DoD's $55M Gulfstream Aerospace aircraft purchase lacked competition, raising value concerns

Contract Overview

Contract Amount: $55,086,271 ($55.1M)

Contractor: Gulfstream Aerospace Corporation

Awarding Agency: Department of Defense

Start Date: 2009-09-09

End Date: 2012-12-31

Contract Duration: 1,209 days

Daily Burn Rate: $45.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMS C-37B AIRCRAFT PURCHASE

Place of Performance

Location: SAVANNAH, CHATHAM County, GEORGIA, 31408

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $55.1 million to GULFSTREAM AEROSPACE CORPORATION for work described as: FMS C-37B AIRCRAFT PURCHASE Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The duration of the contract (1209 days) suggests a significant, long-term commitment for the aircraft. 3. The absence of a competitive bidding process is a key risk indicator for value for money. 4. The contract falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicating a specific niche within defense procurement. 5. The firm-fixed-price structure shifts cost risk to the contractor, but the lack of competition hinders benchmark pricing.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source aircraft purchase is challenging without comparable contract data. The $55.1 million price tag for a single aircraft (implied by the data) needs to be assessed against market rates for similar high-value aerospace assets. The lack of competition means there's no direct price comparison to ensure optimal taxpayer value. Without competitive bids, it's difficult to ascertain if the price reflects a fair market value or if it includes a premium due to the non-competitive award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor, Gulfstream Aerospace Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. The lack of competition means there were no alternative offers to compare against, potentially leading to a higher price than if multiple bids had been received. This method is usually reserved for situations where only one source can fulfill the requirement, but it significantly reduces the government's leverage in price negotiation.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall spending for the same goods or services.

Public Impact

The primary beneficiary is the Department of the Air Force, acquiring a specific aircraft asset. The services delivered involve the provision of a high-value aircraft, likely for strategic or operational purposes. The geographic impact is centered around the contractor's operations in Georgia and the eventual deployment location of the aircraft. Workforce implications are primarily within Gulfstream Aerospace Corporation, supporting manufacturing and delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can indicate potential barriers to entry for other suppliers.
Limited transparency in the procurement process due to non-competitive nature.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Award to a known entity (Gulfstream) suggests a degree of reliability in delivery.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and complex supply chains. This contract for a specific aircraft falls within the broader defense industrial base, where specialized capabilities are critical. The market for large, high-performance aircraft is concentrated among a few major manufacturers. Spending in this sector is often driven by national security requirements and technological advancements, with contracts frequently being large and long-term.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Gulfstream Aerospace Corporation, is a large business. There is no explicit information provided regarding subcontracting plans to small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem from this particular contract is likely minimal, though the prime contractor's overall subcontracting practices could have broader implications.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management systems. The Air Force contracting officers are responsible for monitoring performance and ensuring compliance with contract terms. Inspector General (IG) offices within the DoD may conduct audits or investigations into specific aspects of large contracts, particularly concerning allegations of fraud, waste, or abuse. Transparency is limited due to the sole-source nature, but contract award data is generally publicly available.

Related Government Programs

Military Aircraft Procurement
Defense Logistics Agency Contracts
Aerospace Manufacturing Contracts
Department of the Air Force Acquisitions

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.1 million to GULFSTREAM AEROSPACE CORPORATION. FMS C-37B AIRCRAFT PURCHASE

Who is the contractor on this award?

The obligated recipient is GULFSTREAM AEROSPACE CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $55.1 million.

What is the period of performance?

Start: 2009-09-09. End: 2012-12-31.

What is the specific type of aircraft being purchased and its intended use?

The provided data indicates the contract is for 'FMS C-37B AIRCRAFT PURCHASE' with Gulfstream Aerospace Corporation. The C-37B is a military designation for the Gulfstream V-SP business jet, often used for executive transport, VIP airlift, and potentially specialized missions by various military branches. Its specific intended use within the Department of the Air Force is not detailed in the provided data but typically involves rapid, long-range transport for high-ranking personnel or critical equipment.

How does the $55.1 million cost compare to similar aircraft purchases by the DoD or other agencies?

Directly comparing the $55.1 million cost is difficult without knowing the exact configuration, age, and specific mission systems of this C-37B. However, new Gulfstream V-SP aircraft have historically listed prices in the $40-$50 million range, depending on customization. Given this is a sole-source award from 2009-2012, the $55.1 million figure could represent the total contract value including potential modifications, support, or a slight premium due to the lack of competition. Benchmarking against other sole-source VIP transport aircraft acquisitions would be necessary for a more precise value assessment.

What are the risks associated with a sole-source award for a high-value asset like an aircraft?

Sole-source awards for high-value assets like aircraft carry significant risks. The primary risk is paying a premium price because there is no competitive pressure to drive down costs. The government loses the opportunity to explore innovative solutions or better pricing from alternative vendors. Furthermore, it can create a perception of favoritism or a lack of due diligence in procurement. For long-term support or follow-on purchases, the government may become locked into a single provider, limiting future flexibility and potentially incurring higher sustainment costs over the asset's lifecycle.

What is Gulfstream Aerospace Corporation's track record with the Department of Defense?

Gulfstream Aerospace Corporation, a subsidiary of General Dynamics, has a long-standing relationship with the Department of Defense and other government agencies, supplying various business jet models for military and VIP transport. Their track record includes numerous contracts for aircraft acquisition, modification, and support services. While specific performance details for this particular C-37B contract are not provided, Gulfstream is generally recognized as a reputable manufacturer of high-quality business and special mission aircraft, often delivering reliable platforms.

What were the historical spending patterns for C-37B aircraft or similar assets within the Air Force prior to this contract?

Historical spending data for C-37B aircraft prior to this 2009 contract would likely show a pattern of similar sole-source or limited-competition awards, given the specialized nature of these aircraft and Gulfstream's dominant market position. The Air Force has utilized C-37 variants for VIP transport for many years. Analyzing prior contracts would reveal if this $55.1 million award represents an increase or decrease in per-unit cost compared to previous acquisitions, adjusted for inflation and market conditions. Such analysis is crucial for understanding long-term cost trends.

Were there any justifications provided for why this aircraft could only be procured from Gulfstream?

The data indicates the contract type was 'NOT COMPETED,' implying a sole-source justification was invoked. Typical justifications for sole-source aircraft procurements include unique technical requirements, existing fleet commonality (to reduce training and maintenance costs), specific performance capabilities only offered by one manufacturer, or urgent operational needs where a competitive process would cause unacceptable delays. Without access to the specific justification document filed by the Air Force, the precise reasons remain unconfirmed, but these are the standard rationales.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 500 GULFSTREAM RD, SAVANNAH, GA, 01

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $55,086,271

Exercised Options: $55,086,271

Current Obligation: $55,086,271

Contract Characteristics

Cost or Pricing Data: NOT OBTAINED - WAIVED

Parent Contract

Parent Award PIID: F3365702D2011

IDV Type: IDC

Timeline