DoD awards $41.9M for critical long-lead time items, supporting FY08 LRIP for ERMP

Contract Overview

Contract Amount: $41,886,549 ($41.9M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-09-19

End Date: 2010-09-30

Contract Duration: 1,107 days

Daily Burn Rate: $37.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Official Description: CRITICAL LONG LEAD TIME ITEM (LLTI) TO SUPPORT SHEDULED FY 08 ERMP LOW RATE INITIAL PRODUCTION (LRIP)ONE EFFORT.

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $41.9 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: CRITICAL LONG LEAD TIME ITEM (LLTI) TO SUPPORT SHEDULED FY 08 ERMP LOW RATE INITIAL PRODUCTION (LRIP)ONE EFFORT. Key points: 1. Contract supports critical long-lead time items essential for scheduled production. 2. Awarded as a sole-source procurement, limiting competitive price discovery. 3. Contract duration of 1107 days suggests a significant, multi-year effort. 4. Cost-plus incentive contract type may incentivize contractor efficiency. 5. Focus on engineering services indicates a need for specialized technical expertise. 6. Geographic concentration in California for this defense contract.

Value Assessment

Rating: fair

The contract value of $41.9 million for engineering services is substantial. Without specific benchmarks for similar long-lead time item procurements or detailed cost breakdowns, a precise value-for-money assessment is challenging. The cost-plus incentive fee structure aims to align contractor and government interests, potentially leading to better value if managed effectively. However, the lack of competition inherently reduces the pressure for the lowest possible 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. This approach is typically used when a unique capability or item is required, or for urgent needs where competition is not feasible. The absence of multiple bidders means that the government did not benefit from a competitive bidding process to drive down costs or explore alternative solutions.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to ensure the most economical price is achieved.

Public Impact

Benefits the Department of Defense by ensuring the availability of critical components for future production. Supports the production of the Extended Range Multi-Purpose (ERMP) system. Impacts the defense industrial base, particularly in specialized engineering and manufacturing. Workforce implications are likely within the specialized engineering and manufacturing sectors at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Cost-plus incentive fee contracts require careful oversight to ensure cost control.
Long contract duration (1107 days) necessitates sustained monitoring for performance and budget adherence.

Positive Signals

Addresses a critical need for long-lead time items, mitigating production schedule risks.
Cost-plus incentive fee structure can align contractor and government objectives.
Award to a known entity (General Atomics) may leverage existing expertise and infrastructure.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense manufacturing. The aerospace and defense industry is characterized by high R&D costs, complex supply chains, and significant government procurement. Contracts for long-lead time items are crucial for maintaining production schedules in this sector, often involving specialized technologies and requiring substantial lead times for manufacturing.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on small business participation may be limited unless the prime contractor actively engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting and program management offices. The cost-plus incentive fee structure necessitates robust financial and performance monitoring to ensure the contractor is meeting objectives efficiently and cost-effectively. Transparency would be enhanced through regular reporting requirements and potential audits.

Related Government Programs

Department of Defense Procurement
Aerospace and Defense Manufacturing
Long Lead Time Item Procurement
Engineering Services Contracts
Cost-Plus Incentive Fee Contracts

Risk Flags

Sole-source award
Potential for cost overruns with CPIF
Supply chain risk due to single source

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.9 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. CRITICAL LONG LEAD TIME ITEM (LLTI) TO SUPPORT SHEDULED FY 08 ERMP LOW RATE INITIAL PRODUCTION (LRIP)ONE EFFORT.

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 Army).

What is the total obligated amount?

The obligated amount is $41.9 million.

What is the period of performance?

Start: 2007-09-19. End: 2010-09-30.

What is the specific nature of the 'critical long lead time item' being procured and its importance to the ERMP program?

The provided data does not specify the exact nature of the 'critical long lead time item' (LLTI). However, LLTIs are components or materials that require a significant amount of time to manufacture or procure, often due to complex processes, specialized materials, or limited production capacity. Their criticality implies that delays in their availability would directly impede the scheduled production of the Extended Range Multi-Purpose (ERMP) system, specifically its Low Rate Initial Production (LRIP) phase planned for FY08. Ensuring the timely delivery of these items is paramount to meeting program milestones and operational deployment targets for the ERMP.

How does the 'cost plus incentive fee' (CPIF) contract type typically function, and what are its implications for this specific award?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and also receives a fee that is adjusted based on performance against pre-determined targets. For this award, the government and General Atomics Aeronautical Systems, Inc. would have established targets for cost, schedule, and performance. If the contractor exceeds targets (e.g., finishes under budget or ahead of schedule), the fee increases, up to a certain maximum. Conversely, if performance falls short, the fee decreases, down to a minimum. This structure aims to incentivize the contractor to control costs and achieve performance objectives efficiently, aligning their interests with the government's.

What is the typical cost range for similar engineering services contracts supporting defense production lines?

Benchmarking the $41.9 million cost for engineering services is challenging without more specific details on the scope of work and the nature of the ERMP system. However, engineering services for major defense platforms can range from millions to hundreds of millions of dollars, depending on the complexity, duration, and criticality. Contracts supporting LRIP phases often involve significant engineering effort for production process refinement, tooling, and integration. Given the 'critical LLTI' designation, this contract likely involves highly specialized engineering expertise, potentially placing its cost towards the higher end for similar service categories, though direct comparisons are difficult without detailed scope information.

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

Sole-source awards for critical defense components carry several inherent risks. Primarily, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process, as the government does not benefit from market forces driving cost efficiency. There's also a risk of reduced innovation, as the incumbent contractor may have less incentive to explore novel or more cost-effective solutions. Furthermore, reliance on a single source can create supply chain vulnerabilities; if the sole-source provider experiences production issues, delays, or financial instability, the entire program could be jeopardized. This necessitates robust government oversight and strong relationship management.

How does the contract's duration (1107 days) align with the typical lifecycle of LRIP for major defense systems?

A contract duration of 1107 days (approximately 3 years) for procuring critical long-lead time items supporting Low Rate Initial Production (LRIP) is generally consistent with the phased approach of major defense system development and fielding. LRIP phases are designed to establish a production capability, test and validate the manufacturing process, and produce initial quantities of the system. This period allows for the integration of components, assembly, testing, and refinement of production techniques. A multi-year duration for LLTIs ensures a steady supply stream throughout this crucial initial production period, mitigating risks of schedule slippage.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics (UEI: 859181984)

Address: 16761 VIA DEL CAMPO CT, SAN DIEGO, CA, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,886,549

Exercised Options: $41,886,549

Current Obligation: $41,886,549

Contract Characteristics

Cost or Pricing Data: YES

Timeline