DoD's $1.67B aircraft manufacturing contract awarded to Teledyne, Inc. with no competition

Contract Overview

Contract Amount: $16,711,428 ($16.7M)

Contractor: Teledyne, Inc

Awarding Agency: Department of Defense

Start Date: 2006-09-25

End Date: 2011-03-31

Contract Duration: 1,648 days

Daily Burn Rate: $10.1K/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 $16.7 million to TELEDYNE, INC for work described as: Key points: 1. Significant contract value raises questions about potential for cost savings through competition. 2. Sole-source award limits market visibility and potential for innovative solutions from other vendors. 3. Long contract duration (over 4 years) suggests a need for robust performance monitoring. 4. Aircraft manufacturing sector is highly specialized, requiring deep technical expertise. 5. The 'Aircraft Manufacturing' NAICS code indicates a focus on production rather than services. 6. Fixed-fee contract structure may incentivize cost control, but requires careful oversight.

Value Assessment

Rating: questionable

The total award of $1.67 billion for aircraft manufacturing is substantial. Without competitive bidding, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed tightly. Comparing this to similar sole-source aircraft manufacturing contracts would be necessary to assess if the pricing is reasonable, but such data is not readily available in this context.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Teledyne, Inc., was considered. This significantly limits the opportunity for price discovery and innovation that typically arises from a competitive bidding process. The lack of competition suggests potential barriers to entry for other firms or specific justifications for bypassing the standard procurement procedures.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, potentially missing out on cost efficiencies and better terms that multiple bidders might have offered.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical aircraft manufacturing capabilities. This contract supports the production of essential aircraft components or platforms for military operations. The geographic impact is primarily in California, where Teledyne, Inc. is located. The contract likely supports a specialized manufacturing workforce within Teledyne, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency and accountability in government spending.
Long-term contracts without competition can foster complacency in contractor performance.
Potential for vendor lock-in if switching providers is difficult or costly.

Positive Signals

Teledyne, Inc. is a known entity in the aerospace and defense sector.
The CPFF contract type, while requiring oversight, can be suitable for complex R&D or production where costs are uncertain.
The contract duration suggests a long-term need for these specific capabilities.

Sector Analysis

The aircraft manufacturing sector is a critical component of the aerospace and defense industry, characterized by high barriers to entry, significant R&D investment, and stringent quality requirements. This contract falls under the broader aerospace manufacturing market, which is a multi-billion dollar global industry. Benchmarking spending in this sector is challenging due to the specialized nature of aircraft production, but large sole-source awards are not uncommon for unique military platforms or components.

Small Business Impact

This contract does not appear to involve a small business set-aside, as Teledyne, Inc. is a large corporation. There is no information provided regarding subcontracting plans for small businesses. The absence of a set-aside or specific subcontracting goals means this large award will not directly benefit the small business ecosystem in this specific instance.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and significant value, enhanced oversight would be expected to ensure cost control and performance. Inspector General investigations could be initiated if any fraud, waste, or abuse is suspected. Transparency is limited due to the non-competitive award.

Related Government Programs

Aircraft Production Contracts
Defense Manufacturing
Aerospace Industry Spending
Sole-Source Procurements
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
High contract value
Cost Plus Fixed Fee contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.7 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 $16.7 million.

What is the period of performance?

Start: 2006-09-25. End: 2011-03-31.

What is Teledyne, Inc.'s track record with sole-source defense contracts?

Teledyne, Inc. has a history of receiving various contracts from the Department of Defense and other federal agencies. While specific details on their sole-source defense contracts are not provided here, their long-standing presence in the aerospace and defense industry suggests experience in fulfilling complex government requirements. Analyzing past performance on similar sole-source awards, including adherence to cost and schedule, would be crucial for a comprehensive assessment. However, without access to detailed contract performance databases or specific historical data on Teledyne's sole-source awards, a definitive track record analysis is limited to general industry knowledge.

How does the $1.67 billion award compare to similar aircraft manufacturing contracts, especially sole-source ones?

Direct comparisons for sole-source aircraft manufacturing contracts are inherently difficult due to the unique specifications and proprietary nature of such procurements. The $1.67 billion figure is substantial and indicates a significant scope of work, likely involving complex systems or platforms. To assess value, one would ideally compare it against other sole-source awards for comparable aircraft components or systems, considering factors like technological sophistication, production volume, and contract duration. However, publicly available data often lacks the granularity for precise benchmarking, especially when dealing with classified or highly specialized defense assets. The absence of competition means there's no direct market price to reference.

What are the primary risks associated with a sole-source award of this magnitude in aircraft manufacturing?

The primary risks associated with a sole-source award of this magnitude in aircraft manufacturing include potential overpricing due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and the risk of vendor lock-in. Taxpayers may bear a higher cost than if the contract were competed. Furthermore, if Teledyne, Inc. faces production issues or delays, the government has limited leverage to seek alternative solutions quickly. The long-term nature of such contracts also increases the risk of performance degradation over time without the pressure of market alternatives. Ensuring robust oversight and clear performance metrics is critical to mitigate these risks.

What specific aircraft manufacturing capabilities does this contract likely address for the Department of the Air Force?

Given the NAICS code 336411 (Aircraft Manufacturing) and the substantial award amount, this contract likely pertains to the production of major aircraft components, sub-assemblies, or potentially entire aircraft platforms. This could include airframes, engines, avionics integration, or specialized military aircraft systems. The 'Aircraft Manufacturing' designation suggests a focus on the physical creation and assembly of aircraft hardware rather than services like maintenance, repair, or overhaul (MRO), although some integration or testing might be included. The specific capabilities would depend on the detailed statement of work, which is not provided.

How has historical spending on aircraft manufacturing by the Department of the Air Force trended, and does this contract align?

Historical spending by the Department of the Air Force (DoD) on aircraft manufacturing has consistently been in the billions of dollars annually, reflecting the high cost of developing, procuring, and maintaining advanced aerial platforms. This $1.67 billion award, while significant for a single contract, aligns with the overall substantial investment the Air Force makes in its aviation capabilities. Trends in this spending are influenced by modernization programs, geopolitical demands, and technological advancements. Without specific historical data for this particular type of aircraft manufacturing or for Teledyne's specific role, it's difficult to say if this contract represents an increase or decrease relative to past specific programs, but it fits within the broader spending patterns for major defense acquisitions.

What are the implications of the Cost Plus Fixed Fee (CPFF) contract type for this large sole-source award?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor (Teledyne, Inc.) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. For a large, sole-source award like this, CPFF can be appropriate when the scope of work involves uncertainties in cost estimation, such as in research and development or complex manufacturing processes where final costs are difficult to predict upfront. However, it places a significant burden on the government to meticulously audit and control costs to prevent overruns. The fixed fee provides some incentive for the contractor to control costs to maximize profit, but the primary risk of cost escalation lies with the government. Robust oversight is essential to ensure costs remain reasonable and the fee is justified.

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

Parent Contract

Parent Award PIID: F3365703G4306

IDV Type: IDC

Timeline