DoD Awards $367M Undefinitized Contract for Aircraft Manufacturing to General Atomics

Contract Overview

Contract Amount: $367,444,098 ($367.4M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2023-12-01

End Date: 2029-06-29

Contract Duration: 2,037 days

Daily Burn Rate: $180.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: PRODUCTION READY TEST ASSET UNDEFINITIZED CONTRACT ACTION

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $367.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: PRODUCTION READY TEST ASSET UNDEFINITIZED CONTRACT ACTION Key points: 1. Significant contract value of $367.4 million for aircraft manufacturing. 2. Sole-source award to General Atomics Aeronautical Systems, Inc. raises competition concerns. 3. Potential for cost overruns due to the undefinitized nature of the contract. 4. The contract falls under the Aircraft Manufacturing sector, with a significant benchmark value.

Value Assessment

Rating: questionable

The contract is undefinitized, meaning final pricing is not yet established. This poses a risk for cost control and potential overruns compared to definitized contracts where prices are fixed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. Lack of competition limits price discovery and may lead to higher costs for the government.

Taxpayer Impact: The absence of competition and the undefinitized nature of the contract could result in taxpayers paying more than necessary for these aircraft manufacturing services.

Public Impact

Taxpayers may face higher costs due to the lack of competitive bidding. The undefinitized contract structure introduces uncertainty regarding the final cost of the assets. This award impacts the defense industrial base, specifically in aircraft manufacturing. The long duration of the contract (2029) suggests a sustained need for these assets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Undefinitized Contract Action (UCA)
Sole-Source Award
Cost-Plus contract type (implied by 'COST NO FEE' and undefinitized nature)
Lack of Small Business Participation (sb: false)

Positive Signals

Award to established defense contractor
Long-term contract duration indicates strategic importance
Potential for technological advancement in aircraft manufacturing

Sector Analysis

This contract is within the Aircraft Manufacturing sector, which is a critical component of the defense industrial base. The value of $367.4 million is substantial and aligns with major defense procurements in this area.

Small Business Impact

The data indicates that small businesses were not involved in this contract (sb: false). This suggests a missed opportunity for small business participation and potential concentration of large prime contractors.

Oversight & Accountability

The undefinitized nature of the contract requires close oversight to ensure fair pricing and prevent cost creep. The Department of Defense will need robust mechanisms to definitize the contract and manage expenditures effectively.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Undefinitized Contract Action (UCA)
Sole-Source Award
Lack of Competition
Potential for Cost Overruns
No Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $367.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. PRODUCTION READY TEST ASSET UNDEFINITIZED CONTRACT ACTION

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 $367.4 million.

What is the period of performance?

Start: 2023-12-01. End: 2029-06-29.

What is the projected final cost of the contract once definitized, and how does it compare to similar aircraft manufacturing contracts?

The final cost is currently unknown as the contract is undefinitized. A thorough review of historical data for similar aircraft manufacturing contracts, considering inflation and specific technical requirements, will be necessary to establish a benchmark. Without this, assessing value for money is challenging.

What are the specific risks associated with an undefinitized contract action (UCA) in this context, and what mitigation strategies are in place?

The primary risk of a UCA is the potential for the government to pay an unreasonable price once the contract is definitized. Mitigation strategies typically involve establishing clear definitization schedules, robust negotiation teams, and independent cost estimates to ensure fair pricing.

How will the effectiveness of this contract be measured, particularly given the sole-source nature and lack of upfront price certainty?

Effectiveness will be measured by the timely delivery of aircraft meeting specified performance requirements and the eventual definitization of the contract at a fair and reasonable price. Performance metrics should be clearly defined, and progress should be monitored closely throughout the contract's lifecycle.

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

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

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: $3,263,351,336

Exercised Options: $367,444,098

Current Obligation: $367,444,098

Subaward Activity

Number of Subawards: 23

Total Subaward Amount: $25,149,154

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline