DoD's $40.8M contract for support services awarded to General Atomics Aeronautical Systems, Inc. lacked competition

Contract Overview

Contract Amount: $40,978,554 ($41.0M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-04-27

End Date: 2020-05-28

Contract Duration: 762 days

Daily Burn Rate: $53.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CT::IGF ACAT III BIG SAFARI

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $41.0 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: IGF::CT::IGF ACAT III BIG SAFARI Key points: 1. The contract's value of $40.8 million represents a significant investment in support services. 2. The sole-source nature of this award raises questions about potential price overruns and limited market engagement. 3. Performance risks are moderate, given the nature of support services, but lack of competition may obscure true cost drivers. 4. This contract falls within the broader 'All Other Support Services' category, making direct sector comparisons challenging. 5. The award to a large, established defense contractor suggests a focus on specialized capabilities rather than broad market access.

Value Assessment

Rating: fair

Benchmarking the value of this contract is difficult without more specific service details. However, the $40.8 million price tag for support services, especially when awarded sole-source, warrants scrutiny. Comparing it to similar sole-source contracts for specialized aerospace support could reveal if the pricing is within an acceptable range, but the lack of competitive bids prevents a robust value-for-money assessment. The cost-plus-fixed-fee structure means the government bears the risk of cost overruns, which is a concern in a non-competitive environment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, General Atomics Aeronautical Systems, Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they limit price discovery and can lead to higher costs for the government compared to a fully competed contract. The absence of competition means taxpayers do not benefit from the potential cost savings that arise from market forces.

Taxpayer Impact: The lack of competition means taxpayers may have paid a premium for these services. Without bids from other qualified vendors, it's harder to ensure the government received the best possible price.

Public Impact

The primary beneficiaries are likely the personnel and operations supported by General Atomics Aeronautical Systems, Inc., potentially within the Department of the Air Force. The services delivered are broadly categorized as 'All Other Support Services,' indicating a range of operational or logistical assistance. The geographic impact is centered in California, where the contractor is located, suggesting a concentration of activity in that state. Workforce implications may include the utilization of specialized technical and support staff employed by General Atomics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee structure shifts cost overrun risk to the government.
Lack of transparency in the procurement process due to sole-source nature.
Limited opportunity for small businesses to participate as prime contractors.
Potential for vendor lock-in if specialized knowledge is developed solely by the incumbent.

Positive Signals

Award to an established contractor like General Atomics suggests access to specialized expertise.
Contract duration (762 days) indicates a sustained need for the services.
The contract is for support services, which are crucial for maintaining operational readiness.
The fixed-fee component provides some cost predictability for the government.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and complex supply chains. Support services, like those procured here, are essential for maintaining the operational readiness of advanced military platforms. General Atomics Aeronautical Systems, Inc. is a major player in this space, particularly known for its unmanned aerial systems. This contract fits within the broader landscape of defense procurement, where specialized support is often contracted out to original equipment manufacturers or firms with unique technical capabilities. Comparable spending benchmarks are difficult to establish without more granular data on the specific services rendered.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to a large, established prime contractor like General Atomics Aeronautical Systems, Inc. suggests that opportunities for small businesses would primarily be through subcontracts, if any. The lack of a small business set-aside means that the direct economic benefit to the small business ecosystem from this prime contract is likely minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and cost-plus-fixed-fee structure, robust oversight is crucial to monitor costs, ensure performance, and prevent potential fraud or abuse. Inspector General jurisdiction would apply if any investigations into waste, fraud, or abuse arise. Transparency is limited due to the non-competitive award, making public scrutiny of the value proposition more challenging.

Related Government Programs

Defense Logistics Agency Support Contracts
Air Force Maintenance, Repair, and Overhaul Services
Aerospace Systems Support Contracts
Unmanned Aerial Vehicle (UAV) Support Services

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.0 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. IGF::CT::IGF ACAT III BIG SAFARI

Who is the contractor on this award?

The obligated recipient is GENERAL ATOMICS AERONAUTICAL SYSTEMS, 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 $41.0 million.

What is the period of performance?

Start: 2018-04-27. End: 2020-05-28.

What specific support services are being provided under this contract?

The provided data categorizes this contract under 'All Other Support Services' (NAICS 561990) and indicates it was awarded to General Atomics Aeronautical Systems, Inc. While the specific nature of the services is not detailed, this category can encompass a wide range of activities such as facilities support, logistics support, operational support, and maintenance services not elsewhere classified. Given the contractor's specialization in aerospace, it is highly probable that these services relate to the support, maintenance, or operation of aerospace systems, potentially including unmanned aerial systems (UAS) for which General Atomics is well-known. Further details would be required from the contract award documentation to ascertain the precise scope of work.

Why was this contract awarded on a sole-source basis?

The data indicates this contract was 'NOT COMPETED,' signifying a sole-source award. Justifications for sole-source procurements typically fall under specific exceptions to full and open competition, such as the availability of only one responsible source, urgent and compelling needs, or specific government-unique requirements. For General Atomics Aeronautical Systems, Inc., this could be due to possessing unique technical expertise, proprietary technology, or existing infrastructure directly related to a specific defense system that only they can support. Without the official justification documentation (e.g., a Justification and Approval document), the precise reason remains speculative, but it implies a determination that competitive procedures were not feasible or not in the government's best interest.

How does the Cost Plus Fixed Fee (CPFF) contract type impact risk and cost for the government?

A Cost Plus Fixed Fee (CPFF) contract type means the government agrees to pay the contractor's actual costs incurred, plus a predetermined fixed fee representing profit. This structure shifts the financial risk of cost overruns primarily to the government, as they are obligated to cover all allowable costs. While the fixed fee provides some predictability regarding the contractor's profit margin, it does not cap the total contract cost. In a sole-source scenario like this, the CPFF structure can be particularly concerning, as the government lacks the leverage of competitive pricing to ensure costs are minimized. Robust oversight is essential to scrutinize allowable costs and prevent inefficiencies.

What is the significance of the contract's duration and award amount in the context of support services?

The contract had a duration of 762 days (approximately 2 years and 1 month) and an award amount of $40,878,554.40. This duration suggests a sustained need for the support services being provided, rather than a short-term or ad-hoc requirement. The substantial award amount indicates that these services are critical and likely involve significant resources, specialized personnel, or complex logistical operations. For support services, especially in the defense sector, such contract values and durations often reflect ongoing operational requirements, maintenance schedules, or program support that are integral to mission readiness.

What is the track record of General Atomics Aeronautical Systems, Inc. with the Department of Defense?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a well-established and extensive track record with the Department of Defense, particularly the Air Force and Navy. They are a leading developer and manufacturer of unmanned aircraft systems (UAS), such as the Predator and Reaper drones, which have seen extensive use in military operations. GA-ASI frequently secures contracts for the production, sustainment, and support of these complex platforms. Their history includes numerous large-value contracts for aircraft, components, training, and associated support services, indicating a deep integration within the defense industrial base and a strong relationship with DoD agencies.

Are there any comparable contracts that could provide a benchmark for this award?

Directly comparable contracts are challenging to identify without knowing the precise nature of the 'All Other Support Services' provided. However, one could look at other sole-source or limited-competition contracts awarded to GA-ASI or similar large aerospace and defense contractors for sustainment, maintenance, or operational support of complex systems. For instance, contracts related to the lifecycle support of specific aircraft platforms (like UAS or manned aircraft) or specialized electronic systems could offer some insight. Benchmarking would ideally involve comparing the cost per flight hour, cost per system supported, or labor rates against similar, competitively awarded contracts, if available, to assess value for money.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 14200 KIRKHAM WAY, POWAY, CA, 92064

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

Financial Breakdown

Contract Ceiling: $45,244,752

Exercised Options: $45,244,752

Current Obligation: $40,978,554

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $70,535

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862016G3021

IDV Type: BOA

Timeline