Army Spends $36.7M on Gray Eagle Aircraft Engineering Services, Sole-Source Contract Awarded

Contract Overview

Contract Amount: $36,688,136 ($36.7M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-03-08

End Date: 2023-01-31

Contract Duration: 1,425 days

Daily Burn Rate: $25.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES FY19-23 FOR THE GRAY EAGLE AIRCRAFT SYSTEM

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $36.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: ENGINEERING SERVICES FY19-23 FOR THE GRAY EAGLE AIRCRAFT SYSTEM Key points: 1. Significant spending on a critical aircraft system highlights ongoing sustainment needs. 2. Sole-source award raises questions about price competition and potential cost efficiencies. 3. The contract's duration and cost-plus structure warrant close monitoring for cost overruns. 4. Focus on aircraft manufacturing sector, with potential implications for related supply chains.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee structure, combined with a sole-source award, makes a direct pricing assessment difficult without further data. Benchmarking against similar sole-source engineering services for complex aircraft systems would be necessary to determine if the $36.7M expenditure represents fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was awarded on a sole-source basis, indicating a lack of competition. This limits price discovery and may lead to higher costs for the government compared to a competitive procurement. The 'NOT COMPETED' status suggests a specific justification was likely made for this approach.

Taxpayer Impact: The sole-source nature of this contract limits competitive pressure, potentially resulting in higher costs for taxpayers than if the services had been competed.

Public Impact

Taxpayers fund critical engineering services for the Gray Eagle aircraft, a key component of Army aviation. The lack of competition in this sole-source award may impact the overall cost-effectiveness of the Gray Eagle program. This contract supports a specific defense manufacturing sector, potentially influencing market dynamics and innovation. The duration of the contract (FY19-23) suggests a long-term commitment to the Gray Eagle system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition
Cost-plus contract type can incentivize cost growth
Lack of detailed cost breakdown makes value assessment difficult

Positive Signals

Supports critical defense aircraft system
Long-term contract provides stability for sustainment

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, specifically supporting the Gray Eagle unmanned aerial system. Spending in this area is driven by defense modernization and sustainment requirements. Benchmarks for similar sole-source engineering services on complex defense platforms would be relevant for comparison.

Small Business Impact

The data provided does not indicate whether small businesses were involved as subcontractors on this contract. Further investigation would be needed to determine the extent of small business participation.

Oversight & Accountability

The sole-source nature of this contract warrants scrutiny to ensure the government obtained fair and reasonable pricing. Oversight should focus on the contractor's cost reporting and the justification for continued sole-source awards.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Limited transparency on cost drivers

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. ENGINEERING SERVICES FY19-23 FOR THE GRAY EAGLE AIRCRAFT SYSTEM

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 $36.7 million.

What is the period of performance?

Start: 2019-03-08. End: 2023-01-31.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves factors such as unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. For the Gray Eagle system, it's possible that General Atomics possesses unique expertise or intellectual property essential for its engineering services. However, without explicit documentation, it's difficult to confirm if alternative competitive strategies were thoroughly explored and deemed unsuitable.

How does the cost-plus fixed fee structure impact the government's ability to control costs for these engineering services?

A Cost Plus Fixed Fee (CPFF) contract allows the contractor to recover all allowable costs plus a predetermined fixed fee. While the fee provides some incentive for the contractor to control costs (as it doesn't increase with costs), the government bears the risk of cost overruns. This structure can lead to higher overall costs if not managed diligently through robust oversight and clear performance metrics.

What is the long-term strategic value of continued investment in the Gray Eagle aircraft system, and are there plans for future competition?

The Gray Eagle is a significant platform for Intelligence, Surveillance, and Reconnaissance (ISR) missions. Continued investment suggests its strategic importance to the Army. Future competition for sustainment or upgrades would depend on market dynamics, technological advancements, and potential platform obsolescence. The Army's long-term aviation strategy will dictate whether future requirements are met through competitive means or continued sole-source arrangements.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics

Address: 14200 KIRKHAM WAY, POWAY, CA, 92064

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

Financial Breakdown

Contract Ceiling: $36,688,136

Exercised Options: $36,688,136

Current Obligation: $36,688,136

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $5,638,257

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ18D0138

IDV Type: IDC

Timeline