DoD awards $55M contract for DAAS/SMART SENSOR NRE to General Atomics, citing sole-source justification

Contract Overview

Contract Amount: $55,000,886 ($55.0M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-01-26

End Date: 2028-07-13

Contract Duration: 1,630 days

Daily Burn Rate: $33.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DAAS/SMART SENSOR NRE

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $55.0 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: DAAS/SMART SENSOR NRE Key points: 1. Contract awarded on a sole-source basis, limiting potential for competitive pricing. 2. Significant duration of over 4 years suggests a long-term need for these services. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully. 4. The awardee, General Atomics, is a major defense contractor with extensive experience in aerospace. 5. The specific nature of 'NRE' (Non-Recurring Engineering) implies development of new capabilities. 6. The contract is a delivery order under a larger unspecified basic agreement.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more information on the specific NRE deliverables and market rates for similar development efforts. The Cost Plus Fixed Fee structure, while common for R&D, carries inherent risks of cost escalation. Comparing it to similar sole-source NRE contracts within the DoD for sensor development would be necessary for a more precise value assessment. The lack of competition directly impacts the ability to ascertain if the fixed fee represents a fair and reasonable price.

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. The justification for this approach is not detailed in the provided data, but typically involves proprietary technology, unique capabilities, or urgent needs where only one source can fulfill the requirement. The absence of competition means there was no opportunity for price discovery through a bidding process, potentially leading to a higher cost for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive bidding. Without competing offers, it's difficult to ensure the government is receiving the best possible price for the development work.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive new sensor capabilities. The contract supports the development of advanced sensor technology, potentially enhancing military intelligence and surveillance. The geographic impact is primarily in California, where General Atomics is located, suggesting potential for local job creation and economic activity. Workforce implications include specialized engineering and technical roles within General Atomics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type introduces risk of cost overruns.
Lack of transparency regarding the sole-source justification.
Potential for scope creep in NRE contracts if not tightly managed.

Positive Signals

Award to an experienced defense contractor with a strong track record.
Focus on developing advanced sensor technology, aligning with modernization goals.
Contract duration suggests a strategic, long-term investment in capability development.

Sector Analysis

This contract falls within the Aircraft Manufacturing (NAICS 336411) and broader aerospace and defense sector. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. General Atomics is a key player in this market, particularly in unmanned aerial systems and related technologies. Spending in this area is critical for maintaining technological superiority and national security.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the awardee is a large defense contractor. There is no information provided regarding subcontracting plans to small businesses. This suggests that the direct economic benefit to the small business ecosystem from this specific award may be limited, unless General Atomics actively engages small businesses for specialized support.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to monitor costs against the fixed fee and ensure compliance with contract terms. Transparency may be limited due to the sole-source nature, but standard reporting requirements and potential Inspector General reviews would apply.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) programs
Naval Air Systems Command (NAVAIR) research and development
Unmanned Aerial Vehicle (UAV) development contracts
Sensor technology research and development

Risk Flags

Sole-source award
Cost-plus contract type
Lack of detailed justification for sole-sourcing
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.0 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. DAAS/SMART SENSOR 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 $55.0 million.

What is the period of performance?

Start: 2024-01-26. End: 2028-07-13.

What is the specific nature of the DAAS/SMART SENSOR NRE being developed, and what capabilities will it provide?

The provided data does not detail the specific functionalities or intended capabilities of the DAAS/SMART SENSOR NRE. 'NRE' stands for Non-Recurring Engineering, which typically involves the design, development, and testing of new or significantly improved systems or components. Given the contractor (General Atomics Aeronautical Systems) and the awarding agency (Department of the Navy), it is likely related to advanced sensor systems for naval aviation platforms, potentially for intelligence, surveillance, reconnaissance (ISR), or targeting applications. Further details would require access to the contract's SOW (Statement of Work) or related documentation.

How does the $55 million cost compare to similar NRE contracts for sensor development within the DoD?

Direct comparison is difficult without knowing the precise scope and complexity of the DAAS/SMART SENSOR NRE. However, $55 million for NRE is a substantial investment, typical for developing novel, high-technology systems in the defense sector. Similar contracts for advanced sensor suites or foundational R&D for new platforms can range from tens to hundreds of millions of dollars. The sole-source nature of this award prevents a direct price-to-price comparison with competitive bids, making it harder to assess if this specific amount represents optimal value. Benchmarking would require analyzing the technical requirements and market rates for comparable R&D efforts.

What are the risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this NRE project?

The primary risk with a CPFF contract is that the government pays the actual allowable costs incurred by the contractor, plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost is not. If the contractor's costs exceed initial estimates, the government bears that increased cost. This structure can incentivize contractors to incur higher costs if not carefully monitored, as their profit (the fixed fee) remains constant regardless of the final cost. For NRE projects, where technical uncertainties are high, CPFF can lead to cost overruns if the scope or technical challenges are underestimated or evolve significantly.

What is General Atomics Aeronautical Systems, Inc.'s track record with similar sole-source NRE contracts for the Department of the Navy?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a well-established track record with the Department of the Navy, particularly in the development and production of unmanned aerial systems (UAS) and related technologies. While specific details on past sole-source NRE contracts for sensors are not provided here, GA-ASI has historically secured significant sole-source awards for its proprietary platforms and system integrations, often citing unique capabilities and program continuity. Their extensive experience suggests a capacity to execute complex NRE tasks, but the sole-source nature warrants scrutiny regarding competitive pricing and justification.

What are the potential performance implications if the DAAS/SMART SENSOR NRE project faces delays or technical challenges?

Delays or technical challenges in NRE projects can have significant performance implications. For the DAAS/SMART SENSOR, delays could postpone the fielding of enhanced naval capabilities, impacting operational readiness and potentially putting personnel at a disadvantage. Technical challenges might necessitate contract modifications, scope adjustments, or even termination if insurmountable. The CPFF structure allows for cost increases to address challenges, but the fixed fee doesn't change, meaning the contractor's profit margin could be squeezed if costs rise substantially without a corresponding fee adjustment. The long contract duration (over 4 years) provides some buffer but also increases the window for potential issues.

How has federal spending on Aircraft Manufacturing (NAICS 336411) trended in recent years, and how does this contract fit?

Federal spending on Aircraft Manufacturing (NAICS 336411) has historically been substantial, driven by the defense needs of the DoD. Trends often reflect modernization priorities, platform upgrades, and the development of new aerospace technologies, including unmanned systems. This $55 million contract for NRE fits within the broader R&D and procurement activities within this sector. While a single contract is a small part of the overall federal spend, it represents investment in future capabilities. Analyzing broader spending trends would require access to historical federal procurement data, but defense aircraft and related systems consistently represent a significant portion of federal outlays.

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: $58,758,489

Exercised Options: $58,758,489

Current Obligation: $55,000,886

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $1,238,040

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