DoD's $30.8M contract for RQ-21A SEPM aircraft manufacturing awarded to Insitu, Inc. without competition

Contract Overview

Contract Amount: $30,787,203 ($30.8M)

Contractor: Insitu, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-06-28

End Date: 2022-06-30

Contract Duration: 1,098 days

Daily Burn Rate: $28.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RQ-21A SEPM

Place of Performance

Location: BINGEN, KLICKITAT County, WASHINGTON, 98605

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $30.8 million to INSITU, INC. for work described as: RQ-21A SEPM Key points: 1. Value for money is difficult to assess due to lack of competition. 2. Competition dynamics indicate a sole-source award, potentially limiting price discovery. 3. Risk indicators include the absence of a competitive process and sole-source nature. 4. Performance context is for aircraft manufacturing, specifically the RQ-21A SEPM. 5. Sector positioning is within Defense, specifically aircraft manufacturing.

Value Assessment

Rating: questionable

Benchmarking the value for money is challenging given the sole-source nature of this contract. Without competitive bids, it's difficult to determine if the $30.8 million price reflects fair market value. Comparisons to similar aircraft manufacturing contracts would be necessary to provide a more concrete assessment, but the specific nature of the RQ-21A SEPM may limit direct parallels.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Insitu, Inc. was the only bidder considered. The absence of a competitive bidding process raises questions about whether alternative suppliers or more cost-effective solutions were explored. This approach can sometimes be justified for specialized equipment or existing systems, but it bypasses the typical price discovery mechanisms of open competition.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the lack of competitive pressure. A sole-source award means the government could not leverage multiple offers to drive down costs.

Public Impact

The primary beneficiary is the Department of the Navy, receiving aircraft manufacturing services. The services delivered include the production and potential support of RQ-21A SEPM aircraft. The geographic impact is primarily within Washington state, where the contractor is located. Workforce implications include employment at Insitu, Inc. and potentially its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce the incentive for contractors to offer competitive pricing.
Limited transparency into the justification for sole-source procurement.

Positive Signals

Contract awarded to a known entity, Insitu, Inc., potentially indicating established capabilities.
Firm Fixed Price contract type can provide cost certainty once negotiated.
Contract duration of nearly three years suggests a significant program requirement.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on unmanned aerial systems (UAS) or drones. The market for such specialized aircraft is often characterized by high barriers to entry due to technological complexity and stringent defense requirements. Comparable spending benchmarks would typically be found within other military aircraft procurement programs, though the specific niche of the RQ-21A SEPM might make direct comparisons difficult.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting requirements. As a sole-source award to a specific large business, the direct impact on the small business ecosystem is likely minimal, unless Insitu, Inc. utilizes small businesses within its own supply chain, which is not specified.

Oversight & Accountability

Oversight mechanisms for this contract would primarily fall under the Department of Defense's procurement regulations and the Inspector General's office. Accountability measures are tied to the delivery of the specified aircraft manufacturing services under the firm fixed price terms. Transparency is limited by the sole-source nature, as the justification for not competing the award is not publicly detailed.

Related Government Programs

Unmanned Aerial Systems Procurement
Naval Aviation Manufacturing
Defense Contractor Services
Aircraft Production Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for non-competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.8 million to INSITU, INC.. RQ-21A SEPM

Who is the contractor on this award?

The obligated recipient is INSITU, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $30.8 million.

What is the period of performance?

Start: 2019-06-28. End: 2022-06-30.

What is the specific role and capability of the RQ-21A SEPM aircraft?

The RQ-21A Small Extended Range Maritime Unmanned Aircraft System (SEPM) is a versatile unmanned aerial vehicle (UAV) designed for intelligence, surveillance, and reconnaissance (ISR) missions. It is capable of operating from various platforms, including ships and land-based sites, providing persistent surveillance over extended periods. Its modular payload system allows for customization to meet different mission requirements, such as electro-optical/infrared imaging, signals intelligence, or communications relay. The SEPM variant likely incorporates enhancements for extended range and endurance compared to earlier models, making it a valuable asset for naval operations and other military applications requiring aerial reconnaissance.

What is Insitu, Inc.'s track record with the Department of Defense and specifically with the RQ-21A program?

Insitu, Inc., a subsidiary of The Boeing Company, has a significant track record with the Department of Defense, particularly in the development and production of unmanned aerial systems. They are the primary manufacturer of the RQ-21A Blackjack, which the RQ-21A SEPM is a variant of. The company has received numerous contracts from various branches of the military, including the Navy and Marine Corps, for the RQ-21A system, encompassing procurement, sustainment, training, and operational support. Their long-standing relationship with the DoD and specific expertise in the RQ-21A platform likely contributed to the sole-source award, suggesting a history of successful performance and established program knowledge.

How does the $30.8 million contract value compare to historical spending on the RQ-21A program?

To accurately compare the $30.8 million contract value to historical spending on the RQ-21A program, a detailed analysis of past contracts awarded for the RQ-21A system would be required. This would involve aggregating data on previous awards for aircraft procurement, modifications, spare parts, training, and support services. Without access to a comprehensive historical spending database specifically for the RQ-21A, it is difficult to provide a precise comparison. However, given the duration of the contract (nearly three years) and the nature of aircraft manufacturing, $30.8 million represents a substantial investment. It is plausible that this figure is part of a larger, ongoing investment in the RQ-21A platform, reflecting its continued importance to naval ISR capabilities.

What are the potential risks associated with a sole-source award for aircraft manufacturing?

The primary risk associated with a sole-source award for aircraft manufacturing is the potential for inflated costs due to the absence of competitive bidding. Without competing offers, the government may not achieve the most favorable pricing, potentially leading to less value for taxpayer money. Another risk is reduced innovation, as the sole contractor may face less pressure to improve efficiency or develop new technologies. Furthermore, sole-source awards can raise concerns about transparency and fairness in the procurement process. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single supplier, potentially limiting future options or leverage.

What oversight mechanisms are in place for sole-source contracts like this one?

Sole-source contracts, like this one for the RQ-21A SEPM, are subject to specific oversight mechanisms within the Department of Defense. The justification for a sole-source award must be rigorously documented and approved, often requiring higher levels of authorization than competitive procurements. Agencies must demonstrate that competition is not feasible or not in the government's best interest. Oversight typically involves contract administration teams monitoring performance against contract requirements, ensuring deliverables are met, and verifying compliance with terms and conditions. The Defense Contract Management Agency (DCMA) often plays a role in overseeing contractor performance. Additionally, the Department of Defense Inspector General (DoDIG) can investigate allegations of fraud, waste, or abuse in any contract, including sole-source awards.

Industry Classification

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

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001918R0079

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company

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: $30,810,278

Exercised Options: $30,787,203

Current Obligation: $30,787,203

Actual Outlays: $4,829,662

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $4,215,828

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001919D0033

IDV Type: IDC

Timeline