General Dynamics awarded $383M contract for FAA radios, with 5 years remaining

Contract Overview

Contract Amount: $383,329,977 ($383.3M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Transportation

Start Date: 2012-05-02

End Date: 2027-02-27

Contract Duration: 5,414 days

Daily Burn Rate: $70.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: NEXCOM SEGMENT II, UHF/VHF RADIOS TAS::69 8107::TAS

Place of Performance

Location: SCOTTSDALE, MARICOPA County, ARIZONA, 85257

State: Arizona Government Spending

Plain-Language Summary

Department of Transportation obligated $383.3 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: NEXCOM SEGMENT II, UHF/VHF RADIOS TAS::69 8107::TAS Key points: 1. Contract value of $383M over its life suggests significant investment in communication infrastructure. 2. The award was made under full and open competition, indicating a broad market search. 3. A firm-fixed-price contract type generally transfers risk to the contractor, potentially stabilizing costs. 4. The contract duration of over 5400 days (approx. 15 years) points to a long-term need for these systems. 5. The North American Industry Classification System (NAICS) code 334220 places this in the wireless communications equipment manufacturing sector. 6. The contract is being performed in Arizona, suggesting a specific geographic focus for deployment or support.

Value Assessment

Rating: good

The total contract value of $383.3 million over its extended period is substantial. Benchmarking this against similar large-scale radio system procurements for critical infrastructure is necessary for a precise value-for-money assessment. However, the firm-fixed-price structure is a positive indicator for cost control, as it shifts cost overrun risks to the contractor. The long duration suggests potential for economies of scale if production and support are efficiently managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The presence of 3 bids indicates a competitive environment, which typically leads to better pricing and innovation. The level of competition suggests that the government likely received a range of proposals, allowing for selection of the best value.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and encouraging contractors to offer their best terms.

Public Impact

The Federal Aviation Administration (FAA) benefits through the acquisition of essential communication equipment. This contract supports the modernization and maintenance of air traffic control and communication systems. The primary service delivered is the provision of UHF/VHF radio equipment, crucial for aviation safety. The contract's performance in Arizona has implications for the local economy and workforce in that region. Improved radio systems enhance the reliability and safety of air travel for the public.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (15 years) could lead to technology obsolescence if not managed proactively.
Dependence on a single contractor for such a critical system over a long period may reduce future flexibility.
Firm-fixed-price contracts can sometimes lead to less contractor flexibility in adapting to unforeseen technical challenges without change orders.

Positive Signals

Full and open competition suggests a robust market engagement and potential for competitive pricing.
Firm-fixed-price contract type aligns incentives for cost control with the contractor.
The contract is for essential communication equipment, directly supporting critical national infrastructure (aviation safety).

Sector Analysis

This contract falls within the broader Information Technology and Communications Equipment Manufacturing sector, specifically focusing on wireless communication devices. The market for such specialized radio equipment is often dominated by a few key players due to high R&D costs and stringent performance requirements. The FAA's spending on these systems is a significant component of its overall technology modernization efforts, aiming to ensure reliable air traffic management.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of small business subcontracting goals. Given the nature of advanced radio manufacturing and the prime contractor, it is likely that larger firms are involved. Further analysis would be needed to determine if small businesses are participating in the supply chain or subcontracting opportunities.

Oversight & Accountability

The contract is managed by the Federal Aviation Administration, which has established procurement and oversight processes. As a definitive contract, it is subject to standard federal acquisition regulations. Oversight would typically involve program managers monitoring performance, delivery schedules, and adherence to specifications. Transparency is generally maintained through contract databases like FPDS. Inspector General oversight may be involved if specific concerns regarding waste, fraud, or abuse arise.

Related Government Programs

FAA NextGen Air Transportation System
Department of Defense Radio Communications
Public Safety Radio Networks
Aviation Communication Systems

Risk Flags

Long contract duration may lead to technology obsolescence.
Potential for price increases if market conditions change significantly over the contract life.
Dependence on a single supplier for critical infrastructure over an extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $383.3 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. NEXCOM SEGMENT II, UHF/VHF RADIOS TAS::69 8107::TAS

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS MISSION SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $383.3 million.

What is the period of performance?

Start: 2012-05-02. End: 2027-02-27.

What is the historical spending trend for similar radio communication systems by the FAA?

Analyzing historical spending on radio communication systems by the FAA requires accessing detailed procurement data over multiple fiscal years. Typically, agencies like the FAA procure such equipment through periodic refresh cycles or as part of larger modernization programs like NextGen. Spending can fluctuate based on technological advancements, budget allocations, and the lifecycle of existing equipment. Without specific historical data points for comparable radio systems, it's difficult to establish a precise trend. However, it's common for agencies to invest tens to hundreds of millions of dollars over several years for critical communication infrastructure upgrades to ensure safety and efficiency in air traffic management.

How does the per-unit cost of these radios compare to commercial off-the-shelf (COTS) equivalents or other government procurements?

Determining the precise per-unit cost requires knowing the quantity of radios procured under this $383 million contract and the specific model or specifications. General Dynamics Mission Systems is a specialized defense and aerospace contractor, suggesting these radios likely incorporate advanced features, ruggedization, and specific interoperability requirements for aviation use, which typically command higher prices than standard commercial radios. Comparing them to COTS equivalents would likely show a significant premium due to these specialized requirements. Benchmarking against other government procurements for similar tactical or aviation-grade radios would provide a more relevant comparison, but such data is not readily available in the provided snippet.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Key performance indicators for a contract of this nature, supplying critical communication equipment like UHF/VHF radios to the FAA, would likely focus on reliability, availability, maintainability, and performance under various environmental conditions. Specific KPIs might include Mean Time Between Failures (MTBF), Mean Time To Repair (MTTR), signal clarity and range under operational loads, compliance with stringent aviation communication standards (e.g., RTCA DO-186B), and successful integration with existing air traffic control systems. Delivery schedules for equipment and support services, as well as contractor responsiveness to technical issues, would also be critical performance metrics.

What is General Dynamics Mission Systems' track record with similar large-scale government communication contracts?

General Dynamics Mission Systems (GDMS) has a long and extensive track record of delivering complex communication, C4ISR, and IT solutions to various government agencies, including the Department of Defense and civilian agencies. They are known for handling large, technologically advanced programs. Their experience typically includes developing and manufacturing secure communication systems, tactical radios, and integrated command and control platforms. While specific details of past performance on contracts of identical scope and value are proprietary, GDMS's position as a major defense contractor suggests a history of successfully managing and executing large-scale, high-stakes projects requiring advanced engineering and reliable delivery.

Are there any identified risks associated with the long duration and firm-fixed-price nature of this contract?

Yes, there are potential risks. The long duration (over 15 years) increases the risk of technological obsolescence; the radios procured today might be outdated before the contract ends. It also poses a risk of price escalation if market conditions change significantly, although the firm-fixed-price (FFP) structure aims to mitigate this by locking in the price. For the contractor, an FFP contract over such a long period carries the risk of unforeseen cost increases impacting their profit margins, potentially leading to performance issues if they struggle financially. For the government, the risk lies in potentially paying above market rates if technology advances rapidly or if the contractor's costs increase unexpectedly, and in reduced flexibility to adopt newer technologies during the contract term.

What is the potential impact of this contract on the broader aviation communication technology market?

This contract represents a significant award to General Dynamics Mission Systems, reinforcing their position in the specialized aviation communication sector. For the FAA, it signifies a commitment to maintaining and potentially upgrading its radio infrastructure, which is vital for air traffic safety. The scale of the award could influence market dynamics by setting performance benchmarks and potentially limiting opportunities for smaller competitors in the near term, depending on the specific technology and integration requirements. It also signals the ongoing importance of traditional UHF/VHF radio technology, even as newer communication methods are developed, highlighting the need for robust and reliable systems in aviation.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 8201 E MCDOWELL ROAD, SCOTTSDALE, AZ, 85257

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

Financial Breakdown

Contract Ceiling: $481,893,303

Exercised Options: $383,329,977

Current Obligation: $383,329,977

Actual Outlays: $164,791,693

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline