EADS awarded $16M contract for Spanish Navy AV-8B upgrade, impacting aircraft parts manufacturing

Contract Overview

Contract Amount: $15,999,264 ($16.0M)

Contractor: Eads Construcciones Aeronauticas SA

Awarding Agency: Department of Defense

Start Date: 2008-04-30

End Date: 2012-11-30

Contract Duration: 1,675 days

Daily Burn Rate: $9.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SPANISH NAVY UPGRADE OF AV-8B (4 AIRCRAFT)

Plain-Language Summary

Department of Defense obligated $16.0 million to EADS CONSTRUCCIONES AERONAUTICAS SA for work described as: SPANISH NAVY UPGRADE OF AV-8B (4 AIRCRAFT) Key points: 1. Contract value of $16 million for aircraft parts suggests a significant investment in specialized aerospace components. 2. The award to EADS Construcciones Aeronauticas SA indicates a focus on established aerospace manufacturers for complex upgrades. 3. The contract's duration of over 1600 days points to a lengthy and involved upgrade process. 4. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code highlights the specialized nature of the services provided. 5. The firm fixed-price contract type aims to provide cost certainty for the Department of Defense. 6. The absence of small business set-asides suggests the scope of work requires specialized capabilities not typically met by smaller firms.

Value Assessment

Rating: fair

The contract value of $15,999,264 for the upgrade of four AV-8B aircraft for the Spanish Navy is difficult to benchmark without more specific details on the scope of work. However, given the specialized nature of military aircraft upgrades and the involvement of a major manufacturer like EADS, the price appears within a plausible range for such complex projects. Further analysis would require comparing the cost per aircraft or per upgrade component against similar international military procurement contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This typically occurs when only one contractor possesses the necessary specialized knowledge, technology, or proprietary rights to fulfill the requirement. The lack of competition means that price discovery through market forces was not utilized, potentially leading to a higher cost than if multiple bids were solicited.

Taxpayer Impact: For taxpayers, sole-source contracts can mean a lack of competitive pressure to drive down prices, potentially resulting in less value for money compared to competitively awarded contracts.

Public Impact

The Spanish Navy benefits from upgraded AV-8B aircraft, enhancing its operational capabilities. The contract supports the maintenance and modernization of a key military asset. The contract's geographic impact is primarily on the Spanish Navy's fleet, with potential indirect benefits to international defense cooperation. The workforce implications are likely concentrated within EADS Construcciones Aeronauticas SA and its supply chain, supporting specialized aerospace manufacturing jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for the government.
Lack of transparency in the procurement process due to sole-source nature.
Potential for cost overruns if not managed tightly, despite firm fixed-price.
Dependence on a single contractor for critical upgrade components.

Positive Signals

Award to a known and established aerospace manufacturer (EADS) suggests technical capability.
Firm fixed-price contract provides cost certainty for the duration of the award.
Upgrade of military assets contributes to national defense and security.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for military aircraft upgrades is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long development cycles. Spending in this area is driven by defense budgets and the need to maintain the operational readiness and technological relevance of aging fleets. Comparable spending benchmarks would involve analyzing other international military aircraft modernization programs.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the specialized nature of the AV-8B upgrade and the capabilities required were beyond the scope typically undertaken by small businesses in the aerospace sector. The focus is likely on large, established defense contractors with the necessary expertise and infrastructure.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. As a sole-source award, scrutiny on the justification for the procurement method and the reasonableness of the price would be critical. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract execution.

Related Government Programs

AV-8B Harrier Program
Foreign Military Sales (FMS)
Aerospace Component Manufacturing
Defense Procurement

Risk Flags

Sole-source procurement
Lack of competition
Potential for higher costs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.0 million to EADS CONSTRUCCIONES AERONAUTICAS SA. SPANISH NAVY UPGRADE OF AV-8B (4 AIRCRAFT)

Who is the contractor on this award?

The obligated recipient is EADS CONSTRUCCIONES AERONAUTICAS SA.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $16.0 million.

What is the period of performance?

Start: 2008-04-30. End: 2012-11-30.

What specific upgrade components were included in this contract for the Spanish Navy's AV-8B aircraft?

The provided data does not specify the exact upgrade components. However, contracts for military aircraft upgrades typically involve enhancements to avionics, weapons systems, structural integrity, engine performance, or electronic warfare capabilities. Given the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, the focus was likely on the supply of specialized parts and equipment necessary for these upgrades rather than the integration or installation services themselves. Further details would be found in the contract's statement of work.

How does the $16 million contract value compare to other AV-8B upgrade programs?

Direct comparison is challenging without knowing the specific scope of work and the number of aircraft involved in other AV-8B upgrade programs. However, $16 million for upgrading four aircraft suggests an average cost of $4 million per aircraft. This figure needs to be contextualized by the complexity of the upgrades. For instance, a basic avionics refresh would be less costly than a comprehensive overhaul including structural and engine improvements. International military procurement costs can vary significantly based on national requirements and market conditions.

What are the risks associated with a sole-source award for military aircraft upgrades?

The primary risk of a sole-source award is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may pay more than necessary. Other risks include a reduced incentive for the contractor to innovate or maintain high-quality standards, and a potential lack of transparency in the procurement process. There's also a risk of vendor lock-in, making it difficult to switch providers in the future. Robust oversight and negotiation are crucial to mitigate these risks.

What is the significance of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code in this context?

This NAICS code (336413) signifies that the contract's primary purpose was the manufacturing of parts and auxiliary equipment for aircraft, rather than the assembly of complete aircraft or the provision of repair and maintenance services. For this Spanish Navy AV-8B upgrade, it implies that EADS Construcciones Aeronauticas SA was contracted to produce or supply specific components or systems needed to enhance the aircraft's capabilities. This specialization is common in complex defense procurements where different companies may contribute specialized parts or systems.

What is the historical spending pattern for AV-8B upgrades or similar aircraft parts by the Department of Defense?

Historical spending data for AV-8B upgrades or similar aircraft parts by the Department of Defense would reveal trends in investment in this specific platform and its components. Analyzing past contracts can indicate whether spending has been consistent, increasing, or decreasing, and whether upgrades are typically sole-source or competitively bid. Such analysis helps in understanding the long-term commitment to the platform and the typical cost structures involved in maintaining and modernizing such assets. Without access to a comprehensive historical database, a precise pattern cannot be determined from this single data point.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001906R0029

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Airbus U.S. Space & Defense, Inc. (UEI: 403284867)

Address: AVENIDA ARAGON 404, MADRID

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

Financial Breakdown

Contract Ceiling: $17,489,840

Exercised Options: $17,489,840

Current Obligation: $15,999,264

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: YES

Timeline