DoD's $93.9M B-2 Software Maintenance Contract Awarded to Northrop Grumman Amidst Limited Competition

Contract Overview

Contract Amount: $93,914,638 ($93.9M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2010-12-30

End Date: 2018-08-31

Contract Duration: 2,801 days

Daily Burn Rate: $33.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CY11 B-2 SUSTAINMENT DELIVERY ORDER FOR SOFTWARE MAINTENANCE

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $93.9 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY11 B-2 SUSTAINMENT DELIVERY ORDER FOR SOFTWARE MAINTENANCE Key points: 1. Value for money is difficult to assess due to the lack of competitive bidding and limited public data on performance metrics. 2. Competition dynamics were heavily constrained, with the contract awarded via a sole-source justification. 3. Risk indicators include potential for cost overruns given the cost-plus contract type and lack of robust competition. 4. Performance context is tied to the critical B-2 bomber sustainment, highlighting the strategic importance of this contract. 5. Sector positioning places this contract within the high-value defense aerospace and sustainment market.

Value Assessment

Rating: questionable

The contract's value is difficult to benchmark against similar sustainment contracts due to its sole-source nature and the specialized requirements of the B-2 platform. The cost-plus-fixed-fee structure introduces inherent risk for cost overruns, as the contractor is incentivized to incur costs to achieve a fixed profit. Without detailed performance data or competitive bids, assessing true value-for-money is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, indicating that only one responsible source, Northrop Grumman Systems Corp, was determined to be capable of fulfilling the requirement. This severely limits the opportunity for price discovery through a competitive bidding process.

Taxpayer Impact: The lack of competition means taxpayers may not have benefited from the most cost-effective solution, as there was no pressure from competing firms to offer lower prices or more efficient service delivery.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the U.S. Air Force, ensuring the continued operational readiness of the B-2 bomber fleet. Services delivered include essential software maintenance, crucial for the complex avionics and control systems of the B-2. Geographic impact is primarily centered around the operational bases of the B-2 bomber, with potential support activities extending to Northrop Grumman facilities. Workforce implications involve specialized engineers and technicians at Northrop Grumman who maintain the software integrity and functionality of this advanced aircraft.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost overruns if not closely monitored.
Lack of transparency in performance metrics makes it difficult to assess efficiency and effectiveness.
Specialized nature of B-2 sustainment may create long-term reliance on a single provider.

Positive Signals

Contract ensures critical sustainment for a strategic national asset (B-2 bomber).
Northrop Grumman is the original equipment manufacturer, likely possessing unique expertise.
Long-term contract duration suggests a stable and ongoing need for these services.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and specialized software maintenance. The market for such services is characterized by high barriers to entry due to proprietary technology, stringent security requirements, and the need for deep institutional knowledge. Spending in this area is critical for maintaining the readiness of aging, high-value military platforms, often involving long-term support agreements with original equipment manufacturers.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting opportunities for small businesses. Given the specialized nature of B-2 software maintenance and the sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal, unless Northrop Grumman voluntarily engages small businesses for specific support roles.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, with potential involvement from the Air Force's Inspector General. Accountability measures would be tied to the terms of the cost-plus-fixed-fee contract, requiring detailed reporting and justification of costs. Transparency is limited due to the sole-source nature and the sensitive defense context.

Related Government Programs

B-2 Bomber Sustainment Programs
Aerospace Defense Contractor Support
Aircraft Software Maintenance Services
Department of Defense Logistics and Maintenance

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding
Limited performance data transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $93.9 million to NORTHROP GRUMMAN SYSTEMS CORP. CY11 B-2 SUSTAINMENT DELIVERY ORDER FOR SOFTWARE MAINTENANCE

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 $93.9 million.

What is the period of performance?

Start: 2010-12-30. End: 2018-08-31.

What is Northrop Grumman's track record with B-2 sustainment contracts?

Northrop Grumman Systems Corp, as the original manufacturer of the B-2 Spirit bomber, has a long-standing and exclusive track record in its sustainment. This includes providing a comprehensive range of services essential for maintaining the aircraft's operational readiness, encompassing structural integrity, avionics, software, and overall system performance. Their deep institutional knowledge and proprietary access to design data are critical for addressing the unique challenges associated with supporting such a complex and aging platform. Past performance data, while not publicly detailed for this specific delivery order, is generally understood to be extensive given their role as the prime contractor for the B-2 program since its inception.

How does the $93.9M cost compare to similar aircraft software maintenance contracts?

Direct comparison of the $93.9 million cost for this B-2 software maintenance delivery order to similar contracts is challenging due to several factors. Firstly, the B-2 is a unique, highly specialized stealth bomber, meaning its software systems and maintenance requirements are not directly comparable to more common aircraft platforms. Secondly, this contract was awarded on a sole-source basis, limiting the price discovery that occurs in competitive procurements. The cost-plus-fixed-fee (CPFF) structure also means the final cost is influenced by actual expenses incurred, making it different from fixed-price contracts. Benchmarking would ideally require access to detailed cost breakdowns and performance metrics, which are not publicly available for this specific award.

What are the primary risks associated with this sole-source, cost-plus contract?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved in a competitive environment. The government lacks the leverage of alternative bidders to negotiate the best possible terms. Secondly, the CPFF structure, while providing flexibility, carries the risk of cost overruns. The contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. If costs escalate beyond initial estimates, the total contract value can increase significantly, impacting the overall budget. Effective oversight and robust cost-control measures by the procuring agency are crucial to mitigate these risks.

How effective is the software maintenance likely to be given the contract structure?

The effectiveness of the software maintenance is likely to be high in terms of technical execution, given that Northrop Grumman is the original equipment manufacturer and possesses unique expertise. However, the effectiveness from a value-for-money perspective is harder to ascertain. The sole-source award and CPFF structure mean that while the technical requirements will likely be met, the efficiency and cost-effectiveness are not guaranteed to be optimized as they might be under competitive, fixed-price arrangements. The Air Force's program management and oversight will be critical in ensuring that the services delivered meet performance standards and that costs remain within reasonable bounds, despite the inherent limitations of the contracting approach.

What are the historical spending patterns for B-2 sustainment?

Historical spending patterns for B-2 sustainment, including software maintenance, have been substantial, reflecting the complexity and strategic importance of the aircraft. Over the life cycle of the B-2 program, sustainment costs have represented a significant portion of the overall program expenditure. These costs are driven by the need to maintain advanced avionics, stealth capabilities, and software systems, which require specialized engineering support and frequent updates. While specific figures for individual delivery orders like this one are often not aggregated publicly, the overall sustainment budget for the B-2 fleet is consistently high, reflecting the ongoing investment required to keep these unique assets operational and technologically relevant.

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

Pricing Type: COST PLUS FIXED FEE (U)

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: $93,914,638

Exercised Options: $93,914,638

Current Obligation: $93,914,638

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline