DoD's $148M B-2 Sustainment Contract with Northrop Grumman Lacked Competition, Raising Cost Concerns

Contract Overview

Contract Amount: $147,896,565 ($147.9M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2009-02-26

End Date: 2015-08-31

Contract Duration: 2,377 days

Daily Burn Rate: $62.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: B-2 SUSTAINMENT, NON PDM OVER AND ABOVE (O&A)

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $147.9 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 SUSTAINMENT, NON PDM OVER AND ABOVE (O&A) Key points: 1. Significant spending on aircraft sustainment, highlighting the cost of maintaining advanced military platforms. 2. Sole-source award to Northrop Grumman suggests limited market options or strategic sourcing decisions. 3. The contract's duration and cost-plus structure may present risks for cost control and efficiency. 4. Focus on sustainment indicates ongoing operational needs for the B-2 fleet.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee (CPFF) structure, combined with a lack of competition, raises concerns about potential cost overruns and the government's ability to secure the best value. Benchmarking against similar sustainment contracts for complex aircraft is difficult without competitive data.

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 limits price discovery and potentially leads to higher costs for the government as there is no competitive pressure to drive down prices.

Taxpayer Impact: The lack of competition on a nearly $150 million contract means taxpayers may have paid more than necessary for B-2 sustainment services.

Public Impact

Taxpayers funded extensive sustainment for the B-2 bomber fleet, a critical but costly defense asset. The decision to award without competition impacts the transparency and potential cost-effectiveness of defense spending. This contract highlights the long-term financial commitment required for maintaining advanced military technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long contract duration
No small business participation

Positive Signals

Supports critical defense asset
Ensures operational readiness of B-2 fleet

Sector Analysis

This contract falls within the Defense sector, specifically Aircraft Manufacturing. Spending on sustainment for high-value, complex platforms like the B-2 is substantial and often involves specialized contractors due to the unique nature of the technology.

Small Business Impact

The data indicates no small business participation in this contract. This is common for large, sole-source prime contracts for complex defense systems where the prime contractor handles most of the work.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny regarding the justification for not competing the requirement. Robust oversight would be needed to ensure cost reasonableness and performance standards were met throughout the contract's life.

Related Government Programs

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

Risk Flags

Sole-source award
Cost-plus contract type
Lack of small business participation
Long contract duration (2009-2015)
High contract value ($148M)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $147.9 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 SUSTAINMENT, NON PDM OVER AND ABOVE (O&A)

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 $147.9 million.

What is the period of performance?

Start: 2009-02-26. End: 2015-08-31.

What was the specific justification for awarding this B-2 sustainment contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves factors like unique capabilities, proprietary technology, or the absence of adequate competition. For the B-2, Northrop Grumman's role as the original manufacturer likely played a significant part. However, a thorough review would assess if market research was conducted to identify potential competitors or if phased approaches could have introduced competition for specific sustainment tasks.

How did the Cost Plus Fixed Fee (CPFF) structure impact the final cost, and what mechanisms were in place to control potential cost growth?

CPFF contracts provide the contractor with a fixed fee regardless of the final cost, incentivizing cost control but also carrying risk if costs escalate significantly. Oversight mechanisms would include detailed cost reporting, audits, and performance metrics. The government's ability to manage cost growth depends on the strength of these oversight processes and the contractor's adherence to them.

What is the long-term strategic value and cost-effectiveness of sustaining the B-2 fleet through such contracts compared to potential modernization or replacement?

Sustaining the B-2 fleet ensures the continued availability of a unique strategic asset, but the costs are substantial. Evaluating cost-effectiveness requires comparing sustainment expenditures against the operational value derived and the costs associated with alternative strategies, such as fleet modernization or the development of next-generation platforms. This analysis is crucial for long-term defense planning and budget allocation.

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 FIXED FEE (U)

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: $147,896,565

Exercised Options: $147,896,565

Current Obligation: $147,896,565

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline