DoD's $470M Textron Systems contract for Shadow TUAS logistics lacked competition, raising value concerns

Contract Overview

Contract Amount: $470,748,151 ($470.7M)

Contractor: Textron Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2009-11-01

End Date: 2016-12-31

Contract Duration: 2,617 days

Daily Burn Rate: $179.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: FY 2010 SHADOW 200 TUAS PERFORMANCE BASED LOGISTICS CONTRACT

Place of Performance

Location: COCKEYSVILLE, BALTIMORE County, MARYLAND, 21030

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $470.7 million to TEXTRON SYSTEMS CORPORATION for work described as: FY 2010 SHADOW 200 TUAS PERFORMANCE BASED LOGISTICS CONTRACT Key points: 1. The contract's value proposition is questionable due to the absence of a competitive bidding process. 2. Sole-source awards can lead to inflated pricing and reduced innovation. 3. The contract's duration and cost-plus structure may present cost overrun risks. 4. Performance-based logistics aims for efficiency, but its success here is unproven without benchmarks. 5. This contract falls within the aircraft manufacturing sector, specifically supporting unmanned aerial systems. 6. The lack of competition limits transparency and taxpayer value assessment.

Value Assessment

Rating: questionable

Benchmarking the value of this $470.7 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if Textron Systems Corporation provided the most cost-effective solution for the Shadow TUAS performance-based logistics. The cost-plus incentive fee structure, while intended to incentivize performance, can also lead to higher costs if not carefully managed and monitored. Comparing this to similar sole-source logistics contracts for unmanned systems would be necessary for a more robust assessment, but such data is often proprietary or not publicly available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Textron Systems Corporation, was solicited. This approach bypasses the standard competitive procurement process, which typically involves multiple companies bidding on the contract. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to higher costs for the government and taxpayers. It also limits the government's ability to explore alternative solutions or innovations that might have been offered by other potential vendors.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings and innovation that typically arise from a competitive bidding environment. This can result in higher overall expenditure for the same or similar services.

Public Impact

The primary beneficiaries are the Department of the Army, which receives logistics support for its Shadow Tactical Unmanned Aircraft Systems (TUAS). Services delivered include performance-based logistics, ensuring the operational readiness and maintenance of the TUAS fleet. The geographic impact is likely concentrated around Army installations where Shadow TUAS are deployed and maintained. Workforce implications may include specialized technical and maintenance personnel employed by Textron Systems Corporation to support the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices and reduced value for taxpayer dollars.
Cost-plus contract type carries inherent risk of cost overruns if not rigorously managed.
Sole-source awards can stifle innovation by not exposing the government to alternative solutions.
Limited transparency in pricing and performance metrics due to non-competitive nature.

Positive Signals

Performance-based logistics aims to ensure system readiness and operational availability.
Textron Systems Corporation is a known entity in the defense sector, potentially offering specialized expertise.
The contract duration suggests a long-term commitment to supporting critical defense assets.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on unmanned aerial systems (UAS) and their support. The market for UAS logistics and maintenance is growing as these platforms become increasingly integral to military operations. Comparable spending benchmarks for UAS logistics can vary widely based on platform type, mission requirements, and service level agreements. However, contracts of this magnitude for dedicated platform support are significant within the defense industrial base.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (sb: false) and does not explicitly mention subcontracting goals for small businesses (ss: false). As a sole-source award to a large defense contractor, Textron Systems Corporation, the direct impact on the small business ecosystem is likely minimal unless Textron actively engages small businesses as subcontractors. Without specific subcontracting plans or set-aside provisions, opportunities for small businesses to participate in this contract are limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification for this procurement method would be subject to review. Accountability measures would be tied to the performance-based aspects of the contract, with potential for incentives or penalties based on defined metrics. Transparency may be limited due to the non-competitive nature, but contract modifications and performance reports are typically subject to internal review and potentially Inspector General oversight if issues arise.

Related Government Programs

Tactical Unmanned Aircraft Systems (TUAS) programs
Aerospace and Defense Logistics Contracts
Performance-Based Logistics (PBL) Contracts
Department of Defense Aircraft Manufacturing Spending

Risk Flags

Lack of Competition
Cost-Plus Contract Type
Sole-Source Award Justification
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $470.7 million to TEXTRON SYSTEMS CORPORATION. FY 2010 SHADOW 200 TUAS PERFORMANCE BASED LOGISTICS CONTRACT

Who is the contractor on this award?

The obligated recipient is TEXTRON SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $470.7 million.

What is the period of performance?

Start: 2009-11-01. End: 2016-12-31.

What is Textron Systems Corporation's track record with similar performance-based logistics contracts for unmanned systems?

Textron Systems Corporation has a significant history in developing and supporting unmanned aircraft systems, including the Shadow platform itself. Their experience with performance-based logistics (PBL) contracts is substantial, often focusing on ensuring high levels of readiness and availability for complex defense equipment. While specific details of past PBL contracts are often sensitive, their long-standing relationship with the Department of Defense suggests a capability to manage such agreements. However, the effectiveness and value derived from these contracts can vary, and a direct comparison to this specific $470.7 million award would require access to detailed performance metrics and cost data from previous engagements.

How does the $470.7 million cost compare to market rates for similar unmanned aerial system logistics support?

Directly comparing the $470.7 million cost to market rates for similar unmanned aerial system (UAS) logistics support is challenging due to the sole-source nature of this contract and the proprietary details of logistics services. Market rates are typically established through competitive bidding, where multiple vendors offer proposals, driving prices down. In a sole-source scenario, the government relies on negotiation and cost analysis to determine a fair price, but without competitive pressure, the risk of paying a premium is higher. Benchmarking would ideally involve comparing this contract's cost per flight hour, maintenance cost per system, or overall support cost against publicly available data for comparable UAS platforms, which is often limited.

What are the primary risks associated with a sole-source, cost-plus incentive fee contract for long-term logistics support?

The primary risks associated with a sole-source, cost-plus incentive fee (CPIF) contract for long-term logistics support are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs and reduced incentive for the contractor to find the most economical solutions. Secondly, the CPIF structure, while designed to reward performance, can incentivize the contractor to incur costs to achieve higher fee payouts, especially if cost controls are not robust. This can lead to cost overruns if the target costs are not accurately estimated or if scope creep occurs. Furthermore, the lack of competition can reduce transparency and make it harder for the government to assess true value for money over the contract's lifespan.

What evidence exists regarding the effectiveness of performance-based logistics in maintaining the readiness of the Shadow TUAS?

Evidence regarding the effectiveness of performance-based logistics (PBL) in maintaining the readiness of the Shadow TUAS is primarily held within the Department of the Army's operational and contracting records. PBL contracts are designed specifically to improve readiness and availability by aligning contractor incentives with government outcomes. Success is typically measured through metrics such as system uptime, mission-capable rates, and turnaround times for repairs. While the Army's continued reliance on Textron Systems for this support suggests a degree of satisfaction, specific, publicly available data quantifying the precise impact of this PBL contract on Shadow TUAS readiness is limited. Independent assessments or Inspector General reports could provide more objective insights.

How has historical spending on Shadow TUAS logistics evolved, and does this contract represent a significant increase or decrease?

Analyzing historical spending on Shadow TUAS logistics requires access to detailed budget and contract databases over multiple fiscal years. This specific contract, valued at approximately $470.7 million over its duration (2009-2016), represents a substantial investment. Without comparative data on prior logistics contracts for the Shadow TUAS, it's difficult to definitively state whether it represents a significant increase or decrease. However, the trend towards performance-based logistics and the increasing complexity and operational tempo of UAS operations often correlate with rising support costs. A comprehensive analysis would involve tracking spending trends year-over-year and comparing contract types and scopes.

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: W58RGZ10R0003

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Textron Inc

Address: 124 INDUSTRY LN, HUNT VALLEY, MD, 21030

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

Financial Breakdown

Contract Ceiling: $470,748,151

Exercised Options: $470,748,151

Current Obligation: $470,748,151

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline