DoD's $48M sole-source contract for GA-ASI capital assets raises questions on competition and value

Contract Overview

Contract Amount: $47,958,873 ($48.0M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-06-19

End Date: 2023-12-31

Contract Duration: 1,290 days

Daily Burn Rate: $37.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF GA-ASI CAPITAL ASSETS.

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $48.0 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: PROCUREMENT OF GA-ASI CAPITAL ASSETS. Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure and potentially impacting price. 2. A significant portion of the contract value was awarded to a single entity, General Atomics Aeronautical Systems, Inc. 3. The contract duration of 1290 days suggests a long-term commitment to these capital assets. 4. The firm-fixed-price contract type shifts cost risk to the contractor, but the lack of competition hinders price validation. 5. The absence of small business set-asides indicates a focus on large prime contractors for this acquisition. 6. The contract falls under the Aircraft Manufacturing NAICS code, highlighting its role in defense aviation production.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of 'capital assets' for aircraft manufacturing. Without competitive bids, it's difficult to assess if the $47.96 million price represents fair market value. Comparisons to similar sole-source procurements of specialized capital assets would be necessary for a more robust assessment, but such data is not readily available. The lack of competition inherently raises concerns about potential overpricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. This indicates that only one responsible source, General Atomics Aeronautical Systems, Inc., was determined to be capable of fulfilling the requirement. The lack of competition means there were no other bidders to drive down prices through a bidding process, and it limits the government's ability to explore alternative solutions or pricing structures.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government did not benefit from the price discovery mechanisms inherent in a competitive procurement process.

Public Impact

The primary beneficiaries are likely the defense aviation sector and the contractor, General Atomics Aeronautical Systems, Inc., through the sale of capital assets. The services delivered involve the provision of capital assets essential for aircraft manufacturing, supporting the Department of the Navy's operational capabilities. The geographic impact is primarily centered in California, where General Atomics Aeronautical Systems, Inc. is located, and potentially at Navy facilities where these assets will be utilized. Workforce implications could include sustained employment at the contractor's facilities and specialized roles within the Navy for operating and maintaining these assets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Lack of transparency in the justification for sole-source award.
Potential for contractor lock-in due to specialized nature of capital assets.
Difficulty in benchmarking value without competitive data.
Long contract duration may not reflect evolving technological needs.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Award to a known entity with presumed expertise in aircraft manufacturing.
Contract supports critical defense capital asset acquisition.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector (NAICS 336411), a critical component of the defense industrial base. The market for specialized aircraft manufacturing capital assets is often concentrated among a few key players due to high barriers to entry, including technological expertise, intellectual property, and significant capital investment. Spending in this sector is heavily influenced by defense budgets and strategic priorities. Comparable spending benchmarks are difficult to establish without detailed knowledge of the specific capital assets procured.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, as indicated by 'sb': false. The award was made directly to General Atomics Aeronautical Systems, Inc., a large business. There is no explicit information provided regarding subcontracting plans for small businesses. This suggests that the primary focus of this procurement was on the capabilities of the large prime contractor, potentially limiting opportunities for small businesses to participate directly in this specific contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Department of Defense. As a definitive contract, it is subject to standard contract administration and oversight processes. Transparency regarding the justification for the sole-source award and the specific capital assets procured is crucial for effective oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Procurement
Aircraft Manufacturing
Capital Asset Acquisition
Sole Source Contracts
Department of the Navy Contracts

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 Defense awarded $48.0 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. PROCUREMENT OF GA-ASI CAPITAL ASSETS.

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 Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $48.0 million.

What is the period of performance?

Start: 2020-06-19. End: 2023-12-31.

What specific capital assets were procured under this contract?

The provided data does not specify the exact nature of the 'capital assets' procured. However, given the contractor (General Atomics Aeronautical Systems, Inc.) and the NAICS code (Aircraft Manufacturing), it is highly probable that these assets are related to the production, modification, or support infrastructure for aircraft, potentially including specialized tooling, manufacturing equipment, or facilities upgrades. Without further details, it's impossible to ascertain the precise nature and strategic importance of these assets beyond their general classification as capital goods for aircraft production.

What was the justification for awarding this contract on a sole-source basis?

The data indicates the contract was awarded as 'NOT COMPETED' and classified as 'sole-source'. While the specific justification is not detailed in the provided snippet, common reasons for sole-source awards include unique capabilities of a single contractor, urgent and compelling needs where competition is not feasible, or when only one source is capable of meeting the requirement. For General Atomics Aeronautical Systems, Inc., this could relate to proprietary technology, existing platform integration, or specialized manufacturing processes essential for specific defense aircraft programs. A formal Justification for Other Than Full and Open Competition (JOFOC) would typically be required and documented by the agency.

How does the $47.96 million contract value compare to similar procurements for aircraft manufacturing capital assets?

Direct comparison of the $47.96 million contract value is difficult without knowing the specific capital assets procured. However, as a sole-source award, its value is inherently less transparent than a competed contract. General Atomics Aeronautical Systems, Inc. is a major defense contractor specializing in unmanned aerial systems (UAS) and related technologies. Procurements of capital assets for such advanced manufacturing can range widely in cost depending on complexity, quantity, and technological sophistication. Without access to detailed pricing data from competitive bids or other comparable sole-source acquisitions for similar specialized assets, it is challenging to definitively benchmark this value as high or low.

What is the track record of General Atomics Aeronautical Systems, Inc. in fulfilling large defense contracts?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a well-established track record as a prime contractor in the defense industry, particularly known for its development and production of unmanned aerial systems (UAS) like the Predator and Reaper. They have consistently secured large, complex contracts with the Department of Defense and other government agencies. Their performance history generally indicates a capability to deliver advanced aerospace systems and technologies. However, like any large contractor, specific contract performance can vary, and scrutiny of individual contract outcomes, especially sole-source awards, is warranted.

What are the potential risks associated with a sole-source procurement of this magnitude?

The primary risk associated with a sole-source procurement of this magnitude ($47.96 million) is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price. Other risks include a reduced incentive for the contractor to innovate or improve efficiency beyond what is contractually required, and potential contractor lock-in if the procured assets are highly specialized and difficult to replace or integrate with alternative systems. Furthermore, the lack of competition can limit transparency and make it harder to assess overall value for money.

How does this contract align with the Department of the Navy's broader strategic goals in aircraft manufacturing?

This contract likely aligns with the Department of the Navy's strategic goals by ensuring the availability of critical capital assets necessary for the manufacturing or sustainment of its aircraft fleet. GA-ASI is a key player in advanced aviation technologies, particularly in the unmanned systems domain, which is a growing area of focus for naval aviation. Acquiring these capital assets could support modernization efforts, enhance production capabilities for existing or new platforms, or bolster the domestic defense industrial base. The specific alignment depends on the exact nature of the assets and their intended use within the Navy's aviation programs.

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

Solicitation ID: N0001919R0062

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics

Address: 14200 KIRKHAM WAY, POWAY, CA, 92064

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: $47,958,873

Exercised Options: $47,958,873

Current Obligation: $47,958,873

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $250,427

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline