DoD's $248M contractor logistics support contract awarded to General Atomics Aeronautical Systems, Inc. for aircraft manufacturing

Contract Overview

Contract Amount: $248,443,228 ($248.4M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-05-20

End Date: 2014-04-30

Contract Duration: 1,806 days

Daily Burn Rate: $137.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: EXTENDED RANGE/MULTI-PURPOSE CONTRACTOR LOGISTICS SUPPORT QUICK REACTION CAPABILITY

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $248.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: EXTENDED RANGE/MULTI-PURPOSE CONTRACTOR LOGISTICS SUPPORT QUICK REACTION CAPABILITY Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Long contract duration of 1806 days suggests a need for sustained support, but also raises concerns about flexibility and potential for cost overruns. 3. The contract type (Cost Plus Fixed Fee) can incentivize contractors to increase costs to achieve higher fee amounts. 4. Focus on contractor logistics support indicates a critical need for maintaining operational readiness of aircraft. 5. The specific North American Industry Classification System (NAICS) code 336411 points to a specialized segment of the aircraft manufacturing industry. 6. Awarded by the Department of the Army, this contract likely supports specific aviation assets within the branch.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of contractor logistics support for specialized aircraft. Without competitive bids, it's difficult to ascertain if the fixed fee and cost reimbursement structure resulted in optimal pricing. The extended duration and cost-plus fee structure present inherent risks for cost control, suggesting potential for expenditures exceeding initial expectations if not rigorously managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially leading to higher costs for taxpayers.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down prices. The government's negotiating position is also weakened without alternative offers.

Public Impact

The primary beneficiaries are the Department of the Army, ensuring the operational readiness and maintenance of critical aircraft assets. Services delivered include contractor logistics support, which encompasses maintenance, repair, and supply chain management for aircraft. The geographic impact is likely concentrated around military bases or operational theaters where these aircraft are deployed. Workforce implications include the employment of skilled technicians and support personnel by General Atomics Aeronautical Systems, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs.
Cost-plus fixed fee contract type can incentivize cost escalation.
Long contract duration increases risk of cost overruns and reduced flexibility.
Lack of transparency in pricing due to non-competitive award.

Positive Signals

Ensures critical logistics support for essential military aircraft.
Award to a specialized contractor with likely relevant expertise.
Definitive contract provides a clear framework for service delivery.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and associated logistics support. The market for such specialized services is often dominated by a few key players due to high barriers to entry, including technical expertise, security clearances, and established relationships with government agencies. Spending in this area is critical for maintaining national defense capabilities and ensuring the operational readiness of military aviation fleets.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, General Atomics Aeronautical Systems, Inc., is a large aerospace company. There is no explicit information provided regarding subcontracting plans to small businesses. This suggests that the primary focus of this contract is on the capabilities of the prime contractor, with potential limited direct benefit to the small business ecosystem unless subcontracting opportunities are actively pursued by the prime.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army's contracting and program management offices. Accountability measures would be defined within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Aircraft Maintenance and Repair Services
Defense Logistics Support
Aerospace Contractor Services
Military Aircraft Manufacturing Support
Department of Defense Aviation Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Extended contract duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $248.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. EXTENDED RANGE/MULTI-PURPOSE CONTRACTOR LOGISTICS SUPPORT QUICK REACTION CAPABILITY

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 $248.4 million.

What is the period of performance?

Start: 2009-05-20. End: 2014-04-30.

What is the track record of General Atomics Aeronautical Systems, Inc. with similar sole-source, cost-plus contracts for logistics support?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a significant history with the Department of Defense, particularly in the development and production of unmanned aerial systems (UAS) and related support. While specific details on sole-source, cost-plus logistics contracts are not publicly itemized in this summary, GA-ASI's extensive work on programs like the Predator and Reaper drones suggests a deep understanding of the complexities involved in providing long-term sustainment and operational support for advanced aviation platforms. Their experience likely includes managing complex supply chains, providing technical expertise for maintenance and repair, and fulfilling demanding performance requirements under various contract structures. However, the cost-plus nature of such contracts inherently carries a higher risk of cost overruns compared to fixed-price arrangements, necessitating robust government oversight to ensure value for money.

How does the $248 million contract value compare to similar contractor logistics support contracts for aircraft manufacturing within the DoD?

Comparing this $248 million contract value requires context regarding the specific aircraft type, scope of services, and duration. Large-scale contractor logistics support (CLS) for major defense platforms can easily run into hundreds of millions or even billions of dollars over their lifecycle. For instance, CLS for fighter jets or transport aircraft often involves extensive maintenance, spare parts, technical data, and specialized personnel. Given that this contract is for "EXTENDED RANGE/MULTI-PURPOSE CONTRACTOR LOGISTICS SUPPORT QUICK REACTION CAPABILITY" and awarded to a manufacturer of advanced aircraft, the $248 million over approximately five years (1806 days) appears to be within a plausible range for specialized, high-demand support. However, without knowing the exact platforms supported and the specific services included, a precise benchmark against other contracts is difficult. The sole-source nature also means direct price comparisons are not feasible.

What are the primary risks associated with a sole-source, cost-plus fixed fee contract for extended range logistics support?

The primary risks associated with this contract structure are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to seek cost efficiencies. Secondly, the Cost-Plus Fixed Fee (CPFF) structure, while providing the contractor with a guaranteed profit margin (the fixed fee), can incentivize cost escalation. Contractors may be less motivated to control costs rigorously because a portion of their profit is tied to the fee, not necessarily to cost savings. The "extended range" and "quick reaction capability" aspects suggest a need for high readiness and potentially unpredictable operational demands, which can further drive up costs under a CPFF model. Finally, the long duration (1806 days) increases the exposure to these risks over time and can lead to budget unpredictability if cost overruns occur.

How effective is contractor logistics support in ensuring the operational readiness of military aircraft compared to organic (in-house) support?

The effectiveness of contractor logistics support (CLS) versus organic support is a long-standing debate in defense circles, with effectiveness often depending on the specific system, mission requirements, and the contractor's capabilities. CLS can be highly effective when dealing with highly specialized, technologically advanced, or rapidly evolving systems where organic military personnel may lack the requisite training, equipment, or infrastructure. Contractors like General Atomics Aeronautical Systems, Inc. often possess deep technical expertise specific to their platforms, potentially leading to faster turnaround times for repairs and higher aircraft availability rates. Furthermore, CLS can allow military personnel to focus on core warfighting missions rather than maintenance tasks. However, organic support offers greater control, potentially lower long-term costs (if managed efficiently), and avoids reliance on external entities, which can be a strategic vulnerability. The "quick reaction capability" aspect suggests a need for rapid response that CLS might be better positioned to provide.

What are the historical spending patterns for contractor logistics support within the Department of the Army for aircraft manufacturing?

Historical spending patterns for contractor logistics support (CLS) within the Department of the Army for aircraft manufacturing are substantial and have generally trended upwards, reflecting the increasing complexity and cost of modern military aviation platforms. The Army, like other branches of the DoD, relies heavily on CLS to maintain the readiness of its diverse fleet, which includes helicopters, fixed-wing aircraft, and unmanned systems. Spending in this category is driven by factors such as the number of aircraft in the inventory, their operational tempo, the age of the platforms, and the technological sophistication requiring specialized maintenance. Contracts for CLS are often long-term, multi-year agreements, contributing to significant annual outlays. While specific figures fluctuate based on budget allocations and acquisition priorities, CLS for aviation assets consistently represents a major expenditure area within the Army's overall maintenance and sustainment budget.

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: W58RGZ09R0169

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: $248,443,228

Exercised Options: $248,443,228

Current Obligation: $248,443,228

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline