DHS awarded $41.4M for UAS support, raising questions about competition and value

Contract Overview

Contract Amount: $41,404,629 ($41.4M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2008-04-25

End Date: 2010-06-08

Contract Duration: 774 days

Daily Burn Rate: $53.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: UNMANNED AIRCRAFT SYSTEM OPERATIONAL AND MAINTENANCE SUPPORT SERVICES

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Homeland Security obligated $41.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: UNMANNED AIRCRAFT SYSTEM OPERATIONAL AND MAINTENANCE SUPPORT SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of contract (774 days) suggests a long-term need for these services. 3. Focus on operational and maintenance support indicates a critical role for these systems. 4. Lack of competition raises concerns about whether the government received the best possible value. 5. The contract's value, while substantial, needs benchmarking against similar services to assess fairness.

Value Assessment

Rating: questionable

The contract value of $41.4 million for Unmanned Aircraft System (UAS) operational and maintenance support services is substantial. However, without a competitive bidding process, it is difficult to definitively assess if this represents excellent value for money. Benchmarking against similar contracts for UAS support, particularly those awarded competitively, would be necessary to determine if the pricing is fair and reasonable. The sole-source nature of this award inherently limits the ability to compare pricing and ensure optimal resource utilization.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one vendor, General Atomics Aeronautical Systems, Inc., was solicited. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified vendors. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price competition and may result in higher costs for the government compared to fully competed contracts.

Taxpayer Impact: The lack of competition means taxpayers may not have benefited from the cost savings that typically arise from a competitive bidding environment. This could translate to a higher overall expenditure for the services provided.

Public Impact

U.S. Customs and Border Protection benefits from continued operational readiness of its Unmanned Aircraft Systems. Services provided ensure the effective deployment and maintenance of critical surveillance and border security assets. The contract supports advanced aerial surveillance capabilities essential for national security and border enforcement. Geographic impact is likely nationwide, wherever CBP deploys its UAS fleet. Workforce implications include support for specialized technical personnel required for UAS operations and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the sole-source justification process.
Potential for vendor lock-in due to specialized nature of UAS support.
Limited opportunities for other qualified vendors to compete for this significant contract.
Absence of performance benchmarks from a competitive process makes value assessment challenging.

Positive Signals

Ensures continuity of critical UAS operational and maintenance support for a key federal agency.
Award to a known entity (General Atomics) may imply a level of established expertise.
Supports advanced technology critical for national security and border protection missions.

Sector Analysis

The Unmanned Aircraft System (UAS) market is a rapidly growing segment within the aerospace and defense industry. This contract falls under the Aircraft Manufacturing (NAICS 336411) sector, specifically focusing on the support services for advanced aerial platforms. The total value of this contract, $41.4 million, represents a significant investment in maintaining and operating these sophisticated systems. Comparable spending in this sector often involves substantial sums due to the high cost of technology, research and development, and specialized maintenance required for military and homeland security applications.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the award was made to General Atomics Aeronautical Systems, Inc., a large defense contractor. This suggests that subcontracting opportunities for small businesses may be limited unless they are part of the prime contractor's supply chain. The lack of a specific small business set-aside means that the direct impact on the small business ecosystem for this particular contract is likely minimal, though the prime contractor may engage small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security's contracting and program management offices. Given the sole-source nature, scrutiny might be higher to ensure the justification for not competing is sound and that the pricing is fair. Transparency is limited due to the lack of a competitive process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Unmanned Aircraft Systems Procurement
Homeland Security Surveillance Contracts
Aerospace Maintenance Services
Border Patrol Technology
Defense Contractor Support Services

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $41.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. UNMANNED AIRCRAFT SYSTEM OPERATIONAL AND MAINTENANCE SUPPORT SERVICES

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 Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $41.4 million.

What is the period of performance?

Start: 2008-04-25. End: 2010-06-08.

What is the specific justification provided by the Department of Homeland Security for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available, or when there is a compelling urgency. For this contract, the justification would likely relate to the unique capabilities of General Atomics Aeronautical Systems, Inc. in manufacturing and supporting the specific Unmanned Aircraft Systems used by U.S. Customs and Border Protection, or potentially a critical need that precluded a competitive process. A full review of the contract file and associated documentation would be required to ascertain the precise rationale.

How does the $41.4 million contract value compare to similar UAS operational and maintenance support contracts awarded by other federal agencies?

Benchmarking this $41.4 million contract against similar Unmanned Aircraft System (UAS) operational and maintenance support contracts requires access to a broader dataset of federal procurements. However, given the duration of 774 days (approximately 2 years) and the nature of UAS support, this value appears substantial but not necessarily outside the expected range for complex defense and security systems. Contracts for similar services, especially for advanced platforms like those operated by CBP, can easily run into tens of millions of dollars. The key differentiator here is the sole-source award, which makes direct value comparison difficult. Competitively awarded contracts for comparable services would provide a clearer benchmark for assessing cost-effectiveness.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with awarding a contract of this magnitude on a sole-source basis include: 1. **Higher Costs:** Without competition, the contractor may not be incentivized to offer the lowest possible price, potentially leading to inflated costs for the government. 2. **Reduced Innovation:** A lack of competition can stifle innovation as there is less pressure on the incumbent to improve services or offer new solutions. 3. **Limited Vendor Pool:** It restricts the government's access to potentially better or more cost-effective solutions from other qualified vendors. 4. **Potential for Complacency:** The sole-source provider might become complacent in service delivery or responsiveness, knowing that alternatives are not being actively considered. 5. **Oversight Burden:** Justifying and overseeing sole-source awards requires significant internal effort to ensure fairness and prevent potential abuses.

What is the track record of General Atomics Aeronautical Systems, Inc. in providing UAS support services to the federal government?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a well-established and extensive track record in developing, manufacturing, and supporting Unmanned Aircraft Systems (UAS) for the U.S. military and homeland security agencies. They are a primary provider of large, long-endurance UAS, such as the Predator and Reaper series, which are widely used for intelligence, surveillance, and reconnaissance (ISR) missions. Their experience includes providing not only the aircraft but also the associated ground control stations, data links, and crucial operational and maintenance support services. GA-ASI has been a key partner for agencies like the Air Force, Army, and Department of Homeland Security for many years, indicating a deep understanding of their operational requirements and a proven capability to deliver complex UAS solutions.

How does the duration of this contract (774 days) impact the assessment of its value and potential risks?

The contract duration of 774 days (approximately 2 years and 1.5 months) suggests a significant and ongoing need for the Unmanned Aircraft System (UAS) operational and maintenance support services by U.S. Customs and Border Protection. A longer duration can be beneficial for ensuring continuity of operations and allowing the contractor to build specialized expertise. However, it also increases the financial commitment and the potential impact of any risks. For a sole-source contract, a longer duration amplifies concerns about price fairness over time, as there are fewer opportunities to re-evaluate market rates or introduce competition. It also means the government is potentially locked into a specific vendor and support structure for an extended period, which could hinder flexibility if needs or technologies change.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HSBP1008R1590

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics (UEI: 859181984)

Address: 16761 VIA DEL CAMPO CT, SAN DIEGO, CA, 92127

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $41,933,200

Exercised Options: $41,404,629

Current Obligation: $41,404,629

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline