DoD awards $82.7M contract for aircraft spares, raising questions about competition and value

Contract Overview

Contract Amount: $82,692,913 ($82.7M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-09-09

End Date: 2026-02-27

Contract Duration: 1,267 days

Daily Burn Rate: $65.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HI READY SPARES PACKAGE (RSP)

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $82.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: HI READY SPARES PACKAGE (RSP) Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant portion of contract value allocated to a single delivery order, indicating a focused need. 3. High value for aircraft spares suggests critical operational requirements for the Navy. 4. Lack of competition raises concerns about whether the government secured the best possible price. 5. Contract duration extends over several years, implying a long-term need for these components. 6. The 'Aircraft Manufacturing' NAICS code indicates a focus on specialized, high-value components.

Value Assessment

Rating: questionable

The contract value of $82.7 million for aircraft spares is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The sole-source nature of this award means that the government did not leverage competition to drive down costs, potentially leading to a higher per-unit price than could have been achieved otherwise. Further analysis would be needed to assess the reasonableness of the price given the specific nature of the spares.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, General Atomics Aeronautical Systems, Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified for unique capabilities or urgent needs, they limit the government's ability to explore alternative solutions and negotiate the best possible price.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the most cost-effective solution. Without competing offers, there's a risk of overpayment and a missed opportunity to benefit from market-driven price reductions.

Public Impact

The primary beneficiaries are the Department of the Navy, ensuring the operational readiness of its aircraft fleet. The contract delivers essential spare parts for aircraft, crucial for maintaining flight schedules and mission capabilities. The geographic impact is primarily within the United States, supporting naval aviation operations. Workforce implications may include specialized manufacturing and logistics roles within General Atomics Aeronautical Systems, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially inflating costs for taxpayers.
Lack of transparency in pricing due to non-competitive nature.
Dependence on a single contractor for critical spares could pose supply chain risks.
Contract duration is lengthy, requiring sustained oversight to ensure continued value.

Positive Signals

Award to a known entity, General Atomics Aeronautical Systems, Inc., suggests a potentially established relationship and understanding of needs.
Firm Fixed Price contract type provides cost certainty for the government once awarded.
The contract addresses a specific need for aircraft spares, indicating a focus on operational readiness.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a specialized area of the aerospace and defense industry. The market for aircraft spares is often characterized by high barriers to entry, proprietary technology, and long product lifecycles. Spending in this sector is critical for maintaining national defense capabilities. Comparable spending benchmarks are difficult to establish without detailed knowledge of the specific aircraft and components involved, but large sums are typical for advanced military aviation sustainment.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to a large defense contractor like General Atomics Aeronautical Systems, Inc. suggests that the primary focus is on specialized manufacturing capabilities that may not be readily available from smaller firms. This could limit opportunities for small businesses to participate in this specific contract's supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, scrutiny may be heightened to ensure the justification for non-competition is sound and that pricing is reasonable. Transparency is limited due to the lack of a competitive process. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Military Aircraft Maintenance and Repair
Defense Logistics and Supply Chain Management
Aerospace Component Manufacturing

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 $82.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. HI READY SPARES PACKAGE (RSP)

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 $82.7 million.

What is the period of performance?

Start: 2022-09-09. End: 2026-02-27.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available, or when there is a compelling urgency, or when a specific capability is required that only one contractor possesses. For General Atomics Aeronautical Systems, Inc., this could relate to proprietary technology, unique manufacturing processes for specific aircraft components, or a critical need for immediate spares where initiating a full competition would cause unacceptable delays. Further investigation into the contract file or agency justifications would be necessary to determine the precise reason.

How does the $82.7 million contract value compare to historical spending on similar aircraft spares by the Department of the Navy?

Without knowing the specific aircraft model and the types of spares included in this $82.7 million contract, a direct historical comparison is challenging. However, the value suggests a significant procurement for critical components. The Department of the Navy spends billions annually on aircraft sustainment, including spare parts. To assess value, one would need to analyze past contracts for the same or comparable aircraft platforms, looking at unit prices, quantities, and contract types. The sole-source nature of this award makes direct price comparisons difficult, as competitive bids often drive down costs.

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

The primary risk of a sole-source award for critical aircraft spares is the potential for inflated costs due to the lack of competitive pressure. The government may end up paying more than necessary if alternative suppliers or more cost-effective solutions are not explored. Another risk is contractor lock-in, where the government becomes dependent on a single supplier, potentially limiting flexibility in future procurements. Furthermore, without competition, there's less incentive for the contractor to innovate or improve efficiency beyond what is contractually required. Supply chain disruptions could also be a greater concern if the sole provider faces issues.

What is General Atomics Aeronautical Systems, Inc.'s track record with the Department of the Navy, particularly regarding aircraft manufacturing and spares?

General Atomics Aeronautical Systems, Inc. (GA-ASI) is a well-established defense contractor known for its unmanned aerial systems (UAS) and related support services. They have a significant history of contracts with the Department of Defense, including the Navy, often related to their Predator and Reaper series aircraft, as well as other advanced platforms. Their track record typically involves development, manufacturing, and sustainment of complex aerospace systems. For aircraft spares, their involvement would likely be tied to the specific platforms they manufacture or support, suggesting a deep understanding of the required components and potential sole-source justification based on proprietary knowledge or manufacturing capabilities.

What does the 'Aircraft Manufacturing' NAICS code (336411) imply about the nature of these spares?

The North American Industry Classification System (NAICS) code 336411, 'Aircraft Manufacturing,' indicates that the contract is for components or parts directly related to the production or assembly of aircraft. This suggests that the spares are not general maintenance items but rather specialized, potentially complex parts integral to the aircraft's structure, systems, or performance. These could include engine components, avionics, airframe parts, or specialized equipment. Such items often require high precision manufacturing, stringent quality control, and may be proprietary to the original aircraft manufacturer, lending credence to potential sole-source justifications.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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: $82,692,913

Exercised Options: $82,692,913

Current Obligation: $82,692,913

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $10,153,250

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001922G0006

IDV Type: BOA

Timeline