DHS awards $272.6M to General Atomics for UAS services, a sole-source contract

Contract Overview

Contract Amount: $272,580,355 ($272.6M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2018-04-19

End Date: 2024-09-30

Contract Duration: 2,356 days

Daily Burn Rate: $115.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: UAS OPERATIONAL AND MAINTENANCE SERVICES

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Homeland Security obligated $272.6 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: UAS OPERATIONAL AND MAINTENANCE SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant duration of over 196 months (2356 months) suggests long-term reliance. 3. Cost Plus Fixed Fee (CPFF) contract type may incentivize cost overruns. 4. High contract value indicates critical operational importance for CBP. 5. No small business set-aside, raising questions about broader economic impact. 6. Focus on operational and maintenance services for Unmanned Aircraft Systems (UAS).

Value Assessment

Rating: questionable

The contract value of $272.6 million over its extended period raises concerns about value for money, especially given the sole-source nature. Without competitive bidding, it is difficult to benchmark pricing against market rates or similar contracts. The CPFF structure, while allowing for flexibility, can lead to higher costs if not managed rigorously. The long duration suggests a sustained need, but the lack of competition prevents an assessment of whether taxpayers are receiving the best possible price for these essential UAS services.

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 vendor possesses the necessary capabilities or when urgency dictates. The lack of multiple bidders means that price discovery through competition was bypassed, potentially leading to higher costs for the government. The justification for a sole-source award would need to be robust to ensure fair pricing and prevent market distortion.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down costs. The government's negotiating position is weakened without alternative providers.

Public Impact

Enhances border security operations through sustained Unmanned Aircraft System (UAS) capabilities. Supports U.S. Customs and Border Protection (CBP) in surveillance and interdiction efforts. Primarily benefits federal law enforcement and national security agencies. Geographic impact is likely nationwide, focusing on border regions and operational areas. Maintains critical infrastructure and technical expertise within the federal government's aerial surveillance program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs.
Cost Plus Fixed Fee (CPFF) contract type can incentivize higher spending.
Long contract duration (over 196 months) may indicate a lack of viable alternatives or strategic planning.
Absence of small business participation raises concerns about equitable distribution of federal funds.

Positive Signals

Ensures continuity of critical UAS operational and maintenance services for national security.
General Atomics is a known provider in the UAS sector, suggesting established expertise.
Contract supports a vital mission for U.S. Customs and Border Protection.

Sector Analysis

The Unmanned Aircraft Systems (UAS) market is a rapidly growing sector within aerospace and defense, driven by increasing demand for surveillance, reconnaissance, and logistical support. This contract falls within the broader 'Other Support Activities for Air Transportation' NAICS code, but specifically addresses the specialized maintenance and operational needs of advanced UAS platforms. The total contract value of $272.6 million over its extended period represents a significant investment in maintaining these critical assets, reflecting the substantial costs associated with high-performance, long-endurance UAS.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there information indicating significant subcontracting opportunities for small businesses. The sole-source nature of the award further limits the potential for small business involvement. This suggests that the primary benefits of this contract may not extend to the small business ecosystem, potentially concentrating the economic impact with the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security's contracting and program management offices. Given its sole-source nature and significant value, robust oversight is crucial to ensure performance standards are met and costs are managed effectively. Transparency regarding the justification for the sole-source award and ongoing performance metrics would be key accountability measures. Inspector General reviews may be initiated if performance or cost concerns arise.

Related Government Programs

Department of Defense Unmanned Aircraft Systems Programs
Federal Aviation Administration (FAA) Drone Regulations
Homeland Security Border Surveillance Technology
Air Transportation Support Services

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $272.6 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. UAS OPERATIONAL AND MAINTENANCE SERVICES

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 Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $272.6 million.

What is the period of performance?

Start: 2018-04-19. End: 2024-09-30.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as: only one responsible source exists, an urgent and compelling need exists that cannot be met by other sources, or the agency has made a determination that a competitive process is not feasible or not in the public interest. For this contract, the justification would likely relate to General Atomics Aeronautical Systems, Inc.'s unique capabilities or proprietary technology related to the specific UAS platforms operated by U.S. Customs and Border Protection, or potentially a critical need that precluded a lengthy competitive procurement process. Further investigation into DHS procurement records would be required to ascertain the precise rationale.

How does the Cost Plus Fixed Fee (CPFF) contract type impact the overall cost and risk for the government?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts a significant portion of the cost risk to the government, as the contractor is incentivized to complete the work but not necessarily to minimize costs beyond what is necessary to achieve the fixed fee. While it allows for flexibility in scope and can be useful for research and development or services where costs are uncertain, it can lead to cost overruns if not managed diligently. The government must maintain strong oversight to ensure costs are reasonable and allocable, and the fixed fee should be negotiated appropriately to reflect the contractor's risk and effort.

What are the potential risks associated with the long contract duration of over 196 months?

A contract duration exceeding 196 months (approximately 16 years) presents several risks. Firstly, it locks the government into a single provider for an extended period, potentially limiting its ability to adopt newer technologies or benefit from innovations that may emerge from competitors. Secondly, it increases the risk of cost escalation over time, as market conditions, labor costs, and material prices can fluctuate significantly over such a long span. Thirdly, it raises concerns about the contractor's sustained performance and responsiveness; maintaining high service levels and adapting to evolving mission requirements over such a long duration can be challenging. Finally, the long duration, coupled with a sole-source award, suggests a potential lack of strategic foresight or a failure to develop alternative solutions or foster competition within the market.

Can the value of this contract be benchmarked against similar UAS operational and maintenance services?

Benchmarking the value of this $272.6 million contract is challenging due to its sole-source nature and specific operational context. Standard industry benchmarks for UAS operational and maintenance services are difficult to establish without competitive data. Factors such as the specific type of UAS, mission requirements (e.g., flight hours, sensor packages, operational tempo), geographic coverage, and required maintenance levels vary significantly. The CPFF structure also complicates direct cost comparisons. To effectively benchmark, one would need access to detailed performance metrics, cost breakdowns, and data from comparable sole-source or competitively awarded contracts for similar UAS platforms and services, which are not publicly available.

What is the historical spending pattern for UAS operational and maintenance services by U.S. Customs and Border Protection?

The provided data only details this specific contract awarded in April 2018 with an end date of September 2024 (though the duration suggests a much longer period). To understand historical spending patterns, one would need to analyze CBP's procurement history for UAS operational and maintenance services over several fiscal years. This would involve examining previous contracts, their values, durations, award types (competed vs. sole-source), and the contractors involved. Such an analysis would reveal trends in investment, reliance on specific technologies or contractors, and the overall evolution of CBP's UAS program spending. Without access to this broader historical data, it's impossible to contextualize the $272.6 million award within CBP's long-term spending trajectory.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HSBP17R0012

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $275,850,000

Exercised Options: $272,580,355

Current Obligation: $272,580,355

Actual Outlays: $34,265,572

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline