DoD Spends $49.3M on B-2 Audio Control Redesign, Awarded Sole-Source to Northrop Grumman

Contract Overview

Contract Amount: $49,351,664 ($49.4M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2012-12-14

End Date: 2019-03-29

Contract Duration: 2,296 days

Daily Burn Rate: $21.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: B-2 AUDIO CONTROL DISTRIBUTION UNIT FORM, FIT AND FUNCTION REDESIGN

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $49.4 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 AUDIO CONTROL DISTRIBUTION UNIT FORM, FIT AND FUNCTION REDESIGN Key points: 1. Significant investment in aircraft component redesign highlights ongoing sustainment needs. 2. Sole-source award to Northrop Grumman raises questions about competition and potential cost efficiencies. 3. The contract's Cost Plus Incentive Fee structure aims to align contractor and government interests. 4. Focus on form, fit, and function redesign suggests critical operational requirements for the B-2 bomber.

Value Assessment

Rating: questionable

The total award of $49.3M for a redesign of an audio control unit appears high, especially given the duration. Benchmarking against similar complex avionics redesigns is difficult without more detailed cost breakdowns, but the lack of competition suggests potential for inflated pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Northrop Grumman. This method limits price discovery and may result in higher costs compared to a competitive process. The justification for sole-source is not provided but likely relates to proprietary data or unique capabilities for the B-2 platform.

Taxpayer Impact: The lack of competition for a nearly $50 million contract raises concerns about taxpayer value. Without competitive pressure, the government may have paid a premium for this redesign.

Public Impact

Ensures continued operational capability of the B-2 bomber fleet by updating critical audio systems. Supports advanced aerospace manufacturing and engineering expertise within a major defense contractor. Potential for improved pilot communication and system reliability within the aircraft. The significant expenditure could have been allocated to other defense priorities if competition had yielded lower costs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price transparency.
High total contract value for a component redesign.
Cost Plus Incentive Fee can lead to cost overruns if not managed tightly.
Lack of small business participation noted.

Positive Signals

Addresses critical form, fit, and function requirements for a key defense asset.
Potential for improved system performance and reliability.
Long contract duration suggests a comprehensive redesign effort.

Sector Analysis

The aerospace and defense sector, particularly for legacy platforms like the B-2 bomber, often involves specialized components and extensive redesign efforts. Spending benchmarks for such specific avionics redesigns are highly variable, but significant investments are common for maintaining strategic assets.

Small Business Impact

The data indicates that small businesses were not involved in this contract (sb: false). This is common for large, sole-source awards to prime contractors like Northrop Grumman, which often handle complex systems integration internally or through their own supply chains.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny regarding the justification for avoiding competition. Robust oversight would involve verifying the necessity of the redesign and ensuring the Cost Plus Incentive Fee structure is effectively managed to control costs and achieve performance goals.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition.
High contract value for component redesign.
Potential for cost overruns with CPIF.
No small business participation.
Limited transparency on cost justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.4 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 AUDIO CONTROL DISTRIBUTION UNIT FORM, FIT AND FUNCTION REDESIGN

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 $49.4 million.

What is the period of performance?

Start: 2012-12-14. End: 2019-03-29.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative solutions or competitive approaches considered?

The justification for a sole-source award typically stems from factors such as unique capabilities, proprietary data, or the need for compatibility with existing systems, especially for specialized military platforms like the B-2. Without the specific justification document, it's impossible to confirm if alternatives were explored, but agencies are generally required to justify sole-source procurements rigorously.

How does the final cost of this redesign compare to initial estimates, and what mechanisms were in place to control costs under the Cost Plus Incentive Fee structure?

The Cost Plus Incentive Fee (CPIF) contract structure is designed to incentivize the contractor to meet or exceed cost and performance targets. The government and contractor negotiate target cost, target profit, and a sharing ratio for cost variances. Effective oversight would involve monitoring performance against these targets and ensuring the incentive structure drove efficiency rather than cost escalation.

What are the expected improvements in performance, reliability, or maintainability resulting from this redesign, and how will these benefits be measured?

The redesign aims to improve the form, fit, and function of the B-2's audio control distribution unit. Expected benefits likely include enhanced pilot communication clarity, reduced system failures, and potentially easier maintenance. Measuring these benefits would involve tracking operational performance metrics, pilot feedback, and maintenance logs post-implementation.

Industry Classification

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

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $49,351,664

Exercised Options: $49,351,664

Current Obligation: $49,351,664

Subaward Activity

Number of Subawards: 117

Total Subaward Amount: $9,413,403

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline