DoD awards $18M contract for aircraft kits, with limited competition and potential cost risks

Contract Overview

Contract Amount: $17,974,873 ($18.0M)

Contractor: Rockwell Collins, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-08-14

End Date: 2021-04-30

Contract Duration: 1,355 days

Daily Burn Rate: $13.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THIS DELIVERY ORDER IS TO ESTABLISH THE NRE FOR THE KGR-72 AND TO PURCHASE 3 KITS AND INSTALL THEM.

Place of Performance

Location: CEDAR RAPIDS, LINN County, IOWA, 52498

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $18.0 million to ROCKWELL COLLINS, INC. for work described as: THE PURPOSE OF THIS DELIVERY ORDER IS TO ESTABLISH THE NRE FOR THE KGR-72 AND TO PURCHASE 3 KITS AND INSTALL THEM. Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending. 2. Limited competition raises concerns about optimal pricing and value for taxpayer dollars. 3. The extended duration of over three years suggests a complex or lengthy project. 4. The contract is for aircraft manufacturing, a critical but often high-cost sector. 5. The award was a delivery order under an existing contract, indicating potential pre-existing relationships. 6. The lack of small business set-aside suggests limited opportunities for smaller firms in this specific award.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or uncertain scope projects, carries inherent risks of cost overruns. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The total award amount of $17.97 million for three kits and installation suggests a high per-unit cost, which warrants further scrutiny, especially given the lack of competitive pressure to drive down prices.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition award. The specific reason for not competing is not detailed, but such awards can limit price discovery and potentially lead to higher costs for the government. The absence of multiple bidders means the government did not benefit from the potential for lower prices or innovative solutions that a competitive process might have yielded.

Taxpayer Impact: The lack of competition means taxpayers may not have received the best possible price for these aircraft kits and installation services. This could translate to a less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units requiring the KGR-72 aircraft system. The contract delivers three specialized kits and their installation, crucial for enhancing or maintaining aircraft capabilities. The geographic impact is likely concentrated within military operational areas or specific maintenance facilities. Workforce implications include specialized technicians for installation and potentially ongoing maintenance personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may lead to cost overruns.
Lack of competition limits price discovery and potential savings.
High per-unit cost for kits and installation requires justification.
Extended contract duration could indicate project complexity or delays.
No small business participation noted, potentially excluding smaller innovative firms.

Positive Signals

Awarded under an existing contract, suggesting a streamlined process for a known entity.
The contract addresses a specific need for aircraft manufacturing capabilities.
The contractor, Rockwell Collins, Inc., is a known entity in the aerospace industry.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a segment of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality and safety standards. Spending in this area is often driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish without more specific details on the KGR-72 system, but large-scale aircraft manufacturing and modification contracts can range from millions to billions of dollars.

Small Business Impact

The data indicates that this contract was not subject to small business set-aside provisions (ss: false, sb: false). This means that opportunities for small businesses to directly participate as prime contractors were not prioritized for this specific award. While Rockwell Collins, Inc. may engage small businesses as subcontractors, the primary award structure does not explicitly promote small business involvement, potentially limiting their direct access to this portion of federal spending.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee structure necessitates close monitoring of costs and progress to mitigate risks of overspending. Transparency regarding the specific justification for the sole-source award and detailed cost breakdowns would be crucial for public accountability, though such details are not provided in the summary data.

Related Government Programs

Aircraft Procurement
Aviation Systems
Defense Logistics
Military Aircraft Maintenance
Aerospace Manufacturing

Risk Flags

Sole-source award may indicate lack of competition.
Cost-plus-fixed-fee contract type carries risk of cost overruns.
High per-unit cost requires justification.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.0 million to ROCKWELL COLLINS, INC.. THE PURPOSE OF THIS DELIVERY ORDER IS TO ESTABLISH THE NRE FOR THE KGR-72 AND TO PURCHASE 3 KITS AND INSTALL THEM.

Who is the contractor on this award?

The obligated recipient is ROCKWELL COLLINS, 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 $18.0 million.

What is the period of performance?

Start: 2017-08-14. End: 2021-04-30.

What is the specific nature of the KGR-72 system and why was it chosen?

The KGR-72 is identified as an aircraft system, likely a component or modification related to military aircraft. Without further details, its exact function, capabilities, and the specific military platform it integrates with remain unclear. The choice of this system would typically be driven by operational requirements, technological advancements, or obsolescence of existing equipment. A deeper dive into defense acquisition documents or program justifications would be needed to ascertain the specific reasons for its selection and its role within the DoD's aviation strategy.

What are the risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this acquisition?

The CPFF contract type, while offering flexibility for projects with uncertain scopes or technical challenges, presents significant risks for the government. The contractor is reimbursed for all allowable costs plus a fixed fee representing profit. This structure can incentivize the contractor to incur higher costs, as their profit margin remains constant regardless of the total expenditure. For taxpayers, this means a potential for cost overruns and a less predictable final price compared to fixed-price contracts. Robust oversight and detailed cost tracking by the government are essential to mitigate these risks and ensure value for money.

Why was this contract awarded on a sole-source basis instead of being competed?

The provided data indicates the contract was 'NOT COMPETED,' suggesting a sole-source award. Common justifications for sole-source contracts include the urgency of need, the unavailability of other sources, or the existence of a unique capability held by a single contractor. In the defense sector, this can sometimes relate to proprietary technology or systems where only one company can provide the necessary parts or services. Without specific documentation from the agency, the precise rationale remains speculative, but it implies that a competitive process was deemed impractical or not in the government's best interest at the time of award.

How does the $17.97 million award for three kits and installation compare to similar aircraft system procurements?

Benchmarking this $17.97 million award for three kits and installation is challenging without knowing the specific type and complexity of the KGR-72 system. However, if this represents the cost for three units of a major aircraft component or modification, it suggests a substantial per-unit cost, potentially exceeding $5 million per kit plus installation. Comparing this to publicly available data on similar defense procurements for aircraft modifications or specialized systems would be necessary. Given the sole-source nature and CPFF structure, it is plausible that the cost is higher than it might be under a competitive, fixed-price scenario.

What is Rockwell Collins, Inc.'s track record with similar sole-source, CPFF contracts within the DoD?

Rockwell Collins, Inc. (now part of Collins Aerospace, a Raytheon Technologies company) has a long history of contracting with the Department of Defense, often involving complex avionics, communication, and integrated systems. While specific data on their sole-source, CPFF contracts for aircraft kits isn't detailed here, their extensive experience suggests familiarity with such arrangements. Analyzing past performance reviews, contract awards databases (like FPDS), and Inspector General reports related to Rockwell Collins could provide insights into their historical success rates, cost control performance, and adherence to contract terms in similar situations.

What are the potential long-term implications of this contract for the DoD's aircraft sustainment and modernization efforts?

This contract for KGR-72 kits and installation contributes to the DoD's ongoing efforts to maintain and potentially upgrade its aircraft fleet. The successful delivery and integration of these kits could enhance operational capabilities, improve system reliability, or extend the service life of specific aircraft. However, the sole-source and CPFF nature raises questions about the long-term cost-effectiveness and strategic sourcing of such components. If similar systems are required in the future, the DoD might consider strategies to foster competition or explore alternative pricing models to ensure better value and reduce reliance on single-source providers.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001917B0150

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 400 COLLINS RD NE, CEDAR RAPIDS, IA, 52498

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: $17,974,873

Exercised Options: $17,974,873

Current Obligation: $17,974,873

Actual Outlays: $3,148,616

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $146,859

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001914G0021

IDV Type: BOA

Timeline