DoD's $36M Northrop Grumman Contract for B-2 Stealth Structural Component Repair Faces Scrutiny

Contract Overview

Contract Amount: $25,535,855 ($25.5M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2002-12-20

End Date: 2005-12-31

Contract Duration: 1,107 days

Daily Burn Rate: $23.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200306!000152!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD27 !20021220!20031231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000001500000!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !811219!E! !5!B!S! ! ! !99990909!B! ! !N!Z!D!N!R!1!001!N!1A!A!Y!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 $25.5 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200306!000152!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD27 !20021220!20031231!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 to Northrop Grumman for B-2 stealth aircraft structural component maintenance. 2. Significant value of $36.27 million over 3 years. 3. Awarded on a sole-source basis, raising concerns about competition and price discovery. 4. The sector is Aircraft Manufacturing, with a specific focus on specialized defense equipment.

Value Assessment

Rating: questionable

The contract value of $36.27 million for aircraft structural component repair appears high, especially given the sole-source nature. Benchmarking against similar sole-source contracts for specialized defense components is difficult but suggests potential for overpricing without competitive pressure.

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 lack of competition limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The absence of competition likely results in taxpayers paying a premium for these specialized repair services, as there was no market pressure to drive down costs.

Public Impact

Taxpayers may be overpaying for critical B-2 bomber maintenance due to lack of competition. The sole-source award raises questions about the government's ability to secure the best value for specialized defense services. Dependence on a single contractor for essential repairs could pose a long-term risk to aircraft readiness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Positive Signals

Supports critical defense asset maintenance
Contractor has specialized knowledge of B-2 aircraft

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, specifically supporting the maintenance and repair of highly specialized defense equipment like the B-2 stealth bomber. Spending in this niche area is often characterized by high costs due to proprietary technology and limited contractor availability.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was awarded directly to a large defense contractor, Northrop Grumman. This suggests a missed opportunity for small business participation in the defense supply chain.

Oversight & Accountability

The sole-source nature of this award warrants further oversight to ensure fair pricing and prevent potential cost overruns. Accountability mechanisms should be in place to validate the necessity and cost-effectiveness of the services provided.

Related Government Programs

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

Risk Flags

Sole-source award lacks competition.
Potential for inflated pricing due to lack of market pressure.
Limited transparency in cost justification.
Dependency on a single contractor for critical maintenance.
No clear path to competition outlined.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.5 million to NORTHROP GRUMMAN SYSTEMS CORP. 200306!000152!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD27 !20021220!20031231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000001500000!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !811219!E! !5!B!S! ! ! !99990909!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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $25.5 million.

What is the period of performance?

Start: 2002-12-20. End: 2005-12-31.

What is the justification for awarding this contract on a sole-source basis, and were alternative sourcing strategies considered?

The justification for a sole-source award typically stems from unique capabilities or proprietary technology held by a single contractor. For the B-2 program, Northrop Grumman's deep historical involvement and specialized knowledge of its complex systems likely form the basis. However, a thorough review should confirm that no other qualified sources exist and that competitive bidding was genuinely infeasible or would have compromised national security or program integrity.

How does the pricing structure (Cost Plus Award Fee) compare to industry benchmarks for similar sole-source maintenance contracts, and what mechanisms are in place to control costs?

Cost Plus Award Fee (CPAF) contracts are common in complex defense procurements where cost estimation is difficult. However, they can incentivize cost growth if not managed tightly. Benchmarking CPAF contracts for similar specialized aircraft maintenance is challenging due to unique program requirements. Robust oversight, clear performance metrics, and stringent review of cost proposals are crucial to ensure the government receives good value and that award fees are tied to demonstrable efficiencies and cost control.

What is the long-term strategy for ensuring competitive sourcing or cost reduction for ongoing B-2 structural maintenance needs beyond this contract?

The long-term strategy should involve exploring options for fostering competition, even in specialized areas. This could include incentivizing Northrop Grumman to share technical data, developing alternative maintenance capabilities within the government or through other contractors, or breaking down future requirements into smaller, more competitive packages. Proactive planning is essential to avoid perpetual sole-source reliance and manage the lifecycle costs of aging critical assets like the B-2.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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: Titan II Inc. (UEI: 016435559)

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline