Federal Aviation Administration awards $106M for aircraft manufacturing, with Bombardier Inc. as the contractor

Contract Overview

Contract Amount: $106,308,500 ($106.3M)

Contractor: Bombardier Inc.

Awarding Agency: Department of Transportation

Start Date: 2009-01-30

End Date: 2016-08-01

Contract Duration: 2,740 days

Daily Burn Rate: $38.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 1ST CHALLENGER CL-604 AIRCRAFT IAW SECTION C. SEE SECTION F, PARAGRAPH F.1 FOR DELIVERY SCHEDULE. 1ST CHALLENGER AIRCRAFT: $24,050,000 LESS 3 HAWKERS TRADE-IN VALUE: $10,800,000 TRADE DIFFERENCE: $13,250,000

Place of Performance

Location: RICHARDSON, COLLIN County, TEXAS, 75080

State: Texas Government Spending

Plain-Language Summary

Department of Transportation obligated $106.3 million to BOMBARDIER INC. for work described as: 1ST CHALLENGER CL-604 AIRCRAFT IAW SECTION C. SEE SECTION F, PARAGRAPH F.1 FOR DELIVERY SCHEDULE. 1ST CHALLENGER AIRCRAFT: $24,050,000 LESS 3 HAWKERS TRADE-IN VALUE: $10,800,000 TRADE DIFFERENCE: $13,250,000 Key points: 1. The contract's value of over $106 million indicates a significant investment in aviation assets. 2. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 3. The long duration of the contract (2740 days) suggests a complex or ongoing requirement. 4. The inclusion of trade-in values in the initial pricing structure is an interesting financial element. 5. The contract's focus on aircraft manufacturing places it within a specialized and capital-intensive sector. 6. The absence of small business participation raises questions about broader economic impact. 7. The firm-fixed-price structure aims to provide cost certainty for the government.

Value Assessment

Rating: fair

The total contract value is substantial, but without specific details on the aircraft model and its intended use, a direct comparison to similar contracts is challenging. The pricing structure, which includes trade-in values, complicates a straightforward assessment of value for money. The firm-fixed-price type suggests cost predictability, but the overall value proposition depends heavily on the performance and longevity of the delivered aircraft.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The reasons for this approach are not detailed, but it means there was no open market competition to solicit bids from multiple vendors. This can sometimes lead to higher prices or less favorable terms compared to a fully competed contract, as the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Taxpayer Impact: For taxpayers, a sole-source award means the government may not have secured the best possible price or terms, as there was no competitive pressure to drive down costs. This could result in a less efficient use of public funds.

Public Impact

The primary beneficiary is the Federal Aviation Administration (FAA), which will receive new aircraft to support its operations. The services delivered involve the manufacturing and delivery of specific aircraft, likely for surveillance, testing, or operational support. The geographic impact is primarily centered around the manufacturing facilities and the operational bases where the aircraft will be deployed. The contract supports jobs within the aerospace manufacturing sector, specifically at Bombardier Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency in pricing.
Long contract duration could introduce risks related to obsolescence or changing requirements.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Award to an established manufacturer like Bombardier suggests a focus on quality and reliability.
Inclusion of trade-in values may represent a cost-saving measure.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant capital investment, and stringent regulatory requirements. This contract falls within this sector, involving the production of specialized aircraft. The total value of the contract is substantial, reflecting the complexity and cost of modern aircraft. Comparable spending benchmarks would typically involve other large government procurements for similar aviation assets or platforms.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of aircraft manufacturing, it is likely that the prime contractor, Bombardier Inc., possesses the specialized capabilities and scale required. There is no explicit information regarding subcontracting plans to small businesses, which could represent a missed opportunity for broader economic participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program officials within the Federal Aviation Administration. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified aircraft. Transparency is limited due to the sole-source nature and the proprietary aspects of aircraft manufacturing, but contract awards are generally reported in federal procurement databases.

Related Government Programs

FAA Aircraft Procurement
General Services Administration (GSA) Vehicle Procurement
Department of Defense Aircraft Acquisition

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $106.3 million to BOMBARDIER INC.. 1ST CHALLENGER CL-604 AIRCRAFT IAW SECTION C. SEE SECTION F, PARAGRAPH F.1 FOR DELIVERY SCHEDULE. 1ST CHALLENGER AIRCRAFT: $24,050,000 LESS 3 HAWKERS TRADE-IN VALUE: $10,800,000 TRADE DIFFERENCE: $13,250,000

Who is the contractor on this award?

The obligated recipient is BOMBARDIER INC..

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $106.3 million.

What is the period of performance?

Start: 2009-01-30. End: 2016-08-01.

What specific aircraft models are being procured under this contract, and what are their intended operational roles within the FAA?

The provided data indicates the procurement of a '1ST CHALLENGER CL-604 AIRCRAFT'. The Challenger 604 is a business jet known for its range and cabin size. Within the FAA, such aircraft are often utilized for specialized missions including flight inspection of navigation aids, calibration of airport equipment, atmospheric research, or potentially for executive transport. The exact role would be detailed in Section C of the contract, which specifies the technical requirements and statement of work. Without access to Section C, the precise operational purpose remains inferred based on the aircraft type and the agency's known activities.

How does the trade-in value of $10.8 million impact the overall cost-effectiveness of this acquisition?

The trade-in value of $10.8 million directly reduces the net cost of the new aircraft. The contract states a base price for the first Challenger aircraft at $24,050,000, with the trade-in reducing this to $13,250,000 for that specific unit. This mechanism effectively lowers the out-of-pocket expense for the FAA. From a cost-effectiveness standpoint, it's beneficial as it offsets a portion of the acquisition cost with the residual value of older assets. However, a full assessment would require knowing if the trade-in value offered was competitive compared to selling the aircraft on the open market, and the condition and maintenance costs of the aircraft being traded in.

What are the risks associated with a sole-source award for aircraft manufacturing, particularly for a long-duration contract?

Sole-source awards in aircraft manufacturing carry several risks. Firstly, the absence of competition can lead to inflated prices, as the contractor faces less pressure to offer the most competitive bid. Secondly, it can limit innovation and the adoption of new technologies if the government is locked into a specific manufacturer's offerings. For a long-duration contract (2740 days), risks include potential cost overruns if initial estimates were inaccurate, the possibility of the technology becoming outdated before delivery or during its service life, and the contractor potentially facing financial instability or changes in business strategy that could impact delivery or support. The government also has less leverage to negotiate favorable terms compared to a competitive scenario.

What is Bombardier Inc.'s track record with government contracts, particularly with the FAA or similar agencies?

Bombardier Inc. is a major global aerospace manufacturer with a history of supplying aircraft to various government entities worldwide, including military and civilian agencies. While specific details of their past performance with the FAA are not provided in the excerpt, their established presence in the industry suggests experience in meeting government procurement standards. Government contractors are typically assessed on past performance, which includes factors like delivery timeliness, quality of product, cost control, and overall customer satisfaction. A comprehensive review would involve examining historical contract data, performance reviews, and any past disputes or issues related to Bombardier's government contracts.

How does the $106 million total contract value compare to typical FAA spending on aircraft acquisition?

The total contract value of $106,308,499.79 is a significant sum, indicative of acquiring multiple high-value assets or a complex, customized platform. To benchmark this against typical FAA spending, one would need to analyze historical FAA budgets and contract awards for aircraft. The FAA operates a diverse fleet for various functions, including flight standards, aviation safety, and research. The cost of individual aircraft can range from hundreds of thousands for smaller planes to tens of millions for specialized jets like the Challenger 604. A contract of this magnitude might represent the acquisition of several such aircraft or a single, highly customized platform over several years, and would likely be a notable expenditure within the FAA's capital investment portfolio for a given fiscal year.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 800 BOUL RENE-LEVESQUE O BUREAU 2900, MONTREAL

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $946,575,805

Exercised Options: $107,959,533

Current Obligation: $106,308,500

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Timeline