DoD's $43.8M B-2 Software Sustainment contract awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $43,841,067 ($43.8M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2013-01-01

End Date: 2018-07-31

Contract Duration: 2,037 days

Daily Burn Rate: $21.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CY13 PERFORMANCE-BASED LOGISTICS (PBL) B-2 SOFTWARE SUSTAINMENT (SWS)

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $43.8 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY13 PERFORMANCE-BASED LOGISTICS (PBL) B-2 SOFTWARE SUSTAINMENT (SWS) Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. The contract spans over five years, suggesting a long-term need for sustainment services. 3. Awarded to a single source, raising questions about potential cost efficiencies from competition. 4. The North American Industry Classification System (NAICS) code 336411 points to aircraft manufacturing, aligning with the B-2 platform. 5. Performance-based logistics (PBL) approach aims for outcomes rather than specific tasks. 6. The contract was not competed, limiting opportunities for broader market engagement and potentially higher costs.

Value Assessment

Rating: questionable

Benchmarking the value of this specific B-2 software sustainment contract is challenging due to its sole-source nature and specialized application. Without competitive bids, it's difficult to ascertain if the $43.8 million price represents optimal value for money. The firm-fixed-price structure provides cost certainty but doesn't inherently guarantee efficiency compared to a competitively bid contract. Further analysis would require access to historical sustainment costs for the B-2 or comparable aircraft software sustainment contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, proprietary knowledge, or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the contractor faced no direct market alternatives for this specific service.

Public Impact

The primary beneficiaries are the Department of the Air Force and the B-2 bomber fleet, ensuring operational readiness. Services delivered include software sustainment, crucial for the continued functionality of the B-2's complex systems. The geographic impact is primarily within the United States, supporting Air Force bases where the B-2 is stationed. Workforce implications include specialized software engineers and technicians required for maintaining advanced aviation software.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Lack of transparency in the justification for sole-source award.
Potential for cost overruns if not closely managed due to lack of market alternatives.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Performance-based logistics (PBL) approach focuses on achieving desired outcomes.
Long-term sustainment contract ensures continued operational capability for a critical asset.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, specialized technologies, and long product lifecycles. Sustainment contracts, like this one for B-2 software, are critical for maintaining the operational readiness of complex military platforms. Spending in this area is often concentrated among a few large prime contractors due to the proprietary nature of the systems and the need for deep technical expertise. The total addressable market for aircraft sustainment is substantial, with significant portions dedicated to software and systems maintenance.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The sole-source nature of the award to a large prime contractor like Northrop Grumman typically means that the primary contract value flows to the prime, with limited direct impact on the small business ecosystem unless specific subcontracting plans are mandated and executed.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price and performance-based logistics (PBL) structure, which ties payment to defined outcomes. Transparency may be limited due to the sole-source nature of the award, with justifications for such awards often being sensitive. Inspector General jurisdiction would apply to any investigations of fraud, waste, or abuse.

Related Government Programs

B-2 Bomber Program
Aircraft Software Sustainment
Defense Logistics Agency (DLA) Contracts
Air Force Sustainment Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost inefficiency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.8 million to NORTHROP GRUMMAN SYSTEMS CORP. CY13 PERFORMANCE-BASED LOGISTICS (PBL) B-2 SOFTWARE SUSTAINMENT (SWS)

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $43.8 million.

What is the period of performance?

Start: 2013-01-01. End: 2018-07-31.

What is Northrop Grumman's track record with sustainment contracts for critical defense platforms?

Northrop Grumman has a long and extensive history of providing sustainment services for major defense platforms, including the B-2 Spirit bomber. Their track record includes managing complex logistics, providing technical support, and ensuring the operational readiness of aircraft systems. This often involves proprietary software and hardware maintenance, requiring specialized expertise. While specific performance metrics for individual contracts are not always publicly available, their continued role as a prime contractor for such critical assets suggests a generally accepted capability to meet demanding sustainment requirements. However, the absence of competition on specific contracts, like the B-2 SWS, means that performance and cost-effectiveness are primarily assessed internally by the agency rather than through market-based comparisons.

How does the $43.8 million value compare to similar software sustainment contracts for advanced aircraft?

Directly comparing the $43.8 million value of this B-2 Software Sustainment (SWS) contract to similar contracts is challenging due to several factors. Firstly, the B-2 is a unique, highly specialized platform, making direct comparisons difficult. Secondly, this contract was awarded on a sole-source basis, meaning there was no competitive bidding process to establish a market-driven price. Typically, software sustainment for advanced aircraft can range significantly based on the complexity of the software, the age of the platform, the scope of services (e.g., updates, bug fixes, cybersecurity), and the duration of the contract. Without access to data from competitively bid contracts for comparable aircraft or detailed breakdowns of the services provided under this specific contract, a precise benchmark is not feasible. However, sole-source awards can sometimes result in higher costs than competitively sourced contracts.

What are the primary risks associated with a sole-source award for critical software sustainment?

The primary risks associated with a sole-source award for critical software sustainment include a lack of price competition, which can lead to higher costs for the government compared to a competitively bid contract. There's also a potential for reduced innovation, as the incumbent contractor may have less incentive to improve services or reduce costs without market pressure. Furthermore, reliance on a single provider can create vendor lock-in, making it difficult and costly to switch providers in the future. Operational risks can also arise if the sole-source provider experiences financial difficulties or strategic shifts that impact their ability to deliver sustainment services. Finally, the justification for a sole-source award must be robust to ensure it is truly necessary and not a result of poor planning or market research.

How effective is the Performance-Based Logistics (PBL) approach in ensuring the B-2's software sustainment?

The Performance-Based Logistics (PBL) approach is designed to incentivize contractors to achieve specific, measurable outcomes rather than simply delivering tasks. For the B-2 Software Sustainment (SWS) contract, this means Northrop Grumman is likely being compensated based on factors such as software availability, system uptime, response times for critical issues, and successful implementation of updates or patches. When effectively implemented, PBL can lead to improved system readiness, reduced lifecycle costs, and greater contractor accountability. The success of this approach hinges on the clear definition of performance metrics, robust data collection and analysis, and a willingness from both the government and contractor to adapt the metrics as needed. The long duration of this contract (over five years) suggests an intent to leverage PBL for sustained operational effectiveness of the B-2's software.

What are the historical spending patterns for B-2 software sustainment, and how does this contract fit?

Historical spending on the B-2 bomber program, including its sustainment, has been substantial due to the platform's advanced technology and strategic importance. Software sustainment is a critical, ongoing component of maintaining the B-2's operational capability. This $43.8 million contract, awarded in 2013 and running through mid-2018, represents a specific period of sustainment funding. It is part of a larger, continuous investment required to keep the B-2's complex avionics and mission systems functional and updated. Without access to detailed historical contract data for B-2 SWS specifically, it's difficult to pinpoint precise spending trends. However, it is reasonable to assume that sustainment costs for such a unique and aging platform are significant and likely to continue, reflecting the ongoing need for software maintenance, upgrades, and cybersecurity.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 3520 E AVE M, PALMDALE, CA, 93550

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $43,841,067

Exercised Options: $43,841,067

Current Obligation: $43,841,067

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $60,986,528

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline