DoD awards $30.8M for Non-Recurring Engineering (NRE) to General Atomics Aeronautical Systems, Inc

Contract Overview

Contract Amount: $30,840,890 ($30.8M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-02-09

End Date: 2025-12-01

Contract Duration: 661 days

Daily Burn Rate: $46.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NON-RECURRING ENGINEERING (NRE)

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $30.8 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: NON-RECURRING ENGINEERING (NRE) Key points: 1. Significant investment in Non-Recurring Engineering (NRE) suggests development of new capabilities or substantial modifications. 2. Sole-source award raises questions about potential cost efficiencies and market competition. 3. Contract duration of 661 days indicates a medium-term project with ongoing development needs. 4. The award falls under Aircraft Manufacturing (NAICS 336411), a sector critical for defense modernization. 5. California-based contractor General Atomics Aeronautical Systems, Inc. is a major player in defense aerospace. 6. The Cost Plus Fixed Fee (CPFF) contract type may offer less cost certainty compared to fixed-price contracts.

Value Assessment

Rating: questionable

The contract's value of $30.8 million for Non-Recurring Engineering (NRE) is difficult to benchmark without specific project details. CPFF contracts can sometimes lead to higher costs if not managed tightly, as the contractor is reimbursed for allowable costs plus a fixed fee. Comparing this to similar NRE contracts for aircraft systems would be necessary for a more precise value assessment. The lack of competition further complicates a direct value-for-money analysis.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This approach is typically used when there is a unique capability, urgent need, or lack of viable alternatives. The absence of a competitive bidding process means potential cost savings from market competition were not realized. The justification for this sole-source award would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: Sole-source awards can potentially lead to higher prices for taxpayers as the government does not benefit from the competitive pressure that typically drives down costs. It also limits opportunities for other businesses to compete for this work.

Public Impact

The Department of the Navy benefits from the development of new or improved aircraft capabilities. This contract supports the advancement of defense technology within the aerospace sector. The primary beneficiaries are likely the military personnel who will utilize the enhanced aircraft systems. Work is expected to have implications for the skilled workforce in California's aerospace industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type may not provide the most cost-effective outcome if not rigorously managed.
Lack of detailed public information on the specific NRE requirements makes independent cost assessment challenging.

Positive Signals

Award to a known, experienced contractor (General Atomics) suggests a focus on technical capability and program execution.
Investment in NRE indicates a commitment to advancing critical defense capabilities.
The contract is for a specific, defined period, allowing for focused development efforts.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs and long product development cycles. Non-Recurring Engineering (NRE) is a crucial component, covering the initial design, development, and testing phases before mass production. General Atomics Aeronautical Systems, Inc. is a significant entity in this space, particularly known for unmanned aerial systems. This contract likely fits into a broader modernization or upgrade program for naval aviation assets, reflecting substantial government investment in maintaining technological superiority.

Small Business Impact

This contract does not appear to have a small business set-aside component (sb: false). Given the sole-source nature and the specialized field of aircraft manufacturing, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or easily accessible unless specifically included in the contract's statement of work. Further review of subcontracting plans would be needed to assess any potential impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. As a sole-source award, the justification and execution will be subject to review by relevant oversight bodies, potentially including the Government Accountability Office (GAO) if protests arise, and the Department of Defense's Inspector General. Transparency regarding the specific NRE deliverables and cost tracking will be key to ensuring accountability.

Related Government Programs

Unmanned Aerial Systems (UAS) Development
Naval Aviation Modernization Programs
Advanced Aircraft Manufacturing
Defense Research and Development

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of detailed public scope for NRE

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.8 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. NON-RECURRING ENGINEERING (NRE)

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 $30.8 million.

What is the period of performance?

Start: 2024-02-09. End: 2025-12-01.

What specific Non-Recurring Engineering (NRE) activities are covered under this $30.8 million contract?

The provided data does not detail the specific NRE activities. Non-Recurring Engineering typically encompasses the initial design, prototyping, testing, and validation phases required to develop a new product or significantly modify an existing one. For an aircraft system, this could include aerodynamic analysis, structural design, avionics integration, software development, and ground/flight testing. The exact scope would be defined in the contract's Statement of Work (SOW), which is not publicly available in this dataset. Understanding these specifics is crucial for assessing the appropriateness of the cost and the project's technical objectives.

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

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. Common justifications include unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when a specific contractor is the only source capable of meeting requirements due to specialized knowledge or existing infrastructure. For General Atomics Aeronautical Systems, Inc., this could relate to specific intellectual property, existing platform integration expertise, or a critical need for their particular unmanned aerial system technology. The Department of Defense would have a formal justification document (e.g., Justification and Approval - J&A) outlining the rationale for not competing the award.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for NRE projects?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred plus a predetermined fixed fee, which represents profit. This structure is often used for research and development or NRE where the scope and costs are not precisely definable at the outset. Compared to Fixed Price contracts, CPFF offers less cost certainty for the government, as costs can fluctuate. However, it provides flexibility for evolving R&D requirements. Compared to Cost Plus Incentive Fee (CPIF), the fee is fixed regardless of cost performance, potentially offering less incentive for the contractor to control costs compared to CPIF where the fee can be adjusted based on performance against targets.

What is the typical cost range for Non-Recurring Engineering in the aircraft manufacturing sector?

The cost range for NRE in aircraft manufacturing varies enormously depending on the complexity and scale of the project. For major aircraft programs, NRE can represent a significant portion of the total program cost, sometimes ranging from tens of millions to billions of dollars. For specific components, upgrades, or specialized systems like those potentially developed by General Atomics, NRE costs could range from a few million to tens of millions, as seen in this $30.8 million award. Benchmarking requires detailed comparison with similar development efforts, considering factors like technological novelty, system complexity, and required testing rigor.

What are the potential risks associated with a sole-source CPFF contract for NRE?

Sole-source CPFF contracts carry inherent risks. For the government, the primary risks include potentially paying a higher price due to the lack of competition and the contractor having less incentive to control costs under a fixed fee structure compared to incentive-based contracts. There's also a risk of scope creep if the NRE requirements are not tightly managed. For the contractor, the risk lies in accurately estimating the fixed fee to cover their efforts and profit while remaining competitive, and ensuring all costs are allowable under the contract terms. Effective government oversight is critical to mitigate these risks.

What is General Atomics Aeronautical Systems, Inc.'s track record with similar NRE contracts?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a well-established track record in the development and manufacturing of advanced aircraft systems, particularly unmanned aerial systems (UAS) like the Predator and Reaper. They have consistently engaged in significant research, development, and engineering efforts for these platforms, often involving substantial NRE. While specific NRE contract values and details are often proprietary, GA-ASI's history suggests extensive experience in managing complex development programs, integrating new technologies, and meeting stringent defense requirements. Their performance on previous contracts would be a key factor in the Department of the Navy's decision to award this contract sole-source.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

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

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: $31,490,582

Exercised Options: $31,490,582

Current Obligation: $30,840,890

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $5,385,021

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