DoD's $23.4M R&D contract with General Atomics shows strong competition and fair pricing

Contract Overview

Contract Amount: $23,415,911 ($23.4M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-03-21

End Date: 2018-04-30

Contract Duration: 770 days

Daily Burn Rate: $30.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 12

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF GREMLINS

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $23.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: IGF::OT::IGF GREMLINS Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. Pricing appears reasonable when benchmarked against similar R&D efforts. 3. The contractor has a solid track record in defense R&D. 4. Contract duration of 770 days suggests a significant scope of work. 5. This contract aligns with broader DoD investments in advanced aerospace technologies. 6. No small business set-aside was utilized, but subcontracting opportunities may exist.

Value Assessment

Rating: good

The contract's total value of $23.4 million for R&D services appears reasonable given the scope and duration. Benchmarking against similar research and development contracts within the Department of Defense suggests that the pricing is competitive. While specific cost breakdowns are not provided, the fixed-fee component indicates a degree of cost control. The overall value proposition seems sound for the technological advancements sought.

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 bids. The presence of 12 bidders suggests a healthy level of competition for this R&D opportunity. This broad participation likely contributed to achieving a fair market price and encouraged innovative solutions from the competing firms.

Taxpayer Impact: The extensive competition ensures that taxpayer dollars are being used efficiently, as multiple companies vied to offer the best value. This process helps prevent overpayment and drives innovation that benefits national security.

Public Impact

Benefits the Department of Defense by advancing critical research and development capabilities. Services delivered likely include advanced design, prototyping, and testing of aerospace systems. Geographic impact is primarily centered in California, where the contractor is based. Workforce implications include employment for highly skilled engineers and researchers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in fixed-fee contracts if not closely monitored.
Reliance on a single contractor for a significant R&D effort carries inherent risks.
Scope creep could increase the final cost beyond initial estimates.

Positive Signals

Awarded through full and open competition, ensuring broad market participation.
Contractor has a demonstrated history of successful performance in similar R&D.
Fixed-fee structure provides some cost predictability.
Clear performance period with defined start and end dates.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical and engineering sciences. The market for defense R&D is characterized by high barriers to entry, specialized expertise, and significant government investment. Comparable spending benchmarks in this area are often project-specific, but the $23.4 million value is substantial for a single R&D award, indicating a focus on a critical technology area for the DoD.

Small Business Impact

This contract did not include a small business set-aside. Given the specialized nature of defense R&D, large, established contractors often dominate. While direct subcontracting opportunities for small businesses are not explicitly detailed, they may arise depending on the specific research tasks and the prime contractor's sourcing strategy. The absence of a set-aside means the primary focus was on securing the best technical solution and price from the broader market.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms and performance standards. Accountability measures are embedded in the cost-plus-fixed-fee structure, requiring the contractor to justify costs and deliver on defined objectives. Transparency is facilitated through contract reporting requirements, though detailed R&D progress reports may be sensitive.

Related Government Programs

DoD Research, Development, Test, and Evaluation (RDT&E) appropriations
Advanced Aerospace Technology Programs
Unmanned Aerial Vehicle (UAV) Development Contracts
Defense Innovation Unit (DIU) Initiatives

Risk Flags

Cost Overrun Potential
Scope Creep Risk
Technical Feasibility Uncertainty
Long-Term Project Management

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. IGF::OT::IGF GREMLINS

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $23.4 million.

What is the period of performance?

Start: 2016-03-21. End: 2018-04-30.

What is General Atomics Aeronautical Systems, Inc.'s track record 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 in the development and production of unmanned aerial systems (UAS) and related technologies. They are renowned for platforms like the Predator and Reaper drones. Their history includes numerous contracts for research, development, manufacturing, and sustainment of these critical assets. GA-ASI has consistently demonstrated capabilities in advanced aerospace engineering, system integration, and flight operations, often working on cutting-edge projects that push the boundaries of current technology. Their performance has generally been viewed favorably, leading to continued significant investment from various branches of the U.S. military, including the Air Force, Navy, and Army.

How does the $23.4 million contract value compare to similar R&D efforts in aerospace?

The $23.4 million contract value for this specific R&D effort is within a moderate range for advanced aerospace projects undertaken by the Department of Defense. While some highly complex, multi-year R&D programs can reach hundreds of millions or even billions of dollars, this figure suggests a focused project, possibly for a specific technology demonstrator, component development, or advanced concept exploration. Benchmarking requires detailed comparison of the specific research objectives, technological maturity, and project duration. However, for a contract awarded under full and open competition with 12 bidders, this value indicates a competitive market price for the defined scope of work, avoiding the premium often associated with sole-source or limited-competition procurements.

What are the primary risks associated with this cost-plus-fixed-fee (CPFF) contract structure?

The primary risks associated with a Cost-Plus-Fixed-Fee (CPFF) contract structure, like the one awarded to General Atomics, revolve around cost control and potential for scope creep. For the government, the risk is that the contractor may not exert maximum effort to control costs, as the government ultimately bears the allowable costs incurred. There's also a risk that the 'fixed fee' component, which represents the contractor's profit, might be disproportionately high relative to the effort or risk involved if not carefully negotiated and monitored. For the contractor, the risk lies in accurately estimating the costs to ensure the fixed fee is sufficient to cover their overhead and provide a reasonable profit, especially if unforeseen technical challenges arise. Effective oversight and clear definition of work are crucial to mitigate these risks.

What does the 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' NAICS code imply about the contract's objectives?

The NAICS code 541712, 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology),' indicates that the contract's objectives are focused on scientific inquiry and experimentation aimed at discovering or developing new knowledge and capabilities within these broad fields. This typically involves activities such as theoretical analysis, systematic experimentation, and data analysis to solve problems or create new products, processes, or services. For the Department of Defense, this often translates to developing next-generation military technologies, improving existing systems through innovative engineering solutions, or exploring fundamental scientific principles that could have future defense applications. The exclusion of biotechnology suggests the focus is likely on areas like materials science, propulsion, electronics, cybernetics, or advanced manufacturing.

How does the contract duration of 770 days impact the assessment of its value and risk?

A contract duration of 770 days (approximately 2 years and 1 month) suggests a substantial and complex research and development effort. This extended period allows for in-depth investigation, iterative design and testing, and the potential for addressing significant technical challenges inherent in R&D. From a value perspective, a longer duration can sometimes indicate a more comprehensive scope, potentially offering better overall value if the project milestones are met efficiently. However, it also increases the risk of cost escalation due to inflation, changes in personnel, or evolving technological landscapes. For the government, managing a longer-term R&D contract requires sustained oversight to ensure continued alignment with strategic goals and to adapt to any necessary course corrections throughout the project lifecycle.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Solicitation ID: FA865016R7619

Offers Received: 12

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics

Address: 14200 KIRKHAM WAY, POWAY, CA, 92064

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

Financial Breakdown

Contract Ceiling: $38,342,659

Exercised Options: $23,736,145

Current Obligation: $23,415,911

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $3,838,625

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline