DoD awards $75.7M for contractor logistics support of Army unmanned aircraft systems to General Atomics Aeronautical Systems, Inc

Contract Overview

Contract Amount: $75,721,873 ($75.7M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-06-13

End Date: 2011-08-10

Contract Duration: 788 days

Daily Burn Rate: $96.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CONTRACTOR LOGISTICS SUPPORT FOR US ARMY UNMANNED AIRCRAFT SYSTEMS.

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $75.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: CONTRACTOR LOGISTICS SUPPORT FOR US ARMY UNMANNED AIRCRAFT SYSTEMS. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can incentivize cost overruns. 2. The contract was not competed, raising questions about potential price efficiencies. 3. The duration of the contract (788 days) suggests a significant, ongoing need for support. 4. The contract falls under the Aircraft Manufacturing NAICS code, indicating a focus on aviation-related services. 5. The award was made by the Department of the Army, highlighting its reliance on external support for UAS. 6. The contractor, General Atomics Aeronautical Systems, Inc., is a major player in the unmanned aircraft sector.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar sole-source logistics support agreements. The cost-plus-fixed-fee structure, while common for complex services, carries inherent risks of cost escalation if not rigorously managed. The absence of competition limits the ability to assess if the fixed fee represents a fair market price for the services rendered. Further analysis would require understanding the specific deliverables and the contractor's cost structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competitive bidding. This typically occurs when only one responsible source is available or when a compelling justification exists for avoiding competition. The lack of competition means that the government did not benefit from the price discovery and potential cost savings that a competitive bidding process could have provided.

Taxpayer Impact: Taxpayers may have paid a higher price due to the absence of competitive pressure. Without multiple bids, there is less assurance that the negotiated price reflects the best possible value for the government.

Public Impact

The U.S. Army benefits from continued operational readiness of its unmanned aircraft systems. Services provided ensure the functionality and maintenance of critical aviation assets. The contract supports advanced aerospace manufacturing and logistics capabilities within the United States. Workforce implications include employment for specialized technical and logistical personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential savings.
Cost-plus-fixed-fee contract type can lead to cost overruns if not closely monitored.
Lack of transparency in the sole-source justification could obscure potential alternatives.
Long contract duration without competition may indicate a lack of market dynamism for these specific services.

Positive Signals

Contract awarded to a known, experienced provider in the UAS sector.
Ensures continued support for critical military assets.
The fixed fee component provides some cost certainty for the government.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on the manufacturing and support of unmanned aircraft systems (UAS). The market for UAS logistics support is specialized, often dominated by a few key manufacturers who possess the proprietary knowledge and technical expertise required. Spending in this area is driven by the increasing military reliance on drone technology for surveillance, reconnaissance, and combat operations. Comparable spending benchmarks would likely involve other sole-source or limited-competition contracts for specialized military equipment sustainment.

Small Business Impact

This contract does not appear to involve small business set-asides, as the awardee is a large corporation. There is no explicit information provided regarding subcontracting plans for small businesses. The nature of specialized aerospace logistics support often requires deep technical expertise and established relationships, which may limit opportunities for small businesses unless they are part of a larger supply chain or provide niche services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The cost-plus-fixed-fee structure necessitates robust oversight to ensure costs are reasonable and allocable, and that the fixed fee is earned. Transparency is limited due to the sole-source nature of the award. The Inspector General of the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Department of Defense Unmanned Aircraft Systems Programs
Army Aviation Logistics Support
Aerospace Manufacturing and Maintenance Contracts
Defense Contractor Support Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. CONTRACTOR LOGISTICS SUPPORT FOR US ARMY UNMANNED AIRCRAFT SYSTEMS.

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 $75.7 million.

What is the period of performance?

Start: 2009-06-13. End: 2011-08-10.

What specific unmanned aircraft systems are covered under this logistics support contract?

The contract data does not specify the exact models of unmanned aircraft systems (UAS) that General Atomics Aeronautical Systems, Inc. is providing logistics support for. However, given the contractor's specialization, it is highly probable that this contract pertains to their well-known platforms such as the MQ-1 Predator and MQ-9 Reaper, which are extensively used by the U.S. Army and other branches of the military. These systems require comprehensive support, including maintenance, repair, spare parts, and technical expertise to ensure operational readiness. Further details would likely be found in the contract's statement of work.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar services?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used for research and development or complex services where the scope of work is not precisely defined at the outset, or where innovation is a key component. In this case, it suggests that the Army anticipated uncertainties in the logistics support required for the UAS. Compared to fixed-price contracts, CPFF offers less cost certainty for the government but can incentivize the contractor to perform work that might otherwise be avoided due to cost risks. However, it requires stringent oversight to manage costs effectively. Other contract types like Cost-Plus-Incentive-Fee (CPIF) could offer better cost control by linking the contractor's fee to performance metrics.

What is the typical track record of General Atomics Aeronautical Systems, Inc. in fulfilling similar defense contracts?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a long and established track record as a prime contractor for the U.S. military, particularly in the development and production of unmanned aircraft systems. They are renowned for their Predator and Reaper series drones. GA-ASI has consistently been awarded large contracts for the manufacturing, sustainment, and upgrade of these critical platforms. While specific performance metrics for individual contracts are often not publicly detailed, their continued selection for major programs indicates a generally positive performance history and a strong relationship with the Department of Defense. However, like any large defense contractor, they may have faced scrutiny or performance issues on specific contracts that are not widely publicized.

What are the potential risks associated with a sole-source award for critical UAS logistics support?

The primary risk of a sole-source award for critical UAS logistics support is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible value for its expenditure. Another risk is reduced innovation, as the sole provider may have less incentive to develop more cost-effective or efficient support methods. Furthermore, reliance on a single source can create vulnerabilities if that contractor experiences financial difficulties, operational disruptions, or strategic shifts. This can impact the readiness and operational capability of the UAS fleet.

How does this contract's value compare to overall U.S. Army spending on unmanned aircraft systems?

The $75.7 million awarded for this specific logistics support contract represents a component of the U.S. Army's broader investment in unmanned aircraft systems (UAS). The Army's total budget for UAS procurement, development, operations, and sustainment runs into billions of dollars annually. This contract, while substantial, is likely a fraction of the overall UAS expenditure. For context, major UAS platforms themselves can cost millions of dollars per unit, and their operational lifespan necessitates significant ongoing investment in maintenance, training, and support services. Therefore, this contract is a critical but relatively contained element within the larger UAS ecosystem.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ09R0368

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, 48

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: $75,721,873

Exercised Options: $75,721,873

Current Obligation: $75,721,873

Contract Characteristics

Cost or Pricing Data: YES

Timeline