DoD's $58.6M Block 20 Spares contract to Teledyne, Inc. awarded via sole-source justification

Contract Overview

Contract Amount: $58,571,859 ($58.6M)

Contractor: Teledyne, Inc

Awarding Agency: Department of Defense

Start Date: 2007-12-20

End Date: 2015-09-30

Contract Duration: 2,841 days

Daily Burn Rate: $20.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BLOCK 20 SPARES

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $58.6 million to TELEDYNE, INC for work described as: BLOCK 20 SPARES Key points: 1. The contract's value of $58.6 million over its 8-year period suggests significant investment in aircraft spare parts. 2. Sole-source award indicates a lack of competitive bidding, potentially impacting price efficiency. 3. The contract's duration and value warrant scrutiny for potential cost overruns or inefficiencies. 4. Performance context is limited without specific delivery metrics or quality assessments. 5. Positioned within the Defense sector, this contract supports aircraft sustainment and readiness. 6. The absence of competition raises questions about whether the government secured the best possible value.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source nature and lack of publicly available comparable data for specific 'Block 20 Spares'. However, the substantial $58.6 million expenditure over nearly eight years for spare parts suggests a significant investment. Without competitive bidding, it's difficult to ascertain if the pricing reflects market rates or if there were opportunities for cost savings through a more open procurement process. The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility, can sometimes lead to higher costs if not managed diligently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The data indicates 'NOT COMPETED' and a contract type of 'sole-source'. This suggests that the Department of Defense identified Teledyne, Inc. as the only responsible source capable of providing the required Block 20 Spares, likely due to proprietary technology, unique capabilities, or specific integration requirements. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution.

Taxpayer Impact: Taxpayers may have paid a premium for these spares due to the absence of competitive pressure. Without a bidding process, there's less assurance that the price reflects the lowest achievable cost for the government.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically the Air Force, ensuring the operational readiness of aircraft that utilize Block 20 spares. The services delivered include the provision of critical spare parts essential for aircraft maintenance and repair. The geographic impact is primarily within the United States, supporting defense logistics and maintenance operations. Workforce implications may include sustaining specialized manufacturing jobs within Teledyne, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
The long contract duration (2007-2015) could mask inefficiencies or scope creep if not closely monitored.
Lack of competition raises concerns about whether alternative, potentially more cost-effective solutions were overlooked.
CPFF contract type can incentivize cost increases if not rigorously managed.

Positive Signals

Ensures availability of critical spare parts for specific aircraft, supporting operational readiness.
Award to an established contractor (Teledyne, Inc.) may indicate reliability and existing expertise.
Long-term contract provides stability for sustainment efforts.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft components and sustainment. The North American Industry Classification System (NAICS) code 336411 (Aircraft Manufacturing) suggests a focus on parts integral to aircraft production or maintenance. The defense sector is characterized by complex supply chains and specialized requirements, often leading to sole-source or limited competition procurements for unique or critical components. Spending benchmarks for aircraft spares can vary widely based on the aircraft type, age, and criticality of the components.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large corporation (Teledyne, Inc.), there are likely limited direct subcontracting opportunities for small businesses specifically tied to this contract's primary award. The impact on the broader small business ecosystem would depend on Teledyne's internal subcontracting practices and whether smaller suppliers are part of their overall supply chain for these spares.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's contracting and financial management regulations. Specific oversight mechanisms would include contract administration by the Air Force, performance reviews, and potentially audits by the Defense Contract Audit Agency (DCAA) or the Inspector General. Transparency is limited due to the sole-source nature and the proprietary aspects of specialized spare parts. Accountability would be tied to meeting the terms of the Cost Plus Fixed Fee agreement and delivering the specified spares.

Related Government Programs

Aircraft Parts Procurement
Defense Logistics and Sustainment
Air Force Spare Parts Contracts
Sole-Source Defense Contracts
Aerospace Component Manufacturing

Risk Flags

Sole-source award
Lack of competition
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.6 million to TELEDYNE, INC. BLOCK 20 SPARES

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 $58.6 million.

What is the period of performance?

Start: 2007-12-20. End: 2015-09-30.

What specific aircraft or system does 'Block 20 Spares' refer to, and why was Teledyne, Inc. the sole source?

The designation 'Block 20 Spares' likely refers to a specific configuration or upgrade package for a particular aircraft or weapon system within the Department of Defense inventory. Without access to classified or internal DoD documentation, the precise aircraft is not publicly identifiable. Teledyne, Inc. was likely determined to be the sole source due to possessing unique manufacturing capabilities, proprietary designs, specific technical data rights, or holding essential certifications required for these particular spares. This often occurs when a component is highly specialized, integrated into a complex system where only one supplier has the necessary knowledge, or if the original manufacturer is no longer in business and Teledyne holds the rights or expertise to produce replacements.

How does the Cost Plus Fixed Fee (CPFF) contract type typically influence costs compared to other contract types in a sole-source scenario?

In a sole-source scenario, the Cost Plus Fixed Fee (CPFF) contract type can be a double-edged sword for cost control. On one hand, it allows the government to procure complex or uncertain items where cost estimation is difficult, ensuring the contractor is reimbursed for allowable costs plus a predetermined fixed fee. This provides flexibility. However, the 'cost-plus' nature means the government bears the risk of cost overruns, and the fixed fee, while intended to incentivize efficiency, might not be sufficient to overcome the lack of competitive pressure. Without competition, the contractor has less incentive to aggressively minimize costs, as the government is obligated to cover them, potentially leading to higher overall expenditures than a fixed-price contract awarded through competitive bidding.

What are the potential risks associated with a sole-source award of this magnitude and duration?

A sole-source award of $58.6 million over nearly eight years carries several risks. Firstly, the primary risk is paying a non-competitive price, meaning taxpayers may not have received the best value for their money. Secondly, there's a risk of contractor complacency; without the threat of losing future business to competitors, the contractor might be less motivated to innovate, improve efficiency, or proactively address potential issues. Thirdly, dependency risk arises; the DoD becomes reliant on a single supplier for critical spares, making them vulnerable to supply chain disruptions, price hikes, or the contractor's business decisions. Finally, there's a risk of scope creep or cost escalation, as the CPFF structure can sometimes allow costs to increase if oversight is not stringent.

Can we assess the value-for-money achieved given the contract's structure and lack of competition?

Assessing the value-for-money achieved is inherently difficult for this contract due to its sole-source nature and the CPFF structure. Value-for-money typically relies on competitive benchmarking and price analysis, which are absent here. While the contract ensured the availability of critical spares, the lack of competition means we cannot definitively say if the price paid was the lowest possible or if the government received optimal value. The fixed fee provides some level of cost certainty for the contractor's profit, but the underlying costs are borne by the government. Without detailed cost breakdowns and comparisons to market rates for similar components (which are likely unavailable publicly), a definitive value-for-money assessment remains elusive.

What does the historical spending pattern for 'Block 20 Spares' or similar contracts reveal about DoD's procurement strategies?

The historical spending pattern for 'Block 20 Spares' specifically, as represented by this single contract, doesn't reveal broad trends. However, the existence of such a large, sole-source, long-duration contract for spares is indicative of a common DoD procurement strategy for highly specialized or legacy systems where competition is limited. DoD often relies on sole-source awards when dealing with proprietary technology, unique sustainment requirements for aging platforms, or when only one contractor possesses the necessary technical data and manufacturing capabilities. This strategy prioritizes ensuring the availability of critical components for national security over achieving the lowest possible price through open competition, though it necessitates robust contract oversight to mitigate cost risks.

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

Financial Breakdown

Contract Ceiling: $140,645,802

Exercised Options: $140,645,802

Current Obligation: $58,571,859

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365703G4306

IDV Type: IDC

Timeline