DoD's $7.87B FY19 Engineering Services Contract with Aerospace Corp Faces Scrutiny for Lack of Competition
Contract Overview
Contract Amount: $7,873,744,571 ($7.9B)
Contractor: THE Aerospace Corporation
Awarding Agency: Department of Defense
Start Date: 2018-10-01
End Date: 2026-09-30
Contract Duration: 2,921 days
Daily Burn Rate: $2.7M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: FY19 ENGINEERING SERVICES
Place of Performance
Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245
Plain-Language Summary
Department of Defense obligated $7.87 billion to THE AEROSPACE CORPORATION for work described as: FY19 ENGINEERING SERVICES Key points: 1. Significant spending on engineering services, primarily for R&D. 2. Sole-source award to The Aerospace Corporation raises competition concerns. 3. Long contract duration (2018-2026) with a substantial base value. 4. High potential for taxpayer impact due to limited price discovery.
Value Assessment
Rating: questionable
The contract's value of $7.87 billion over its period is substantial. Without competitive bidding, it's difficult to assess if this represents fair market value compared to similar engineering services contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The lack of competition for a contract of this magnitude means taxpayers may be overpaying for engineering services, as there was no market pressure to drive down costs.
Public Impact
Taxpayers may be paying a premium for engineering services due to the absence of competitive bidding. The long-term nature of the contract limits opportunities for other firms to compete for this work. Oversight is crucial to ensure the necessity and cost-effectiveness of services provided under this sole-source award.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- High contract value
- Long contract duration
- Limited price discovery
Positive Signals
- Essential engineering services for the Department of Defense
- Long-term planning and stability for critical R&D
Sector Analysis
This contract falls under Research and Development in the Physical, Engineering, and Life Sciences. Spending in this sector is critical for innovation but requires careful oversight, especially when awarded non-competitively.
Small Business Impact
The contract data indicates no specific set-aside for small businesses, and the sole-source nature further precludes small business participation in this specific award.
Oversight & Accountability
Given the sole-source nature and significant value, robust oversight is essential to ensure the contractor is delivering necessary services at a reasonable cost and that the contract remains justified.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award lacks competition
- High potential for inflated costs
- Limited transparency in pricing
- Long contract duration may stifle innovation
- Potential for contractor lock-in
Tags
research-and-development-in-the-physical, department-of-defense, ca, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $7.87 billion to THE AEROSPACE CORPORATION. FY19 ENGINEERING SERVICES
Who is the contractor on this award?
The obligated recipient is THE AEROSPACE CORPORATION.
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 $7.87 billion.
What is the period of performance?
Start: 2018-10-01. End: 2026-09-30.
What specific justifications were provided for awarding this substantial engineering services contract on a sole-source basis, and how were they validated?
The justification for a sole-source award typically involves demonstrating that only one responsible source can provide the required supplies or services. For a contract of this magnitude, the agency must provide detailed documentation proving the unique capabilities of The Aerospace Corporation and why no other entity could fulfill the requirement. This often includes technical expertise, specialized facilities, or prior performance history that makes competition impractical or not in the government's best interest.
How does the cost-plus-fixed-fee (CPFF) structure impact cost control and contractor incentive for efficiency in this sole-source R&D contract?
A Cost-Plus-Fixed-Fee (CPFF) contract reimburses the contractor for allowable costs plus a fixed fee representing profit. While the fixed fee provides some incentive for cost control, it can be less effective than other contract types in driving down costs, especially in R&D where scope can be uncertain. The government bears the risk of cost overruns beyond the allowable costs, and the contractor's primary incentive is to complete the work within the estimated cost to ensure their fixed fee is realized without incurring losses.
What mechanisms are in place to ensure the ongoing necessity and value for money of the engineering services provided throughout the contract's extended duration?
Given the contract's duration until 2026, mechanisms like regular performance reviews, milestone tracking, and independent cost analyses are crucial. The agency should continuously assess whether the services remain aligned with evolving defense needs and if the pricing remains competitive relative to market benchmarks. Periodic reviews of the sole-source justification and potential for competition in future phases or related procurements are also vital for accountability.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
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: 2310 EAST EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245
Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $19,196,091,440
Exercised Options: $9,345,439,505
Current Obligation: $7,873,744,571
Actual Outlays: $178,931,902
Subaward Activity
Number of Subawards: 538
Total Subaward Amount: $105,902,161
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-10-01
Current End Date: 2026-09-30
Potential End Date: 2028-09-30 00:00:00
Last Modified: 2026-01-14
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