DoD's $21.4M Transformer Rectifier Contract Awarded to General Atomics Amidst Limited Competition

Contract Overview

Contract Amount: $21,447,030 ($21.4M)

Contractor: General Atomics

Awarding Agency: Department of Defense

Start Date: 2020-09-18

End Date: 2028-03-01

Contract Duration: 2,721 days

Daily Burn Rate: $7.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TRANSFORMER RECTIFIER

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92121

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $21.4 million to GENERAL ATOMICS for work described as: TRANSFORMER RECTIFIER Key points: 1. The contract's value of $21.4 million for transformer rectifiers suggests a significant investment in specialized aircraft components. 2. Awarded to General Atomics, a major defense contractor, this contract highlights the concentration of specialized manufacturing within a few key industry players. 3. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code indicates a focus on niche components critical for aviation systems. 4. The contract duration of 2721 days (approximately 7.4 years) points to a long-term need for these specialized parts. 5. The Cost Plus Fixed Fee (CPFF) contract type suggests that costs are reimbursed, with a fixed fee for the contractor's profit, which can introduce cost-overrun risks. 6. The absence of small business set-aside flags indicates this contract was not specifically targeted towards smaller enterprises. 7. The contract's origin in California aligns with the state's significant aerospace and defense manufacturing presence.

Value Assessment

Rating: fair

Benchmarking the value of this $21.4 million contract for transformer rectifiers is challenging without specific performance metrics or detailed cost breakdowns. The CPFF contract type can sometimes lead to higher costs compared to fixed-price contracts if not managed closely. However, given the specialized nature of aircraft components, the price may be reflective of unique manufacturing requirements and research and development investments. Further analysis would require comparing the unit cost of these transformer rectifiers to similar components procured by other defense agencies or commercial aviation manufacturers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple potential suppliers. This approach is typically used when only one source is capable of meeting the requirement, often due to proprietary technology, unique expertise, or urgent needs. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from a wider range of contractors.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is less pressure on the contractor to offer competitive pricing. It also limits opportunities for other businesses to secure government contracts.

Public Impact

The primary beneficiaries of this contract are the Department of the Navy and potentially other Department of Defense branches requiring advanced aircraft components. The contract will deliver essential transformer rectifier units, which are critical for the power systems of various aircraft. The geographic impact is concentrated in California, where General Atomics is based, potentially supporting local jobs and the state's defense industrial base. The contract supports specialized manufacturing roles within General Atomics, contributing to the skilled workforce in the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The sole-source nature of the award limits price discovery and potentially increases costs for taxpayers.
The CPFF contract type carries inherent risks of cost overruns if not rigorously managed and monitored.
Lack of competition may stifle innovation and prevent smaller, specialized firms from entering the supply chain.
The long contract duration could lead to price increases over time due to inflation or changes in material costs, especially without competitive re-evaluation.

Positive Signals

General Atomics is a well-established defense contractor with a proven track record in complex systems, suggesting reliability in delivery.
The contract addresses a specific, critical need for specialized aircraft components, ensuring operational readiness for defense assets.
The long-term nature of the contract provides stability for both the government's supply chain and the contractor's operations.
The award is for a specific part (transformer rectifier) indicating a focused and potentially efficient procurement for a known requirement.

Sector Analysis

The aerospace and defense manufacturing sector is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. This contract for transformer rectifiers falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, a niche but vital segment of the industry. The total addressable market for such specialized components can be substantial, driven by global defense spending and the continuous need for aircraft upgrades and maintenance. General Atomics operates within this complex ecosystem, often securing large, long-term contracts for critical systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'sb' flag being false. Consequently, there are no direct subcontracting implications for small businesses mandated by this specific award. The sole-source nature further limits opportunities for small businesses to participate in the primary contract. However, General Atomics, as a large prime contractor, may engage small businesses for lower-tier subcontracting opportunities not explicitly detailed in this award notice.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and allocable. The Defense Contract Audit Agency (DCAA) and the Department of Defense Inspector General (IG) would likely have jurisdiction for audits and investigations related to potential fraud, waste, or abuse. Transparency is enhanced through contract reporting mechanisms, but the sole-source nature limits public visibility into the negotiation process.

Related Government Programs

Aircraft Parts Manufacturing
Defense Electronics
Power Systems Components
Naval Aviation Support
Specialized Manufacturing Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited competition
Geographic concentration of supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.4 million to GENERAL ATOMICS. TRANSFORMER RECTIFIER

Who is the contractor on this award?

The obligated recipient is GENERAL ATOMICS.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $21.4 million.

What is the period of performance?

Start: 2020-09-18. End: 2028-03-01.

What is the historical spending pattern for transformer rectifiers by the Department of Defense?

Analyzing historical spending on transformer rectifiers by the Department of Defense requires access to comprehensive procurement databases. However, general trends indicate consistent investment in aircraft components due to the aging of existing fleets and the development of new platforms. Spending in this category is often influenced by major defense programs and modernization efforts. The Department of the Navy, as the awarding agency, likely procures these components for a range of naval aircraft, including fighter jets, helicopters, and maritime patrol aircraft. Without specific historical data for this exact component type, it's difficult to establish a precise trend, but the overall defense budget allocation towards aviation systems suggests sustained demand for such parts.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of cost efficiency for specialized components?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex projects where the scope of work is not fully defined at the outset, or where innovation is a key objective. It reimburses the contractor for allowable costs plus a fixed fee representing profit. While it allows for flexibility and encourages contractor engagement in uncertain environments, it can be less cost-efficient than fixed-price contracts. Fixed-price contracts offer greater cost certainty for the government but may deter contractors from undertaking high-risk or innovative projects. For specialized components like transformer rectifiers, if the design and manufacturing process are well-understood, a fixed-price contract might yield better value. However, if significant R&D or unique engineering is involved, CPFF can be justified, provided robust oversight is in place to control costs.

What are the potential risks associated with a sole-source award for critical defense components?

Sole-source awards for critical defense components carry several risks. Primarily, the lack of competition can lead to inflated prices, as the contractor faces no market pressure to offer competitive rates. This can result in higher costs for taxpayers. Secondly, it can stifle innovation, as potential competitors are excluded from the market, and the incumbent contractor may have less incentive to invest in new technologies or process improvements. Thirdly, it creates a dependency on a single supplier, which can be a vulnerability if that supplier experiences production issues, financial instability, or geopolitical challenges. Finally, it reduces transparency in the procurement process, making it harder to assess the fairness of the price and the overall value for money.

What is General Atomics' track record with similar transformer rectifier contracts or complex aircraft component manufacturing?

General Atomics is a prominent defense contractor with extensive experience in developing and manufacturing complex systems, including unmanned aerial vehicles (UAVs), advanced sensors, and power systems. While specific details on their transformer rectifier contracts are not publicly itemized in this data, their overall portfolio suggests a strong capability in producing sophisticated electronic and power-related components for military applications. Their long history and significant role in defense programs indicate a substantial track record in managing complex manufacturing processes, adhering to stringent quality standards, and delivering critical systems to the Department of Defense. Their expertise in areas like power management and avionics likely translates to competence in manufacturing components such as transformer rectifiers.

How does the geographic concentration in California impact the broader defense supply chain for aircraft parts?

The concentration of defense contractors and manufacturing in California, particularly in Southern California, has historically been a hub for the aerospace and defense industry. This concentration can offer benefits such as a skilled workforce, established infrastructure, and a network of specialized suppliers and subcontractors. However, it also presents risks. Over-reliance on a single geographic region can make the defense supply chain vulnerable to localized disruptions, such as natural disasters, labor disputes, or state-specific regulatory changes. For taxpayers, this concentration might mean less competition if key suppliers are clustered, potentially leading to higher prices. It also means that other regions with capable manufacturing bases may be underutilized for defense contracts.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT LAUNCHING, LANDING, GROUND HANDLING AND SERVICING EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Diazyme Laboratories, Inc.

Address: 3550 GENERAL ATOMICS CT, SAN DIEGO, CA, 92121

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: $21,447,030

Exercised Options: $21,447,030

Current Obligation: $21,447,030

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $3,725,990

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001916G0006

IDV Type: BOA

Timeline