DHS awards $66.7M for G550 aircraft, raising questions about competition and value

Contract Overview

Contract Amount: $66,688,100 ($66.7M)

Contractor: Gulfstream Aerospace Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2020-10-06

End Date: 2022-12-29

Contract Duration: 814 days

Daily Burn Rate: $81.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: GULFSTREAM SHALL MANUFACTURE AND PROVIDE THE G550 AIRCRAFT IN THE C-37B CONFIGURATION WITH ADDITIONAL SPECIFICTIONS, SYSTEM, INTERIOR FURNISHINGS, CAPABOLITIES, AND PROVISIONS.

Place of Performance

Location: SAVANNAH, CHATHAM County, GEORGIA, 31408

State: Georgia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $66.7 million to GULFSTREAM AEROSPACE CORPORATION for work described as: GULFSTREAM SHALL MANUFACTURE AND PROVIDE THE G550 AIRCRAFT IN THE C-37B CONFIGURATION WITH ADDITIONAL SPECIFICTIONS, SYSTEM, INTERIOR FURNISHINGS, CAPABOLITIES, AND PROVISIONS. Key points: 1. The contract for specialized G550 aircraft was awarded on a sole-source basis, limiting price discovery. 2. The firm-fixed-price contract type provides cost certainty but may not reflect the best possible price due to limited competition. 3. The duration of the contract (814 days) suggests a significant undertaking for specialized aircraft manufacturing. 4. The specific configuration (C-37B) indicates a need for advanced capabilities beyond standard commercial aircraft. 5. The absence of small business set-asides or subcontracting requirements means limited direct benefit to small businesses. 6. The contract's value of $66.7 million warrants scrutiny for value for money given the sole-source award.

Value Assessment

Rating: questionable

Benchmarking the value of a highly specialized aircraft like the G550 in a C-37B configuration is challenging without detailed specifications and market data. However, the sole-source nature of this award raises concerns about whether the government secured the most competitive pricing. Without competitive bids, it is difficult to definitively assess if $66.7 million represents a fair market price for the unique capabilities and customizations required. Further analysis would require comparing this to historical sole-source awards for similar specialized aircraft or government-unique modifications.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Gulfstream Aerospace Corporation, was solicited. This approach is typically used when a unique product or service is required, and only one source can provide it. The lack of competition means that potential cost savings that could arise from a competitive bidding process were not realized. This limits the government's ability to leverage market forces to drive down prices.

Taxpayer Impact: Taxpayers may have paid a premium for this aircraft due to the absence of competitive bidding. The government did not have the benefit of multiple offers to compare and negotiate against, potentially leading to a higher overall cost.

Public Impact

The U.S. Coast Guard will benefit from the acquisition of advanced G550 aircraft configured for specific operational needs. These aircraft are intended for specialized missions requiring enhanced capabilities, likely for surveillance, transport, or command and control. The geographic impact is national, supporting the Coast Guard's operational reach across various regions. The contract supports the aerospace manufacturing sector, specifically for high-end business jet conversions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases cost to taxpayers.
Lack of transparency in the sole-source justification requires careful review.
High value of the contract necessitates rigorous oversight to ensure funds are used effectively.
Absence of small business participation may limit broader economic impact.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a known manufacturer (Gulfstream) suggests reliance on established quality and expertise.
Specific configuration indicates a tailored solution meeting defined operational requirements.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and stringent regulatory requirements. This contract falls within the specialized segment of business jet manufacturing and modification. The G550 is a high-performance aircraft, and its conversion to a C-37B configuration implies substantial customization for government use. Comparable spending benchmarks would typically involve other government procurements of similar specialized aircraft or modifications, which are often awarded on a sole-source or limited-competition basis due to unique requirements.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor are there explicit requirements for small business subcontracting. The award to Gulfstream Aerospace Corporation, a large aerospace manufacturer, suggests that the primary focus was on acquiring the specialized aircraft from the original equipment manufacturer. This means that the direct economic benefits to the small business ecosystem from this specific contract are likely minimal, unless Gulfstream voluntarily engages small businesses in its supply chain for components or services.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Homeland Security and the U.S. Coast Guard contracting and program management offices. As a sole-source award, the justification and negotiation process would be subject to internal review and potentially audits by agencies like the Government Accountability Office (GAO) or the DHS Inspector General, especially concerning the determination of fair and reasonable pricing. Transparency is limited due to the sole-source nature, but contract award details are publicly available.

Related Government Programs

Specialized Aircraft Procurement
Government Fleet Modernization
Aerospace Manufacturing Contracts
Department of Homeland Security Acquisitions
U.S. Coast Guard Aviation Assets

Risk Flags

Sole-source award
Lack of competition
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $66.7 million to GULFSTREAM AEROSPACE CORPORATION. GULFSTREAM SHALL MANUFACTURE AND PROVIDE THE G550 AIRCRAFT IN THE C-37B CONFIGURATION WITH ADDITIONAL SPECIFICTIONS, SYSTEM, INTERIOR FURNISHINGS, CAPABOLITIES, AND PROVISIONS.

Who is the contractor on this award?

The obligated recipient is GULFSTREAM AEROSPACE CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $66.7 million.

What is the period of performance?

Start: 2020-10-06. End: 2022-12-29.

What specific capabilities does the C-37B configuration of the G550 aircraft provide that necessitate a sole-source award?

The C-37B configuration of the Gulfstream G550 is a specialized variant often used for executive transport and specialized missions by government agencies. While Gulfstream is the original manufacturer, the specific "C-37B" designation implies modifications and systems integration beyond the standard commercial offering. These could include enhanced communication suites, advanced navigation systems, secure data links, specialized sensor integration, or unique interior configurations for command and control or mission-specific operations. The sole-source justification would typically detail these unique requirements, asserting that only Gulfstream, as the OEM and integrator, can provide the aircraft with the specified modifications and ensure compatibility with existing government infrastructure and operational protocols. Without access to the specific justification documentation, the precise nature of these unique capabilities remains proprietary.

How does the $66.7 million price compare to similar government procurements of specialized aircraft?

Directly comparing the $66.7 million price tag for this G550 C-37B configuration is difficult without detailed specifications and the context of the sole-source award. Specialized government aircraft, particularly those with extensive modifications for roles like VIP transport, surveillance, or command and control, can vary significantly in price. Factors such as avionics upgrades, interior outfitting, mission-specific systems (e.g., radar, secure communications), and the number of aircraft procured heavily influence the final cost. Historically, similar sole-source or limited-competition awards for specialized aircraft have ranged from tens of millions to over a hundred million dollars per aircraft, depending on the complexity and mission requirements. The firm-fixed-price nature of this award suggests a defined scope, but the lack of competition makes a precise value-for-money assessment challenging against market benchmarks.

What are the primary risks associated with sole-source contracts for high-value assets like aircraft?

The primary risk associated with sole-source contracts for high-value assets like aircraft is the potential for inflated pricing due to the absence of competitive pressure. Without multiple bidders vying for the contract, the government may not achieve the most favorable price or terms. Another risk is reduced innovation, as the sole provider may have less incentive to offer cost-saving improvements or cutting-edge solutions. Furthermore, sole-source awards can raise concerns about transparency and fairness in the procurement process, potentially leading to scrutiny from oversight bodies. Dependence on a single supplier also creates a risk of supply chain disruptions or vendor lock-in, making future procurements or support services potentially more expensive or difficult to secure.

What is the expected operational lifespan and utility of the G550 aircraft in a C-37B configuration for the U.S. Coast Guard?

The Gulfstream G550 is a long-range, high-performance business jet known for its reliability and speed. In a C-37B configuration, tailored for government use, its operational lifespan is typically expected to be 20-30 years, aligning with the typical service life of major military and government aircraft platforms. Its utility would be dictated by the specific C-37B modifications, which could enhance its role in maritime patrol, search and rescue coordination, personnel transport to remote locations, or as a mobile command center. The Coast Guard's investment in such a platform suggests a long-term strategic need for advanced aviation capabilities to support its diverse missions, including homeland security, drug interdiction, and disaster response.

Are there any historical precedents for the U.S. Coast Guard procuring specialized Gulfstream aircraft via sole-source contracts?

The U.S. Coast Guard, like many government agencies, has procured specialized aircraft, including variants of Gulfstream jets, through various contract types over the years. While specific details on all historical sole-source awards for Gulfstream aircraft by the Coast Guard are not readily available in public databases without extensive searching, it is not uncommon for government entities to utilize sole-source or limited-source procurements for highly specialized or modified aircraft platforms. This often occurs when the original equipment manufacturer (OEM) is the only entity capable of providing the specific configuration, integration, or necessary support infrastructure. The C-37 designation itself has been used by multiple branches of the U.S. military and government for specialized transport and mission roles, often involving sole-source arrangements with Gulfstream due to the unique nature of the modifications.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 500 GULFSTREAM RD, SAVANNAH, GA, 31408

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: $66,688,100

Exercised Options: $66,688,100

Current Obligation: $66,688,100

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA813419D0001

IDV Type: IDC

Timeline