DoD's $44.4M aircraft manufacturing contract with Teledyne, Inc. awarded without competition

Contract Overview

Contract Amount: $44,402,564 ($44.4M)

Contractor: Teledyne, Inc

Awarding Agency: Department of Defense

Start Date: 2004-04-26

End Date: 2008-03-31

Contract Duration: 1,435 days

Daily Burn Rate: $30.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $44.4 million to TELEDYNE, INC for work described as: Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not managed closely. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. A long duration of 1435 days suggests a significant, ongoing requirement for aircraft manufacturing services. 4. The sole awardee, Teledyne, Inc., likely possesses specialized capabilities for this specific aircraft manufacturing need. 5. The contract's performance period spans over three years, indicating a substantial commitment of resources. 6. The absence of competition may limit opportunities for other capable firms and potentially increase costs.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids and limited public data on specific aircraft manufacturing costs. The cost-plus-fixed-fee structure necessitates robust oversight to ensure costs remain reasonable and do not escalate beyond initial projections. Without comparative pricing from other vendors, it's difficult to definitively assess if the fixed fee and cost reimbursements represent a fair market value. Further analysis would require access to detailed cost breakdowns and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source procurement. This means the Department of Defense identified Teledyne, Inc. as the only capable source for the required aircraft manufacturing services. The lack of competition means there was no opportunity for other vendors to bid, which can limit price negotiation and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down prices. The government's ability to secure the best possible value is diminished when a contract is not competed.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical aircraft manufacturing capabilities. The contract supports the production or modification of aircraft essential for national defense operations. The geographic impact is primarily centered around Teledyne, Inc.'s facilities in California, where the work is performed. This contract likely supports a specialized workforce within the aerospace manufacturing sector, requiring skilled labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Cost-plus-fixed-fee contracts require diligent oversight to prevent cost overruns.
Limited transparency into the sole-source justification and pricing details.

Positive Signals

Teledyne, Inc. is a known entity in aerospace manufacturing, suggesting established capabilities.
The contract duration indicates a sustained need and potential for long-term partnership.
The award is for aircraft manufacturing, a critical component of defense capabilities.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, a significant segment of the US industrial base. The market for specialized aircraft manufacturing is often characterized by high barriers to entry due to technical expertise, capital investment, and security clearances. Spending in this sector is heavily influenced by government defense budgets and strategic priorities. Comparable spending benchmarks would typically involve other large-scale defense manufacturing contracts for aircraft, engines, or related complex systems.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information suggesting subcontracting plans specifically targeting small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Teledyne, Inc. voluntarily engages small businesses in its supply chain. Further investigation into subcontracting reports would be needed to ascertain any indirect benefits to small businesses.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous financial oversight, including audits of incurred costs and review of progress reports, is crucial. Transparency is limited by the sole-source nature of the award; however, contract performance and financial data are typically subject to internal government review and potentially Inspector General audits if specific concerns arise.

Related Government Programs

Aircraft Procurement
Defense Manufacturing
Aerospace Industry Contracts
Air Force Logistics Support

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.4 million to TELEDYNE, INC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is TELEDYNE, INC.

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 $44.4 million.

What is the period of performance?

Start: 2004-04-26. End: 2008-03-31.

What is Teledyne, Inc.'s track record with the Department of Defense, particularly in aircraft manufacturing?

Teledyne, Inc. has a history of contracts with the Department of Defense, often related to specialized components, instrumentation, and services within the aerospace and defense sectors. While this specific contract focuses on aircraft manufacturing, Teledyne's broader portfolio includes advanced technologies relevant to aviation. Assessing their track record for this particular type of work would involve reviewing past performance evaluations, any documented issues or successes on similar contracts, and their overall financial stability as a defense contractor. Publicly available data often highlights their capabilities in areas like engines, sensors, and electronic systems, which are integral to aircraft.

How does the $44.4 million value compare to similar aircraft manufacturing contracts awarded by the DoD?

Comparing the $44.4 million value of this contract to similar aircraft manufacturing contracts is challenging without more specific details on the scope of work (e.g., new production, modification, specific aircraft type). However, for large-scale aircraft manufacturing or major overhauls, $44.4 million can represent a significant investment, but it may fall on the lower end for entirely new aircraft programs. Contracts for major defense platforms can easily reach hundreds of millions or billions of dollars. This value might be more aligned with specialized component manufacturing, mid-life upgrades, or the production of a limited number of specialized aircraft. A direct comparison would require identifying contracts with identical or highly similar service descriptions and award amounts.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for aircraft manufacturing?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for aircraft manufacturing are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated prices and reduced incentive for the contractor to optimize costs. The government relies heavily on the contractor's integrity and the effectiveness of its own oversight. Secondly, the CPFF structure means the government reimburses the contractor's allowable costs plus a fixed fee. This can incentivize cost growth, as higher costs (within allowable limits) do not reduce the contractor's profit, which is fixed. Effective risk mitigation requires robust government oversight, detailed cost auditing, and clear performance metrics to ensure value and control expenditures.

How effective is the Department of the Air Force likely to be in overseeing this contract, given its nature?

The effectiveness of the Department of the Air Force's oversight depends heavily on the resources, expertise, and diligence dedicated to this specific contract. For a sole-source CPFF contract, oversight must be particularly stringent, focusing on verifying the allowability and reasonableness of costs incurred, monitoring progress against milestones, and ensuring compliance with contract terms. The Air Force has established program management and contracting offices with the mandate to perform such oversight. However, the effectiveness can be impacted by personnel turnover, budget constraints for oversight activities, and the complexity of the manufacturing process itself. A proactive and experienced oversight team is critical to maximizing value and minimizing risks.

What are the historical spending patterns for aircraft manufacturing within the Department of Defense, and how does this contract fit?

Historical spending patterns for aircraft manufacturing within the Department of Defense are substantial, often comprising a significant portion of the overall defense budget. This spending typically covers research and development, procurement of new aircraft (fighters, bombers, transport, helicopters), and sustainment/modification of existing fleets. Contracts range from billions for major weapon systems to millions for specialized components or services. This $44.4 million contract, awarded without competition for aircraft manufacturing, likely fits into the sustainment, modification, or specialized production category rather than a large-scale new procurement program. It represents a specific, targeted investment within the broader landscape of DoD aviation spending.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft 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: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: ATI Inc. (UEI: 949262737)

Address: 17066 GOLDENTOP ROAD, SAN DIEGO, CA, 92127

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3365703G4306

IDV Type: IDC

Timeline