B-2 Bomber

Status of Subcontract Options Gao ID: NSIAD-91-295 September 24, 1991

This report discusses (1) the extent to which the prime contractor for the B-2 program had acquired components for aircraft that the Air Force does not plan to procure until after fiscal year 1991 and (2) increases to the estimated price of the components. The Defense Department approved Northrop's acquisition of components, under options to subcontracts, for installation in 17 more B-2s than the number the Air Force plans to acquire through fiscal year 1991. If Congress approves B-2 aircraft and funds requested by the Air Force and if available subcontract options are exercised by Northrop, components could be acquired in advance for installation in 11 additional B-2s that the Air Force does not plan to procure until fiscal years 1995 and 1996. Further, prices of the options have risen due to changes in the design of the components. Northrop has allowed the fiscal year 1991 options for seven of these subcontracted components to expire.

GAO found that: (1) the Air Force has obligated $341 million of $401 million in advance procurement funds by Congress for exercise of the subcontract options and has requested an additional $220 million in advance procurement funds for fiscal year (FY) 1992 to provide funds to the contractor to continue to exercise such options; (2) the current Air Force procurement plan, exercise of available fixed-price options could result in the Air Force purchasing components for installation in 28 more aircraft than it plans to procure through FY 1992; (3) the contractor estimates that the new subcontract prices for components whose options are expired will be 150 percent higher than the prices that were available through the options; and (4) subcontracts with annual options have increased in price by 61 percent since FY 1989, primarily due to design changes.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone:


The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.