Northrop Grumman awarded $362.7M for B-2 Stealth aircraft systems engineering, with a significant portion for aircraft equipment

Contract Overview

Contract Amount: $28,100,584 ($28.1M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2001-12-18

End Date: 2007-06-30

Contract Duration: 2,020 days

Daily Burn Rate: $13.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200211!000359!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD20 !20011218!20021231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000014703585!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !336413!E! !5!B!S!C! !C!20021231!B! ! !N!Z!C!U!R!1!001!N!1G!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $28.1 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200211!000359!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD20 !20011218!20021231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS A… Key points: 1. Contract awarded for critical systems engineering and aircraft equipment for the B-2 bomber program. 2. The contract was not competitively procured, raising questions about potential price overruns. 3. Significant portion of the contract value is allocated to 'Other Aircraft Equipment'. 4. The contract spans over 6 years, indicating a long-term need for these services. 5. Northrop Grumman, a major defense contractor, is the sole awardee. 6. The contract's value suggests a substantial investment in maintaining and upgrading a key strategic asset.

Value Assessment

Rating: fair

The total value of this contract is $362,686,958. Without comparable contracts or detailed cost breakdowns, it is difficult to definitively assess value for money. However, the 'Cost Plus Award Fee' pricing structure can sometimes lead to higher costs if not managed tightly, as the contractor is incentivized to meet certain performance targets which may not always align with the lowest possible cost. The lack of competition further complicates a direct value assessment.

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. This typically occurs when only one contractor possesses the unique capabilities or technology required for the service or product. In this case, Northrop Grumman is the prime contractor for the B-2 bomber, suggesting they are the only entity with the necessary intimate knowledge and access to perform these specific systems engineering and equipment services.

Taxpayer Impact: Sole-source awards can limit opportunities for taxpayers to benefit from competitive pricing, potentially leading to higher costs than if multiple vendors had vied for the contract.

Public Impact

The primary beneficiaries are the United States Air Force and national security, through the continued sustainment and enhancement of the B-2 bomber fleet. Services delivered include systems engineering and the provision of other aircraft equipment crucial for the B-2's operational readiness. The geographic impact is primarily centered around Northrop Grumman's facilities in Palmdale, California, and potentially other B-2 operational bases. Workforce implications include the employment of highly skilled engineers and technicians at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost Plus Award Fee structure requires careful oversight to ensure cost efficiency.
Long contract duration could mask inefficiencies if not actively managed.
Sole-source nature limits transparency in pricing benchmarks.

Positive Signals

Awarded to a prime contractor with deep expertise in the B-2 platform.
Focus on systems engineering ensures continued technological relevance of a critical asset.
Contract aims to maintain and potentially upgrade a key strategic defense capability.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically focusing on aircraft manufacturing and related support services. The market for specialized systems engineering and equipment for advanced platforms like the B-2 is highly concentrated, with prime contractors often being the sole viable option due to proprietary knowledge and existing infrastructure. Comparable spending benchmarks are difficult to establish due to the unique nature of the B-2 program.

Small Business Impact

There is no indication of small business set-asides in this award. As a sole-source contract awarded to a large prime defense contractor, the primary focus is on the prime's capabilities. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in the award information. The impact on the broader small business ecosystem is likely indirect, depending on Northrop Grumman's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the relevant Air Force program office. Accountability measures are tied to the 'Cost Plus Award Fee' structure, which includes performance metrics. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal government review and potentially Inspector General oversight if issues arise.

Related Government Programs

B-2 Spirit Program
Air Force Materiel Command
Aircraft Systems Engineering
Defense Industrial Base

Risk Flags

Sole-source award
Cost Plus Award Fee structure
Lack of detailed cost breakdown
Potential for cost overruns due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.1 million to NORTHROP GRUMMAN SYSTEMS CORP. 200211!000359!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD20 !20011218!20021231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000014703585!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !336413!E! !5!B!S!C! !C!20021231!B

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $28.1 million.

What is the period of performance?

Start: 2001-12-18. End: 2007-06-30.

What is the historical spending trend for systems engineering and related equipment for the B-2 program under Northrop Grumman?

Analyzing historical spending trends for the B-2 program's systems engineering and equipment requires access to detailed contract data beyond this single award. This contract, valued at over $362 million, covers a period from December 2001 to June 2007 (with an original award date in 2001 and an end date of 2002, suggesting modifications or a longer period of performance than initially stated). To understand trends, one would need to examine all prior and subsequent contracts awarded to Northrop Grumman (and potentially other contractors) for similar services related to the B-2. This would involve looking at annual spending, the number and value of modifications, and the evolution of the scope of work over time. Without this broader dataset, it's impossible to identify specific spending trends, such as increases or decreases in investment, or shifts in the allocation of funds between systems engineering and equipment.

How does the 'Cost Plus Award Fee' (CPAF) structure typically impact contractor performance and cost efficiency in defense contracts?

The Cost Plus Award Fee (CPAF) contract type is designed to incentivize contractor performance by allowing the contractor to recover all allowable costs plus a fee that is composed of a fixed base fee and an award amount. The award amount is determined based on the government's evaluation of the contractor's performance against pre-defined criteria. This structure aims to encourage contractors to exceed minimum performance requirements. However, it can also lead to increased costs if the award criteria are not carefully defined or if the government's evaluation process is subjective. Contractors may focus on achieving award fee targets, which might not always align with the most cost-effective solutions. Effective government oversight is crucial to ensure that the award fee criteria are objective, measurable, and that the overall cost remains reasonable and allocable to the contract's objectives.

What are the specific 'Other Aircraft Equipment' items being procured under this contract, and why are they classified as such?

The provided data classifies the procurement under PSC code 'A1C' as 'OTHER AIRCRAFT EQUIPMENT' and links it to the B-2 program. Specific details regarding the exact nature of this equipment are not available in the summary data. Typically, 'Other Aircraft Equipment' can encompass a wide range of items, including specialized components, avionics, sensors, communication systems, or even ground support equipment unique to the aircraft's operation and maintenance. Given the B-2's advanced and stealthy nature, this equipment could be highly specialized, proprietary, and critical to the aircraft's mission capabilities or sustainment. The classification 'A1C' suggests items not fitting into more specific categories, often requiring tailored procurement solutions.

What is Northrop Grumman's track record with the B-2 program, and have there been past performance issues?

Northrop Grumman has been the prime contractor for the B-2 Spirit stealth bomber since its inception, giving them an unparalleled track record and deep institutional knowledge of the platform. Their involvement spans design, development, production, and sustainment. While specific past performance issues are not detailed in this summary data, large, long-term defense programs often encounter challenges related to cost overruns, schedule delays, or technical difficulties. However, Northrop Grumman's continued role as the sole provider for critical systems engineering and equipment for the B-2 suggests a generally satisfactory performance history in the eyes of the Department of Defense, particularly given the program's complexity and strategic importance.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent contractor overcharging?

For sole-source contracts, especially those using a Cost Plus Award Fee structure, the government employs several mechanisms to ensure fair pricing and prevent overcharging. These include: 1) **Price Negotiation:** Even without competition, the government negotiates the contract price, often relying on cost realism analyses, should-cost estimates, and historical pricing data. 2) **Cost Audits:** Defense Contract Audit Agency (DCAA) or DCMA auditors may review the contractor's cost proposals and incurred costs to verify allowability, allocability, and reasonableness. 3) **Award Fee Criteria:** The award fee structure itself, if well-defined with objective metrics, can incentivize efficiency. 4) **Contract Surveillance:** Program offices and contracting officers continuously monitor contractor performance and costs. 5) **Defective Pricing Clauses:** Contracts often include clauses that allow the government to recover overpayments if the contractor provided inaccurate cost or pricing data during negotiations.

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

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline