DoD's $295M Predator/Reaper RPA sustainment contract awarded to General Atomics shows limited competition

Contract Overview

Contract Amount: $295,437,757 ($295.4M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2014-01-01

End Date: 2017-12-31

Contract Duration: 1,460 days

Daily Burn Rate: $202.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF THIS IS A PERFORMANCE-BASED SERVICE CONTRACT WHICH INCLUDES PROGRAM MANAGEMENT, URGENT REPAIRS AND SERVICES, LOGISTICS SUPPORT, CONFIGURATION MANAGEMENT, TECHNICAL MANUAL AND SOFTWARE MAINTENANCE, ENGINEERING TECHNICAL SERVICES, CONTRACTOR FIELD SERVICE REPRESENTATIVE SUPPORT, ORGANIC GOVERNMENT DEPOT STAND-UP ACTIONS, CONTRACTOR INVENTORY CONTROL POINT AND SUPPLY SUPPORT/SPARES MANAGEMENT, DEPOT REPAIRS, FLIGHT OPERATIONS SUPPORT, RELIABILITY AND MAINTAINABILITY STUDIES/ENHANCEMENTS, MAINTENANCE DATA COLLECTION/ENTRY AND DEPOT FIELD MAINTENANCE FOR THE MQ-1 AND MQ-9 (PREDATOR/REAPER) REMOTELY PILOTED AIRCRAFT (RPA) PROGRAM. THE REQUIREMENTS LISTED IN THIS CONTRACT ARE REQUIRED TO SUPPORT AIR COMBAT COMMAND (ACC), AIR NATIONAL GUARD (ANG), AIR FORCE SPECIAL OPERATIONS COMMAND (AFSOC), AIR EDUCATION AND TRAINING COMMAND (AETC), AND UNITED STATES AIR FORCE CENTRAL COMMAND (USAFCENT) EFFORTS UNLESS SPECIFICALLY STATED.

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $295.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: IGF::OT::IGF THIS IS A PERFORMANCE-BASED SERVICE CONTRACT WHICH INCLUDES PROGRAM MANAGEMENT, URGENT REPAIRS AND SERVICES, LOGISTICS SUPPORT, CONFIGURATION MANAGEMENT, TECHNICAL MANUAL AND SOFTWARE MAINTENANCE, ENGINEERING TECHNICAL SERVICES, CONTRACTOR FIELD SERVICE REPRESENTATI… Key points: 1. Contract provides comprehensive sustainment for MQ-1 and MQ-9 RPA, including program management, repairs, logistics, and maintenance. 2. Performance-based structure aims to incentivize efficient service delivery for critical aircraft. 3. Sole-source award raises concerns about potential overpricing and lack of market-driven cost controls. 4. Contract duration of four years suggests a long-term commitment to the selected contractor. 5. Focus on critical RPA systems highlights the strategic importance of this support to Air Force operations. 6. Significant investment in depot-level maintenance and spares management indicates a need for robust supply chain support.

Value Assessment

Rating: questionable

The contract's value of $295.4 million over four years for comprehensive sustainment of the MQ-1 and MQ-9 RPA program is substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The sole-source nature raises concerns about whether the government achieved the best possible value, as there was no direct comparison of offers. Further analysis would be needed to assess if the cost-plus-fixed-fee structure adequately controls expenses given the lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, General Atomics Aeronautical Systems, Inc., was considered. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified vendors. While sole-source awards can be justified in specific circumstances, such as when only one vendor possesses the necessary capabilities or proprietary technology, they limit price discovery and can potentially lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not benefit from the cost savings that typically arise from a competitive bidding environment. Without competing offers, there is less pressure on the contractor to offer the most competitive pricing.

Public Impact

The primary beneficiaries are the U.S. Air Force, Air Combat Command, Air National Guard, and Air Force Special Operations Command, ensuring the operational readiness of the MQ-1 and MQ-9 RPA fleets. Services delivered include critical support functions such as program management, urgent repairs, logistics, configuration management, technical manual and software maintenance, and depot-level repairs. The geographic impact is broad, supporting Air Force operations globally where these RPA systems are deployed. Workforce implications include the direct employment of personnel by General Atomics for contract execution and potential indirect support for government depot personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost-plus-fixed-fee structure may offer less incentive for cost control compared to fixed-price contracts.
Reliance on a single contractor for critical RPA sustainment creates potential single-point-of-failure risk.
Contract duration of four years may lock in terms without reassessment of market conditions.

Positive Signals

Performance-based structure incentivizes efficient service delivery.
Contract addresses a wide range of critical sustainment needs for vital RPA platforms.
General Atomics is a specialized and experienced provider for these specific RPA systems.
Contract ensures continued operational capability for key Air Force assets.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on unmanned aerial systems (UAS) and their associated support. The market for RPA sustainment is highly specialized, with a limited number of prime contractors capable of providing comprehensive support for complex platforms like the MQ-1 and MQ-9. Spending in this area is driven by the ongoing operational requirements and modernization efforts for these critical intelligence, surveillance, and reconnaissance (ISR) and strike assets. Comparable spending benchmarks would likely be found within other major defense platform sustainment contracts, though direct comparisons are difficult due to the unique nature of RPA technology.

Small Business Impact

This contract does not appear to include specific small business set-asides, as indicated by the 'sb': false parameter. Given the specialized nature of RPA sustainment and the sole-source award to a large prime contractor, the direct impact on small businesses through set-asides is unlikely. However, General Atomics may engage small businesses as subcontractors for specific components or services, which would be a factor in the overall subcontracting plan. The absence of explicit set-asides suggests that the primary focus was on securing the specialized capabilities of the prime contractor.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and performance standards. The cost-plus-fixed-fee (CPFF) structure necessitates careful monitoring of costs incurred by the contractor to ensure they are reasonable and allowable. Transparency may be limited due to the sole-source nature, but contract performance reviews and financial audits would be key accountability measures. The Inspector General's office would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

MQ-1 Predator RPA Program
MQ-9 Reaper RPA Program
Air Force Remotely Piloted Aircraft Operations
Defense Logistics and Sustainment Contracts
Aerospace Systems Manufacturing
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms

Risk Flags

Sole-source award
Potential for cost overruns
Contractor dependency
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $295.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. IGF::OT::IGF THIS IS A PERFORMANCE-BASED SERVICE CONTRACT WHICH INCLUDES PROGRAM MANAGEMENT, URGENT REPAIRS AND SERVICES, LOGISTICS SUPPORT, CONFIGURATION MANAGEMENT, TECHNICAL MANUAL AND SOFTWARE MAINTENANCE, ENGINEERING TECHNICAL SERVICES, CONTRACTOR FIELD SERVICE REPRESENTATIVE SUPPORT, ORGANIC GOVERNMENT DEPOT STAND-UP ACTIONS, CONTRACTOR INVENTORY CONTROL POINT AND SUPPLY SUPPORT/SPARES MANAGEMENT, DEPOT REPAIRS, FLIGHT OPERATIONS SUPPORT, RELIABILITY AND MAINTAINABILITY STUDIES/ENHANCEMEN

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $295.4 million.

What is the period of performance?

Start: 2014-01-01. End: 2017-12-31.

What is General Atomics Aeronautical Systems, Inc.'s track record with the MQ-1 and MQ-9 RPA programs?

General Atomics Aeronautical Systems, Inc. (GA-ASI) is the original manufacturer and primary sustainment provider for both the MQ-1 Predator and MQ-9 Reaper remotely piloted aircraft (RPA) systems. Their track record is extensive, as they have been instrumental in the development, production, and ongoing support of these platforms since their inception. GA-ASI has consistently provided the necessary hardware, software, and technical expertise to keep these critical assets operational for the U.S. Air Force and allied nations. Their deep understanding of the aircraft's intricacies, coupled with their role as the prime contractor, positions them as the sole entity with the comprehensive knowledge and capability to perform the full spectrum of sustainment activities required under this contract. This long-standing relationship and specialized expertise are key factors often cited in sole-source justifications for such critical systems.

How does the value of this contract compare to other major defense sustainment contracts?

The $295.4 million contract value for the MQ-1/MQ-9 RPA sustainment is significant, placing it among substantial defense support agreements. However, comparing its value directly to other major defense sustainment contracts requires careful consideration of the scope, duration, and complexity of services provided. For instance, sustainment contracts for larger, manned aircraft platforms (like fighter jets or bombers) or complex naval vessels often run into billions of dollars over longer periods. Conversely, contracts for more specialized or niche systems might be smaller. Given that the MQ-1/MQ-9 are critical but relatively smaller platforms compared to major combat aircraft, this contract's value appears commensurate with providing comprehensive, long-term support for a key unmanned system fleet. The sole-source nature, however, prevents a direct value-for-money comparison against competitive bids.

What are the primary risks associated with a sole-source award for critical RPA sustainment?

The primary risk associated with a sole-source award for critical RPA sustainment is the potential for reduced cost-effectiveness. Without competition, the government lacks the leverage to negotiate the lowest possible prices, potentially leading to higher expenditures for taxpayers. There's also a risk of complacency from the contractor, as the absence of competitive pressure might lessen the incentive to innovate or aggressively pursue efficiency improvements. Furthermore, a sole-source arrangement can create a dependency on a single provider, making the government vulnerable if the contractor faces financial difficulties, operational issues, or decides to alter its business strategy. This dependency also limits the government's flexibility to switch providers or adopt alternative solutions if they become available.

How effective is the performance-based structure in ensuring the operational readiness of the MQ-1/MQ-9 RPA?

The performance-based structure of this contract is designed to enhance the operational readiness of the MQ-1/MQ-9 RPA by linking contractor payment and incentives to achieving specific performance outcomes. Instead of simply reimbursing costs, the contract likely includes metrics related to aircraft availability, repair turnaround times, and mission capable rates. By focusing on these results, the performance-based approach incentivizes General Atomics Aeronautical Systems, Inc. to proactively manage maintenance, logistics, and repairs to ensure the RPA systems are ready when needed. This shifts the focus from effort expended to outcomes achieved, theoretically leading to more efficient and effective sustainment, ultimately bolstering the operational readiness of these critical assets for the Air Force.

What are the historical spending patterns for MQ-1/MQ-9 sustainment, and how does this contract fit?

Historical spending on MQ-1/MQ-9 sustainment has been substantial, reflecting the long service life and extensive operational use of these platforms. Prior to this definitive contract, sustainment activities were likely managed through various contracts, potentially including sole-source agreements given GA-ASI's role as the original equipment manufacturer. This $295.4 million contract, spanning from 2014 to 2017, represents a significant, consolidated investment in ensuring the continued operational capability of the RPA fleet during that period. It fits into a pattern of ongoing, high-value support required for advanced military systems. The shift towards performance-based contracts aims to optimize this spending by focusing on measurable results rather than just cost reimbursement, although the sole-source nature here limits the competitive aspect of optimization.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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

Financial Breakdown

Contract Ceiling: $299,987,329

Exercised Options: $299,987,329

Current Obligation: $295,437,757

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline