DoD's $119M contract for aircraft manufacturing services awarded to Insitu, Inc. lacked competition

Contract Overview

Contract Amount: $119,371,026 ($119.4M)

Contractor: Insitu, Inc.

Awarding Agency: Department of Defense

Start Date: 2014-12-18

End Date: 2017-08-31

Contract Duration: 987 days

Daily Burn Rate: $120.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SYSTEM ENGINEERING&PROGRAM MANAGEMENT

Place of Performance

Location: BINGEN, KLICKITAT County, WASHINGTON, 98605

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $119.4 million to INSITU, INC. for work described as: SYSTEM ENGINEERING&PROGRAM MANAGEMENT Key points: 1. The contract's value of $119 million represents a significant investment in aircraft manufacturing. 2. Awarded to a single vendor, the lack of competition raises questions about potential overpayment and limited innovation. 3. The contract duration of 987 days suggests a substantial, long-term need for these services. 4. The firm-fixed-price structure aims to control costs, but without competition, its effectiveness is diminished. 5. The absence of small business set-asides or subcontracting plans may limit broader economic participation. 6. The contract falls under the broad category of aircraft manufacturing, a critical defense sector.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. Without comparison to other offers, it's difficult to ascertain if the $119 million price reflects fair market value. The firm-fixed-price type suggests an attempt to cap costs, but the absence of competition means the government couldn't leverage multiple bids to secure the most economical option. This procurement method inherently carries a higher risk of paying more than necessary.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Insitu, Inc., was considered. This approach bypasses the standard competitive bidding process, which typically involves soliciting proposals from multiple interested parties. The lack of competition means that the government did not explore alternative solutions or pricing from other qualified manufacturers, potentially missing out on cost savings or innovative approaches.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. Without multiple bids, there's less assurance that the price negotiated represents the best value achievable in the market.

Public Impact

The primary beneficiary of this contract is the Department of Defense, which receives critical aircraft manufacturing services. The services delivered likely support military operations, surveillance, or reconnaissance capabilities. The geographic impact is likely concentrated around the contractor's facilities and the operational areas where the aircraft are deployed. This contract supports specialized jobs within the aerospace and defense manufacturing sector, contributing to the skilled workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer dollars.
Sole-source awards can stifle innovation by not encouraging diverse solutions from the market.
Limited transparency in the pricing negotiation process due to the absence of competing bids.
Potential for vendor lock-in, making future procurements more difficult and costly.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government, assuming the initial price was reasonable.
Award to a single, potentially specialized vendor could indicate a unique capability meeting a specific need.
The contract duration suggests a sustained requirement, implying a recognized and ongoing importance of the services.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a significant segment of the U.S. economy. The market for specialized aircraft, particularly for defense applications, is often characterized by high barriers to entry due to technological complexity and stringent regulatory requirements. Spending in this sector is heavily influenced by government defense budgets and geopolitical factors. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar unmanned aerial systems or specialized aircraft.

Small Business Impact

The data indicates that this contract was not awarded as a small business set-aside, nor does it appear to have specific provisions for small business subcontracting. This suggests that the primary contractor, Insitu, Inc., is likely a larger entity, and the contract's benefits may not directly flow down to the small business ecosystem. Without explicit subcontracting requirements, opportunities for small businesses to participate in this significant defense procurement are likely limited.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, particularly the firm-fixed-price structure, which obligates the contractor to deliver specified goods or services at an agreed-upon price. Transparency is limited due to the sole-source nature of the award, making it difficult for the public to scrutinize the pricing and selection process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Unmanned Aerial Systems (UAS) Procurement
Defense Aircraft Manufacturing
Aerospace and Defense Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award lacks competition
Potential for inflated pricing
Limited transparency in procurement process
No small business subcontracting requirements identified

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $119.4 million to INSITU, INC.. SYSTEM ENGINEERING&PROGRAM MANAGEMENT

Who is the contractor on this award?

The obligated recipient is INSITU, 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 $119.4 million.

What is the period of performance?

Start: 2014-12-18. End: 2017-08-31.

What is the track record of Insitu, Inc. in fulfilling government contracts, particularly within the Department of Defense?

Insitu, Inc. has a history of securing contracts with the Department of Defense, primarily focused on unmanned aerial systems (UAS) and related services. Their expertise lies in providing intelligence, surveillance, and reconnaissance (ISR) capabilities through their aircraft platforms. While specific performance metrics for past contracts are not detailed here, their repeated awards suggest a level of satisfaction from the DoD regarding their technical capabilities and product offerings. However, a comprehensive assessment would require examining past performance reviews, any contract disputes, and the overall success rate in meeting delivery schedules and technical specifications across their contract portfolio.

How does the $119 million contract value compare to similar aircraft manufacturing contracts awarded by the DoD, especially those competed?

Comparing this $119 million sole-source contract to similar aircraft manufacturing contracts is challenging without knowing the exact specifications and capabilities of the aircraft procured. However, in a competitive environment, contracts of this magnitude for specialized aircraft can vary widely. Competitively awarded contracts often result in lower prices due to market forces. If this $119 million represents a platform with advanced ISR capabilities, it might be within a reasonable range for a sole-source award if Insitu possesses unique, indispensable technology. Conversely, if similar, less specialized aircraft were procured competitively for significantly less, this contract's value would appear questionable.

What are the primary risks associated with a sole-source award of this magnitude for aircraft manufacturing?

The primary risks associated with a sole-source award of this magnitude include potential overpricing, as the government lacks the leverage of competitive bidding to secure the best possible price. There's also a risk of reduced innovation, as the contractor may have less incentive to develop more cost-effective or technologically advanced solutions when competition is absent. Furthermore, sole-source awards can lead to vendor lock-in, making it difficult and potentially more expensive to switch providers or procure similar systems in the future. Finally, the lack of transparency in the negotiation process can raise concerns about fairness and value for taxpayer money.

What is the strategic importance of the aircraft manufacturing services provided under this contract to the Department of Defense?

The strategic importance of the aircraft manufacturing services provided under this contract likely relates to the Department of Defense's need for advanced intelligence, surveillance, and reconnaissance (ISR) capabilities. Insitu, Inc. specializes in unmanned aerial systems (UAS), which are crucial for gathering real-time information in various operational environments, from tactical battlefield awareness to broader strategic monitoring. These platforms can reduce risk to personnel by performing dangerous missions and provide persistent surveillance. The sustained award duration suggests these capabilities are considered essential for ongoing military operations and national security objectives.

How has historical spending on aircraft manufacturing by the Department of Defense trended, and does this contract align with those trends?

Historical spending by the Department of Defense on aircraft manufacturing has been substantial, driven by the need for advanced platforms for various military roles, including combat, transport, and surveillance. Spending trends are influenced by technological advancements, evolving threats, and budget allocations. Contracts for specialized aircraft, particularly unmanned systems like those produced by Insitu, have seen significant growth in recent years as their utility has become increasingly recognized. This $119 million contract, while a single data point, aligns with the broader trend of increased investment in advanced aviation technologies and ISR capabilities within the DoD's overall procurement strategy.

What specific aircraft or system is being manufactured or provided under this contract, and what are its key capabilities?

While the specific aircraft model is not detailed in the provided data, Insitu, Inc. is known for manufacturing and supporting unmanned aerial systems (UAS), such as the ScanEagle and Integrator. These systems are typically employed for intelligence, surveillance, and reconnaissance (ISR) missions. Key capabilities often include long endurance flight (several hours), day/night imaging, and the ability to operate in challenging environments. They provide persistent aerial observation, supporting ground forces, maritime patrol, and other critical defense operations. The $119 million contract likely covers the production of multiple air vehicles, ground control stations, training, and logistical support.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 118 E COLUMBIA RIVER WAY, BINGEN, WA, 98605

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: $119,371,026

Exercised Options: $119,371,026

Current Obligation: $119,371,026

Subaward Activity

Number of Subawards: 56

Total Subaward Amount: $27,371,483

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline