DoD's $32.3M Northrop Grumman contract for B-2 CDM repairs awarded without competition

Contract Overview

Contract Amount: $32,304,643 ($32.3M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2008-01-01

End Date: 2010-12-31

Contract Duration: 1,095 days

Daily Burn Rate: $29.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE AWARD FEE

Sector: Defense

Official Description: B-2 CDM REPAIRS

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $32.3 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 CDM REPAIRS Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price award fee structure introduces performance incentives but requires careful monitoring. 3. The contract duration of 1095 days suggests a significant, ongoing need for these repair services. 4. The specific nature of 'CDM Repairs' for the B-2 bomber indicates a critical, specialized maintenance requirement. 5. Lack of competition raises concerns about whether the government secured the best possible value. 6. The contract's value, while substantial, needs to be benchmarked against similar specialized aircraft maintenance.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized scope. Without competitive bids, it's difficult to definitively assess if the $32.3 million represents fair market value. The fixed-price award fee structure aims to control costs while incentivizing performance, but the absence of competition means the government may not have benefited from the cost savings typically achieved through a competitive bidding process. Further analysis would require comparing the per-unit cost of specific repair tasks to industry standards for similar complex aircraft maintenance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Northrop Grumman Systems Corp, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government compared to fully competed contracts. The lack of competition here means taxpayers did not benefit from the potential cost reductions that a competitive environment could have fostered.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium for these B-2 repair services. Without multiple bids, there's less pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force and the operational readiness of the B-2 Spirit stealth bomber fleet. The services delivered are critical repairs and maintenance for the B-2 bomber's 'Common Data Module' (CDM) system. The geographic impact is primarily within the United States, likely at facilities where the B-2 fleet is based and maintained. Workforce implications include specialized technicians and engineers employed by Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in the pricing structure due to non-competitive nature.
Reliance on a single contractor for critical B-2 repair services poses a long-term risk.

Positive Signals

Northrop Grumman is a known incumbent with established expertise on the B-2 platform.
Fixed-price award fee structure provides some cost control and performance incentives.
Contract duration suggests a stable, long-term need being met.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on specialized maintenance for a high-value, complex military aircraft. The market for such specialized repair services is inherently limited, often dominated by the original equipment manufacturer or a few highly qualified contractors due to the proprietary nature of the technology and the stringent security requirements. Spending benchmarks for similar sole-source sustainment contracts for advanced military platforms can vary widely, but typically represent significant investments in maintaining national defense capabilities.

Small Business Impact

This contract was not set aside for small businesses, and there is no explicit indication of subcontracting requirements for small businesses within the provided data. As a sole-source award to a large defense contractor, it is unlikely to directly benefit the small business ecosystem unless Northrop Grumman voluntarily includes them in its supply chain. The absence of a small business set-aside means opportunities for smaller, specialized firms to compete for this specific work were not pursued.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The fixed-price award fee structure necessitates monitoring of performance metrics to ensure the 'award fee' portion is justified. Transparency may be limited due to the sole-source nature. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

B-2 Bomber Sustainment Programs
Air Force Aircraft Maintenance Contracts
Defense Contractor Sole-Source Awards
Specialized Aerospace Repair Services

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.3 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 CDM REPAIRS

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 $32.3 million.

What is the period of performance?

Start: 2008-01-01. End: 2010-12-31.

What is the specific nature of the 'CDM Repairs' and why are they critical for the B-2 bomber?

The 'CDM Repairs' likely refer to maintenance and servicing of the Common Data Module (CDM) system aboard the B-2 Spirit stealth bomber. The CDM is a crucial component responsible for managing and processing flight data, mission planning information, and potentially other critical systems data. Its proper functioning is essential for the aircraft's operational capability, mission effectiveness, and safety. Given the B-2's role as a strategic asset, any degradation or malfunction in its core systems, including data management, would significantly impact its readiness and ability to perform its intended missions. Therefore, these repairs are critical for maintaining the technological integrity and operational status of a highly complex and sensitive military platform.

What are the potential risks associated with awarding a $32.3 million contract on a sole-source basis?

The primary risk of a sole-source award is the lack of price competition, which can lead to the government paying a higher price than if multiple bids were solicited. Without competing proposals, there is less incentive for the contractor to offer the lowest possible price, and the government has a reduced ability to benchmark costs against market alternatives. This can result in inefficient use of taxpayer funds. Additionally, sole-source awards can create a dependency on a single provider, potentially limiting future flexibility and increasing risks if that provider faces financial difficulties or decides to exit the market. It also bypasses opportunities for innovative solutions that might emerge from a competitive process.

How does the 'Fixed Price Award Fee' contract type function, and what are its implications for cost control and performance?

A Fixed Price Award Fee (FPAF) contract combines a fixed-price base with an award fee component. The fixed-price portion covers the basic cost of the work, providing the contractor with an incentive to control costs up to that level. The award fee is earned based on the government's subjective evaluation of the contractor's performance against pre-defined criteria. This structure aims to incentivize high performance beyond minimum requirements while still offering some cost predictability. For this contract, it means Northrop Grumman is paid a base amount, and can earn additional fees if their repair work on the B-2 CDM meets or exceeds performance expectations set by the Air Force. The effectiveness hinges on clear, objective performance metrics and diligent government oversight to ensure the award fee is appropriately earned.

What is the historical spending context for B-2 bomber maintenance and sustainment?

The B-2 Spirit is an aging, highly complex, and technologically advanced aircraft, making its sustainment and maintenance exceptionally costly. Historically, programs supporting the B-2 fleet have involved significant, multi-billion dollar investments over its operational lifespan. This includes costs for research, development, procurement, and ongoing sustainment, which encompasses spare parts, depot-level maintenance, system upgrades, and specialized repair services like the one awarded here. Contracts for B-2 sustainment are often long-term and awarded to the prime contractor, Northrop Grumman, due to the specialized knowledge and infrastructure required. The $32.3 million for CDM repairs represents a specific, albeit substantial, component of the overall, continuous investment needed to keep the B-2 fleet mission-capable.

Given the sole-source nature, what mechanisms could ensure value for money and accountability for this contract?

Even with a sole-source award, several mechanisms can help ensure value for money and accountability. Firstly, robust government oversight is crucial. The Air Force must diligently monitor Northrop Grumman's performance against the contract's objectives and the criteria for the award fee. This includes verifying the necessity and scope of the repairs performed. Secondly, the government should conduct thorough cost analyses, even without competing bids, to benchmark the proposed pricing against internal estimates, historical data for similar work, or industry cost models where available. Independent technical reviews of the repair work can also validate its necessity and quality. Finally, clear communication channels and regular performance reviews with the contractor can help address issues proactively and ensure alignment on expectations and outcomes.

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: FIXED PRICE AWARD FEE (M)

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

Financial Breakdown

Contract Ceiling: $52,824,560

Exercised Options: $52,824,460

Current Obligation: $32,304,643

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline