Northrop Grumman receives $131M for B-2 bomber structural support, a sole-source award

Contract Overview

Contract Amount: $130,993,673 ($131.0M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2011-09-21

End Date: 2021-03-31

Contract Duration: 3,479 days

Daily Burn Rate: $37.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: STRUCTURAL SUPPORT, LEFT AND RIGHT HAND, APPL: B-2

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $131.0 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: STRUCTURAL SUPPORT, LEFT AND RIGHT HAND, APPL: B-2 Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Long contract duration of over 9 years suggests a critical, long-term need. 3. Firm Fixed Price contract type shifts cost risk to the contractor. 4. Awarded by the Defense Logistics Agency, indicating support for military readiness. 5. The North American Industry Classification System (NAICS) code 336413 points to specialized aircraft parts manufacturing. 6. The contract value is substantial, reflecting the complexity and importance of B-2 bomber components.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized application for the B-2 bomber. Without competitive bids, it's difficult to definitively assess if the $131 million represents optimal value for money. However, the firm fixed-price structure suggests an attempt to control costs. The long duration implies a sustained need for these critical structural components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corp, was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and fosters innovation. The lack of competition here suggests either a unique capability held by Northrop Grumman for B-2 specific parts or a potential lack of market research to identify alternative sources.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, there is less assurance that the price reflects the lowest possible cost for these essential aircraft parts.

Public Impact

The primary beneficiaries are the U.S. Air Force and the operational readiness of the B-2 Spirit stealth bomber fleet. This contract ensures the continued availability of critical structural support components for a key strategic asset. The geographic impact is primarily within the defense industrial base, supporting specialized manufacturing capabilities. Workforce implications include the need for skilled labor in aerospace manufacturing and engineering at Northrop Grumman facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits transparency and potential cost savings.
Long contract duration could lead to cost overruns if not managed effectively.
Reliance on a single contractor for critical components poses supply chain risk.

Positive Signals

Firm Fixed Price contract shifts cost risk to the contractor.
Award supports a critical national defense asset (B-2 bomber).
Northrop Grumman is an established defense contractor with relevant expertise.

Sector Analysis

This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for specialized components for legacy platforms like the B-2 is often limited to a few key players with the necessary technical expertise and security clearances. Spending in this niche is driven by defense budgets and the sustainment needs of aging, high-value military aircraft.

Small Business Impact

There is no indication of small business set-asides or subcontracting requirements in the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Northrop Grumman voluntarily engages them for specific tasks. Further investigation into Northrop Grumman's subcontracting plans would be needed to assess any indirect benefits to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for monitoring performance, costs, and compliance. The Defense Logistics Agency (DLA) as the contracting activity also retains oversight responsibilities. Transparency is limited by the sole-source nature, but contract modifications and performance reports would be subject to internal review and potentially Inspector General audits.

Related Government Programs

B-2 Bomber Sustainment Programs
Aerospace Parts Manufacturing Contracts
Defense Logistics Agency Procurement
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Long contract duration
Critical defense asset sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $131.0 million to NORTHROP GRUMMAN SYSTEMS CORP. STRUCTURAL SUPPORT, LEFT AND RIGHT HAND, APPL: B-2

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 Logistics Agency).

What is the total obligated amount?

The obligated amount is $131.0 million.

What is the period of performance?

Start: 2011-09-21. End: 2021-03-31.

What is Northrop Grumman's track record with similar sole-source contracts for critical aircraft components?

Northrop Grumman, as a major defense contractor, has a history of receiving sole-source contracts for specialized systems and components, particularly for platforms like the B-2 bomber where they are the original equipment manufacturer or possess unique expertise. These contracts are often awarded due to the proprietary nature of the technology, the highly specialized manufacturing processes required, and the limited number of qualified suppliers. While sole-source awards can be necessary for national security, they necessitate rigorous oversight to ensure fair pricing and prevent potential cost overruns. Analyzing past performance on similar contracts would involve reviewing contract modifications, audit reports, and any documented cost variances to assess their historical effectiveness in managing such agreements.

How does the $131 million contract value compare to historical spending on B-2 structural support?

Determining a precise comparison for historical spending on B-2 structural support is complex without access to detailed historical procurement data specific to this component category. The $131 million figure represents a significant investment over the contract's nearly 10-year duration. However, the B-2 is a highly advanced and expensive aircraft, and its sustainment costs are substantial. To benchmark this value, one would need to analyze: 1) the total lifecycle cost of the B-2 program, 2) previous contracts for similar structural components (if any were awarded separately), and 3) the inflation-adjusted costs of comparable structural parts for other advanced military aircraft. Given the sole-source nature, direct price comparisons are difficult, but the value should be assessed against the criticality of the component and the overall program budget.

What are the primary risks associated with this sole-source contract for critical B-2 components?

The primary risks associated with this sole-source contract are centered around cost control and supply chain resilience. Firstly, the lack of competition means there is less downward pressure on pricing, potentially leading to higher costs for taxpayers if effective cost oversight is not maintained. Secondly, relying solely on Northrop Grumman for these critical structural components creates a single point of failure in the supply chain. Any production delays, quality issues, or unforeseen problems at the contractor's facility could directly impact the operational readiness of the B-2 fleet. Furthermore, the long duration of the contract increases the risk of scope creep or escalating costs if not managed meticulously through contract modifications and performance reviews.

How effective is the Firm Fixed Price (FFP) contract type in managing costs for this specialized defense component?

The Firm Fixed Price (FFP) contract type is generally considered effective in managing costs because it places the primary responsibility for cost control on the contractor, Northrop Grumman. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to be efficient and manage their resources effectively to maximize profit. For specialized components like structural support for the B-2, where technical specifications are well-defined, FFP can provide cost certainty for the government. However, the effectiveness is contingent on the accuracy of the initial cost estimates and the contractor's ability to manage production. If unforeseen technical challenges arise that were not reasonably foreseeable, the FFP structure could lead to contractor losses or demands for contract modifications.

What is the historical spending pattern for NAICS code 336413 by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) frequently procures items falling under NAICS code 336413, which covers 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' DLA's mission is to provide logistics support to the U.S. Armed Forces, and this includes a wide array of aircraft components. Historical spending patterns within this NAICS code by DLA would likely show a consistent demand for various aircraft parts, ranging from routine maintenance items to highly specialized components for specific platforms like the B-2. Analyzing DLA's procurement data for 336413 would reveal trends in contract types (competitive vs. sole-source), average contract values, and the primary contractors receiving awards. This specific $131 million contract represents a significant single award within this category, highlighting the high value associated with sustainment for strategic assets.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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

Financial Breakdown

Contract Ceiling: $130,993,673

Exercised Options: $130,993,673

Current Obligation: $130,993,673

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline