DoD awards $134M for B-2 tailpipe production, a sole-source contract to Northrop Grumman

Contract Overview

Contract Amount: $134,103,346 ($134.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-26

End Date: 2028-10-31

Contract Duration: 1,496 days

Daily Burn Rate: $89.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: B-2 TAILPIPES PHASE II

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $134.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: B-2 TAILPIPES PHASE II Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Long-term contract duration (over 4 years) suggests a sustained need for these specialized parts. 3. The contract is for a critical component of the B-2 bomber, indicating high strategic importance. 4. No small business set-aside was utilized, raising questions about opportunities for smaller defense contractors. 5. The fixed-price contract type shifts some risk to the contractor, but the sole-source nature mitigates competitive pressure. 6. Performance is expected to occur in California, a hub for aerospace and defense manufacturing.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The awarded amount of $134 million over approximately five years suggests a significant investment in maintaining the B-2 fleet. Without comparable contracts or market data for similar specialized aircraft components, it's difficult to definitively assess if the pricing is optimal. However, sole-source awards often carry a premium compared to competitively bid contracts.

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 Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or when there is insufficient time to conduct a full competition. The lack of competition means that taxpayers do not benefit from the price discovery mechanisms inherent in a multi-bidder scenario.

Taxpayer Impact: The absence of competition means taxpayers may not be receiving the lowest possible price for these critical B-2 components. The government relies on negotiation rather than market forces to determine fair value.

Public Impact

The primary beneficiaries are the Department of Defense and the B-2 bomber fleet, ensuring continued operational readiness. Services delivered include the manufacturing and supply of specialized tailpipe components for the B-2 aircraft. The geographic impact is concentrated in California, supporting local aerospace manufacturing jobs and infrastructure. Workforce implications include sustained employment for skilled labor within Northrop Grumman and its supply chain in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Lack of small business participation may reduce opportunities for smaller, innovative firms in the defense supply chain.
Long contract duration could mask inefficiencies if not closely monitored for performance and cost control.

Positive Signals

Contract ensures continued availability of critical components for a strategic defense asset (B-2 bomber).
Firm fixed-price contract type provides cost certainty for the government once the price is set.
Awarding to an incumbent contractor with established expertise may reduce technical risks and ensure quality.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized components for legacy aircraft like the B-2 is often concentrated among a few key players due to the high technical expertise and security clearances required. Spending in this sub-sector is driven by defense readiness requirements and the lifecycle management of aging aircraft fleets.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This means that opportunities for small businesses to participate in this specific award are limited. The prime contractor, Northrop Grumman, will likely manage its own supply chain, and while they may engage small businesses, it's not a mandated aspect of this particular contract.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), which are responsible for ensuring contractor compliance, performance, and cost reasonableness. The contract's firm fixed-price nature provides some cost control, but the sole-source aspect necessitates rigorous oversight to ensure fair pricing and adherence to specifications. Transparency may be limited due to the non-competitive nature of the award.

Related Government Programs

B-2 Spirit Bomber Sustainment
Aerospace Component Manufacturing
Defense Logistics Agency Procurement
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $134.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. B-2 TAILPIPES PHASE II

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $134.1 million.

What is the period of performance?

Start: 2024-09-26. End: 2028-10-31.

What is Northrop Grumman's track record with the B-2 program and similar sole-source contracts?

Northrop Grumman is the prime contractor for the B-2 Spirit bomber and has a long-standing relationship with the Department of Defense for its sustainment and upgrades. Their track record with the B-2 program is extensive, encompassing development, production, and ongoing support. Regarding sole-source contracts, Northrop Grumman, like other major defense contractors, frequently receives sole-source awards for specialized systems or components where they possess unique capabilities or are the sole qualified producer. This is often due to the highly specialized nature of defense systems and the consolidation within the defense industrial base. While this can lead to higher costs compared to competitive bids, it also ensures continuity and leverages the contractor's deep institutional knowledge and established production lines for critical platforms.

How does the $134 million contract value compare to historical spending on B-2 tailpipe components?

Determining the precise historical spending on B-2 tailpipe components is challenging without access to detailed historical contract data beyond the provided summary. The $134 million figure represents the total value over the contract's duration (approximately five years). To compare, one would need to aggregate previous contract awards specifically for tailpipe production or related components for the B-2. Given the B-2's advanced composite materials and unique design, specialized components like tailpipes are likely high-cost items. A direct comparison would require analyzing annual spending trends, inflation adjustments, and any changes in production volume or technological requirements over the B-2's operational life. Without this granular historical data, it's difficult to ascertain if this award represents an increase, decrease, or stable level of investment relative to past expenditures.

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

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, Northrop Grumman may have less incentive to offer the most cost-effective solution, and the government's negotiating power is diminished. Another risk is contractor performance; while Northrop Grumman is experienced, any delays or quality issues could impact the B-2 fleet's readiness. Furthermore, reliance on a single supplier for critical components creates a vulnerability in the supply chain. If Northrop Grumman faces production challenges or decides to exit this specific market segment in the future, finding an alternative supplier could be difficult and costly, potentially leading to program disruptions.

How effective is the firm fixed-price contract type in managing costs for this sole-source award?

The firm fixed-price (FFP) contract type is generally effective in providing cost certainty for the government, as the price is set and the contractor assumes the risk of cost overruns. This is beneficial even in a sole-source scenario, as it establishes a ceiling. However, the effectiveness is somewhat mitigated by the sole-source nature. While the contractor cannot unilaterally increase the price, the initial negotiated price might be higher than it would be under competition. The government's ability to ensure value relies heavily on robust negotiation, cost analysis (if possible), and effective oversight to confirm that the FFP price accurately reflects the cost of performance plus a reasonable profit. Without competition, the 'firm' aspect of the price is more critical, but the 'value' aspect depends heavily on the pre-award negotiation and ongoing monitoring.

What are the implications of awarding this contract to Northrop Grumman for the broader defense industrial base?

Awarding this contract to Northrop Grumman reinforces its position as a key provider of sustainment services for the B-2 platform. It signifies the continued reliance on established, large defense contractors for complex, high-value systems. For the broader industrial base, this sole-source award highlights the challenges small and medium-sized businesses face in accessing prime contracts for highly specialized components, particularly on legacy platforms where incumbent relationships are strong. While Northrop Grumman may utilize subcontractors, the prime contract itself does not appear to prioritize small business participation. This can lead to further consolidation within the defense sector, concentrating critical manufacturing capabilities within a few major corporations.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 6401 S AIR DEPOT BLVD, OKLAHOMA CITY, OK, 73135

Business Categories: Category Business, Corporate Entity Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $134,103,346

Exercised Options: $134,103,346

Current Obligation: $134,103,346

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $45,947,756

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRTA119D0001

IDV Type: IDC

Timeline