DoD's $646.6M Contract for Aircraft Manufacturing with General Atomics Faces Scrutiny Over Competition

Contract Overview

Contract Amount: $646,642,314 ($646.6M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2004-12-21

End Date: 2014-03-28

Contract Duration: 3,384 days

Daily Burn Rate: $191.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $646.6 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: Key points: 1. Significant spending on aircraft manufacturing highlights a key defense sector. 2. The sole-source nature of this contract raises questions about potential overspending. 3. Lack of competition could limit innovation and drive up costs for taxpayers. 4. The long duration of the contract warrants a review of its ongoing necessity and value.

Value Assessment

Rating: questionable

The contract's total award value of $646.6 million over its lifespan is substantial. Without competitive bidding, it's difficult to assess if this represents a fair market price compared to similar aircraft manufacturing contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no competition. This significantly limits price discovery and potentially allows the contractor to set higher prices than might be achieved in a competitive environment.

Taxpayer Impact: The absence of competition likely results in higher costs for taxpayers, as there was no market pressure to drive down the price of aircraft manufacturing.

Public Impact

Taxpayers may be paying a premium for aircraft due to the lack of competitive bidding. The long-term nature of the contract raises concerns about the government's ability to adapt to evolving technological needs. The substantial financial commitment could divert funds from other critical defense or public service areas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
High contract value
Long contract duration
Lack of transparency in pricing

Positive Signals

Essential for national defense
Established contractor with proven capabilities

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of national defense spending. Benchmarks for similar large-scale, sole-source defense contracts are often difficult to establish due to their unique nature.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The focus appears to be on a large, established aerospace manufacturer.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight to ensure the government is receiving fair value and that the contractor is meeting all performance requirements. Regular reviews of contract modifications and expenditures are crucial.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition may lead to inflated prices.
Potential for cost overruns in a cost-plus contract.
Long contract duration could result in outdated technology.
Limited transparency in pricing and performance metrics.
No clear indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $646.6 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. See the official description on USAspending.

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 Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $646.6 million.

What is the period of performance?

Start: 2004-12-21. End: 2014-03-28.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies ever considered?

The justification for sole-source awards typically involves unique capabilities, urgent needs, or a lack of viable alternatives. Without specific details on this contract's justification, it's impossible to definitively state why competition was bypassed. However, agencies are generally required to document such decisions thoroughly and explore competitive options before resorting to sole-source procurement.

How does the cost-plus-incentive-fee structure impact the final price and the contractor's incentive to control costs?

A Cost Plus Incentive Fee (CPIF) contract aims to incentivize the contractor to control costs by sharing in cost savings or overruns. The final price is determined by the actual costs incurred plus a negotiated fee, which can be adjusted based on performance against target cost and schedule. While intended to promote efficiency, the inherent cost-reimbursement nature can still lead to higher final prices compared to fixed-price contracts.

What is the long-term strategic value of the aircraft produced under this contract, and are there plans for future competitive procurements?

The long-term strategic value depends on the specific capabilities of the aircraft and their role in the Department of the Army's mission. Without details on the aircraft type, it's hard to assess. Future competitive procurements would depend on the program's lifecycle, technological advancements, and the availability of alternative solutions in the market.

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: W58RGZ04R0674

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics (UEI: 859181984)

Address: 14200 KIRKHAM WAY, POWAY, CA, 92064

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline