DoD awards $92M for Gulfstream G550 AEW aircraft manufacturing, a sole-source contract with no small business set-aside

Contract Overview

Contract Amount: $91,970,087 ($92.0M)

Contractor: Gulfstream Aerospace Corporation

Awarding Agency: Department of Defense

Start Date: 2016-03-18

End Date: 2020-01-31

Contract Duration: 1,414 days

Daily Burn Rate: $65.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GULFSTREAM G550 AEW AIRCRAFT

Place of Performance

Location: SAVANNAH, CHATHAM County, GEORGIA, 31408

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $92.0 million to GULFSTREAM AEROSPACE CORPORATION for work described as: GULFSTREAM G550 AEW AIRCRAFT Key points: 1. The contract value of $92M for aircraft manufacturing suggests a high unit cost, requiring careful benchmarking. 2. Sole-source procurement limits competitive pressure, potentially impacting price efficiency and value for money. 3. The absence of small business participation may indicate a lack of opportunities for smaller firms in this specialized sector. 4. The contract duration of over three years provides a long-term commitment, but also extends the period of potential price fluctuations. 5. Fixed-price contracts generally shift risk to the contractor, but the specific terms need review for cost control. 6. The aircraft type, Gulfstream G550 AEW, points to a specialized defense application, likely with unique performance requirements.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the aircraft's configuration and capabilities. However, the sole-source nature and the high dollar amount for a single aircraft type raise concerns about potential overpayment. Comparing this to other specialized military aircraft procurements, especially those that undergo competitive bidding, would be crucial to assess if the price reflects fair market value. The firm fixed-price structure offers some cost certainty, but the lack of competition means the government may not be benefiting from the most economical pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when only one vendor possesses the necessary capabilities, technology, or is the sole manufacturer of the required item. The lack of competition means the Department of the Navy did not benefit from a bidding process that could drive down prices through market forces. The rationale for sole-source procurement needs to be thoroughly documented to ensure it was justified and that alternatives were considered.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no opportunity for multiple companies to bid and offer competitive rates. This can lead to higher overall spending for the government.

Public Impact

The primary beneficiaries are the Department of Defense and potentially specific military units requiring airborne early warning capabilities. The contract delivers specialized aircraft manufacturing services, contributing to national defense readiness. The geographic impact is primarily centered around the contractor's facilities in Georgia, with potential downstream effects on the aerospace supply chain. Workforce implications include employment for skilled engineers, technicians, and manufacturing personnel within Gulfstream Aerospace Corporation and its suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of small business participation may exclude innovative smaller firms and limit subcontracting opportunities.
High contract value for a specialized asset warrants scrutiny for cost-effectiveness and potential overruns if not managed tightly.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor, providing budget certainty.
Award to an established manufacturer like Gulfstream suggests access to proven technology and manufacturing expertise.
Long contract duration allows for planned integration and sustainment of critical defense assets.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and stringent regulatory requirements, particularly for defense applications. This contract falls within the specialized segment of military aircraft production, specifically for airborne early warning (AEW) platforms. The market for such specialized defense assets is often limited to a few key players due to technological complexity and security considerations. Comparable spending benchmarks would involve analyzing procurements of similar AEW aircraft or other high-value military platforms, considering factors like mission capabilities and technological sophistication.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mandated for small business participation. The nature of specialized aircraft manufacturing often involves large, established prime contractors with extensive in-house capabilities. This means that opportunities for small businesses to directly participate in this specific contract may be limited, unless they are part of the broader supply chain for Gulfstream Aerospace Corporation. Further investigation into Gulfstream's overall subcontracting practices would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract's performance clauses and delivery schedules. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Airborne Early Warning and Control (AEW&C) Aircraft
Military Aircraft Manufacturing
Defense Procurement
Aerospace Industry Contracts

Risk Flags

Sole-source award may indicate a lack of competition, potentially leading to higher costs.
High contract value for specialized aircraft requires careful justification and oversight.
Absence of small business set-aside may limit opportunities for smaller enterprises.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $92.0 million to GULFSTREAM AEROSPACE CORPORATION. GULFSTREAM G550 AEW AIRCRAFT

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 Navy).

What is the total obligated amount?

The obligated amount is $92.0 million.

What is the period of performance?

Start: 2016-03-18. End: 2020-01-31.

What is the specific mission capability and operational role of the Gulfstream G550 AEW aircraft being procured?

The Gulfstream G550 AEW (Airborne Early Warning) aircraft is a specialized platform designed for surveillance and command and control missions. It is equipped with advanced radar and sensor systems to detect and track enemy aircraft, missiles, and ships at long ranges, providing critical situational awareness to friendly forces. These aircraft act as a 'flying command post,' extending the reach of ground-based radar and enabling commanders to make informed decisions in complex operational environments. The specific configuration for this contract would detail the exact suite of sensors, communication systems, and mission equipment integrated onto the G550 airframe, tailored to the Department of the Navy's operational requirements.

What is the justification for awarding this contract on a sole-source basis instead of through full and open competition?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. For specialized defense assets like the Gulfstream G550 AEW, this could be due to unique technological requirements, proprietary systems, existing platform integration, or the limited number of manufacturers possessing the necessary expertise and certifications. The Department of the Navy would have had to document the specific reasons why competition was not feasible, such as the contractor holding essential patents, unique manufacturing capabilities, or the need for commonality with existing platforms. Without this justification, the award raises questions about whether competitive alternatives were adequately explored.

How does the contract's firm fixed-price (FFP) structure impact cost control and potential for contractor profit?

A Firm Fixed-Price (FFP) contract establishes a price that is not subject to adjustment based on the contractor's cost experience. This structure places the primary risk of cost overruns on the contractor, incentivizing them to manage costs efficiently to maximize profit. For the government, FFP provides budget certainty. However, if the initial price was not accurately estimated or if unforeseen technical challenges arise, the contractor might still face difficulties, or conversely, achieve exceptionally high profits if costs are significantly lower than anticipated. The effectiveness of FFP in this context depends heavily on the accuracy of the initial cost estimates and the contractor's ability to execute the work within those parameters.

What is the historical spending pattern for Gulfstream G550 AEW aircraft or similar AEW platforms by the Department of Defense?

Historical spending on Gulfstream G550 AEW aircraft or similar platforms by the Department of Defense can provide context for the $92 million award. Analyzing past procurements of AEW aircraft, such as the E-2 Hawkeye or other specialized surveillance platforms, would reveal trends in unit costs, contract types, and competition levels. If this is the first procurement of G550 AEW aircraft, comparisons to similar capabilities from different manufacturers would be relevant. Significant deviations from historical price ranges for comparable assets, especially in a sole-source context, would warrant further investigation into the specific justifications for the current contract's value.

Are there any performance metrics or key performance indicators (KPIs) defined in the contract to measure the contractor's success?

While the provided data does not detail specific performance metrics, defense contracts, especially for complex platforms like AEW aircraft, typically include Key Performance Indicators (KPIs) and stringent delivery schedules. These might encompass factors such as on-time delivery of aircraft, adherence to technical specifications, system performance benchmarks (e.g., radar range, processing speed), reliability rates, and quality of manufacturing. The firm fixed-price nature implies that meeting these defined performance standards is crucial for the contractor to achieve profitability. The government's oversight would focus on ensuring these KPIs are met throughout the contract 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

Solicitation ID: N0001914R0031

Offers Received: 1

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: $92,012,087

Exercised Options: $91,970,087

Current Obligation: $91,970,087

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline