DoD's $157M ER/MP Engineering Services contract awarded to General Atomics, a sole-source procurement

Contract Overview

Contract Amount: $157,108,367 ($157.1M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-09-30

End Date: 2015-04-24

Contract Duration: 2,032 days

Daily Burn Rate: $77.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ER/MP ENGINEERING SERVICES

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $157.1 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: ER/MP ENGINEERING SERVICES Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and limited market engagement. 2. The contract duration of 2032 days suggests a long-term need for specialized engineering services. 3. Performance was rated as 'Satisfactory' (ST), indicating a baseline level of execution by the contractor. 4. The absence of small business set-asides suggests the primary contractor is a large entity, with potential subcontracting opportunities. 5. The 'Engineering Services' category (NAICS 541330) is broad, encompassing a wide range of technical expertise. 6. The contract's completion date in 2015 means current value-for-money assessments rely on historical data and benchmarks.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific engineering services provided. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The 'Satisfactory' performance rating suggests the services were delivered as expected, but doesn't necessarily indicate exceptional value or efficiency. Further analysis would require comparing the specific deliverables and their associated costs to similar sole-source engineering contracts within the Department of Defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when only one vendor possesses the necessary capabilities, or in situations where urgency or specific requirements preclude a competitive process. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down costs. The government did not benefit from the potential for innovative solutions or cost savings that often emerge from a competitive bidding process.

Public Impact

The primary beneficiary of this contract is the Department of the Army, which received specialized engineering services. These services likely supported the development, modification, or sustainment of specific defense systems or platforms. The geographic impact is centered around the contractor's operations in California, where the work was likely performed. The contract supported a specialized engineering workforce, contributing to the high-skill employment within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Performance rating of 'Satisfactory' indicates basic fulfillment of requirements, not necessarily optimal value.
Contract duration and value suggest a significant, long-term commitment without clear market alternatives.
Specific engineering services are not detailed, making it hard to assess the true scope and necessity.

Positive Signals

Contract was awarded to a known entity in the defense sector (General Atomics).
Services were delivered, as indicated by the 'Satisfactory' performance rating.
The contract addressed a specific need within the Department of the Army.
Long-term nature of the contract suggests a sustained requirement that was met.

Sector Analysis

The Engineering Services sector (NAICS 541330) is a critical component of the defense industrial base, providing essential technical expertise for complex weapon systems and platforms. This contract falls within a segment of the market dominated by large, specialized defense contractors. Spending in this sector is often characterized by long-term, high-value contracts due to the intricate nature of defense engineering. Comparable spending benchmarks are difficult to establish without more specific details on the services rendered, but large-scale engineering support for defense programs can run into hundreds of millions of dollars.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). This suggests the primary contractor, General Atomics Aeronautical Systems, Inc., is a large business. While there's no direct information on subcontracting plans, large defense contracts often include provisions for small business participation. The absence of a set-aside means opportunities for small businesses would likely be through subcontracting with the prime contractor, rather than direct award.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of the Army contracting and program management offices. Accountability measures would typically include performance reviews, milestone tracking, and financial audits. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

Defense Engineering Services
Unmanned Aerial Vehicle (UAV) Support
Aerospace Engineering Contracts
Department of Defense Research and Development

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $157.1 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. ER/MP ENGINEERING SERVICES

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 $157.1 million.

What is the period of performance?

Start: 2009-09-30. End: 2015-04-24.

What specific engineering services were provided under this contract, and how did they contribute to the Army's mission?

The contract, identified as 'ER/MP ENGINEERING SERVICES,' was awarded to General Atomics Aeronautical Systems, Inc. for engineering services under NAICS code 541330. While the specific nature of 'ER/MP' is not explicitly defined in the provided data, General Atomics is well-known for its work on unmanned aerial systems (UAS), particularly the Predator and Reaper drones. Therefore, it is highly probable that these engineering services related to the design, development, modification, testing, or sustainment of specific unmanned aircraft systems or their associated components and ground control systems. These services would have been critical for enhancing the capabilities, reliability, and operational effectiveness of the Army's intelligence, surveillance, and reconnaissance (ISR) or strike missions conducted via UAS platforms. The 'Satisfactory' performance rating suggests the contractor met the defined technical and programmatic requirements for these specialized engineering tasks.

How does the $157 million contract value compare to similar engineering services contracts within the Department of Defense?

The $157 million contract value for engineering services is substantial, placing it in the mid-to-large tier for individual contract awards within the Department of Defense. However, without knowing the precise scope and duration of the services, direct comparisons are difficult. The DoD procures a vast array of engineering services, ranging from basic technical support to highly specialized R&D for advanced weapon systems. Contracts for major platform development or sustainment can easily reach billions of dollars. For specialized engineering services related to complex systems like unmanned aerial vehicles, a $157 million award over approximately five years (based on the duration of 2032 days) is within a reasonable range, especially if awarded on a sole-source basis to a prime contractor with unique expertise. However, the lack of competition means this figure cannot be directly benchmarked against competitive bids for similar services.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing due to the absence of competitive pressure. Without multiple bidders vying for the contract, the government may not achieve the most cost-effective outcome. Another significant risk is the lack of innovation that can stem from a competitive environment; alternative approaches or technologies might be overlooked. Furthermore, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single contractor, potentially creating vendor lock-in and reducing future flexibility. There's also a risk that the contractor may not feel the same urgency to optimize performance or efficiency as they would in a competitive scenario, although the 'Satisfactory' rating suggests basic requirements were met.

Given the contract was awarded in 2009 and completed in 2015, what can be inferred about the contractor's track record based on this engagement?

The contract was awarded to General Atomics Aeronautical Systems, Inc. (GA-ASI) and received a 'Satisfactory' performance rating (ST). This indicates that, during the period of performance from September 30, 2009, to April 24, 2015, GA-ASI met the contract's requirements to an acceptable degree. A 'Satisfactory' rating is the standard baseline and suggests that the contractor delivered the engineering services as specified, within the agreed-upon timelines and quality standards, without significant issues or deficiencies. While not an 'Outstanding' rating, it signifies a successful completion of the contractual obligations. For GA-ASI, this engagement likely reinforced their position as a key provider of engineering services for the Department of the Army, particularly in areas related to their known expertise in unmanned systems.

What does the 'Engineering Services' classification (NAICS 541330) encompass, and how does this contract fit within that broader category?

NAICS code 541330, 'Engineering Services,' encompasses establishments primarily engaged in providing specialized engineering services. This includes services related to civil, mechanical, electrical, industrial, and other engineering disciplines. These firms typically offer expert advice, consultation, and services related to engineering design, planning, and project management. This specific contract with General Atomics Aeronautical Systems, Inc. falls under this broad category but is highly specialized, likely focusing on aerospace and defense engineering, particularly related to unmanned aerial systems (UAS) given the contractor's known capabilities. The 'ER/MP' designation suggests a specific program or system requiring advanced engineering support, differentiating it from more general engineering consulting.

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

Solicitation ID: W58RGZ08R0703

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics (UEI: 859181984)

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: $157,108,367

Exercised Options: $157,108,367

Current Obligation: $157,108,367

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline