DoD's $19.45M engineering services contract with General Atomics shows long duration and cost-plus structure
Contract Overview
Contract Amount: $19,456,484 ($19.5M)
Contractor: General Atomics
Awarding Agency: Department of Defense
Start Date: 2004-07-26
End Date: 2013-08-30
Contract Duration: 3,322 days
Daily Burn Rate: $5.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 6
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92121
Plain-Language Summary
Department of Defense obligated $19.5 million to GENERAL ATOMICS for work described as: Key points: 1. Contract awarded under full and open competition, suggesting a potentially competitive bidding process. 2. The cost-plus fixed fee (CPFF) contract type carries inherent risk of cost overruns. 3. A long contract duration of 3322 days (over 9 years) may indicate a stable, long-term need or potential for scope creep. 4. The absence of small business set-asides means opportunities for smaller firms may have been limited. 5. Engineering services are critical for defense, but the specific nature of these services requires further detail to assess value. 6. The contract was awarded by the Department of Defense, a major federal spender with complex procurement needs.
Value Assessment
Rating: fair
Benchmarking the value of this $19.45 million contract is challenging without specific details on the engineering services rendered. The cost-plus fixed fee structure, while common for complex or uncertain projects, can lead to higher costs compared to fixed-price contracts if not managed tightly. Comparing it to similar long-term engineering service contracts within the DoD would provide better context for its value proposition. The extended duration suggests a significant scope of work, but the overall cost-effectiveness hinges on the successful delivery of critical engineering solutions.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. With 6 bidders participating, the competition level appears robust, which typically aids in price discovery and can lead to more favorable pricing for the government. The presence of multiple bidders suggests that the market for these engineering services is sufficiently competitive.
Taxpayer Impact: A competitive bidding process generally benefits taxpayers by driving down costs and ensuring the government receives the best possible value for its investment.
Public Impact
The Department of Defense benefits from specialized engineering expertise to support its complex technological requirements. This contract likely supports the development, testing, or maintenance of defense systems and platforms. The geographic impact is centered in California, where General Atomics is headquartered and likely performs the work. The contract supports a workforce of engineers and technical specialists, contributing to the high-skilled defense industry labor pool.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus fixed fee contracts can incentivize contractors to incur higher costs to maximize their fee.
- The extended duration of over 9 years increases the risk of cost escalation due to inflation or unforeseen project changes.
- Lack of specific details on the engineering services makes it difficult to assess performance metrics and potential risks.
- No small business participation is indicated, potentially limiting broader economic impact and innovation from smaller firms.
Positive Signals
- Awarded under full and open competition with 6 bidders, suggesting a healthy competitive environment.
- The contract is with General Atomics, a known entity in the defense sector, potentially indicating a level of established capability.
- Engineering services are crucial for maintaining and advancing defense technology, implying strategic importance.
- The definitive contract award suggests a clear agreement on terms and scope, albeit with a flexible pricing structure.
Sector Analysis
This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the defense industrial base. The market for defense engineering services is substantial, driven by the continuous need for innovation, modernization, and maintenance of military platforms and systems. Spending in this sector is often characterized by long-term relationships, specialized expertise, and significant government investment. Comparable spending benchmarks would typically involve analyzing other large-scale engineering support contracts awarded by the DoD and other federal agencies for similar defense-related projects.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This means that the competition was open to all eligible firms, including large corporations. While this ensures broad access to the contract, it may limit direct opportunities for small businesses unless they are subcontractors. The absence of specific subcontracting plans in the provided data makes it difficult to assess the extent of small business involvement.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), which is listed as the servicing agency. Accountability measures are inherent in the contract terms, particularly the cost-plus fixed fee structure which requires detailed reporting and justification of costs. Transparency is generally facilitated through contract award databases, though specific performance details and cost breakdowns may be considered sensitive.
Related Government Programs
- Defense Engineering Services
- Research and Development Contracts
- Aerospace Engineering
- Military Systems Development
- Cost-Plus Contracts
- Department of Defense Procurement
Risk Flags
- Cost-plus contract type carries inherent risk of cost overruns.
- Long contract duration increases risk of cost escalation and scope creep.
- Lack of specific service details hinders performance assessment.
- No small business set-aside limits opportunities for smaller enterprises.
Tags
defense, engineering-services, department-of-defense, general-atomies, definitive-contract, cost-plus-fixed-fee, full-and-open-competition, california, long-term-contract, large-business
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $19.5 million to GENERAL ATOMICS. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is GENERAL ATOMICS.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $19.5 million.
What is the period of performance?
Start: 2004-07-26. End: 2013-08-30.
What specific engineering services were provided under this contract?
The provided data identifies the NAICS code as 541330 (Engineering Services) and the PSC code is blank, offering limited specificity. However, given the contractor (General Atomics) and the awarding agency (Department of Defense), it is highly probable that these services relate to the design, development, testing, integration, or sustainment of defense systems, platforms, or related technologies. This could encompass areas such as aerospace engineering, naval systems, electronic warfare, or advanced materials. Without more granular information, the exact nature of the engineering tasks remains generalized.
How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar services?
The Cost Plus Fixed Fee (CPFF) structure is often used when the scope of work is not clearly defined or involves significant uncertainty, such as in research and development or complex system integration. It allows the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF generally offers less cost certainty for the government and can incentivize higher spending as the fee is a percentage of costs. However, it provides flexibility for evolving requirements. For well-defined engineering services, fixed-price contracts might offer better value, but for innovative or exploratory work, CPFF can be appropriate if managed diligently.
What are the potential risks associated with the 9+ year duration of this contract?
A contract duration of over 9 years (3322 days) presents several potential risks. Firstly, there's a significant risk of cost escalation due to inflation, changes in labor rates, or material costs over such an extended period. Secondly, the scope of work may evolve considerably, potentially leading to contract modifications, change orders, and increased administrative burden. Thirdly, maintaining consistent oversight and performance management over nearly a decade can be challenging. Lastly, technological obsolescence is a risk; the systems or technologies being engineered might become outdated before the contract concludes, requiring substantial adaptation or rework.
What is General Atomics' track record with the Department of Defense?
General Atomics is a well-established defense contractor known for its work in areas such as unmanned aerial vehicles (e.g., Predator, Reaper), advanced electronics, and energy technologies. They have a long history of receiving significant contracts from the Department of Defense across various programs. Their track record generally includes the successful development and production of complex defense systems. However, like any large contractor, they may have faced scrutiny or challenges on specific programs related to cost, schedule, or performance, which would be detailed in specific contract performance reviews or GAO reports.
How does the $19.45 million total award amount compare to typical engineering service contracts in the defense sector?
The $19.45 million total award amount for this engineering services contract is substantial but falls within a common range for significant defense projects. Large-scale engineering efforts, particularly those involving system design, integration, or long-term sustainment for major platforms (like aircraft, ships, or ground vehicles), can easily reach tens or even hundreds of millions of dollars over their lifecycle. This contract's value is moderate in the context of major defense procurements, suggesting a focused scope of engineering work rather than an entire program's development. Benchmarking requires comparing it to contracts for similar types of engineering support and system complexity.
What does the presence of 6 bidders imply about the market for these engineering services?
The fact that 6 bidders competed for this contract suggests a reasonably healthy and competitive market for the specific type of engineering services required. A higher number of bidders generally indicates that multiple companies possess the necessary capabilities and are interested in pursuing government contracts. This level of competition can exert downward pressure on prices and encourage innovation as contractors strive to offer the most compelling technical solutions and cost proposals. It also provides the government with a wider range of options to choose from, potentially leading to better overall value.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: RESEARCH AND DEVELOPMENT › General Science and Technology R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: BASIC RESEARCH
Offers Received: 6
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 3550 GENERAL ATOMICS COURT, SAN DIEGO, CA, 92121
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2004-07-26
Current End Date: 2013-08-30
Potential End Date: 2013-08-30 00:00:00
Last Modified: 2015-11-17
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