DoD's $302M Predator/Reaper Sustainment Contract Awarded to General Atomics with Limited Competition

Contract Overview

Contract Amount: $302,277,270 ($302.3M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2015-01-01

End Date: 2018-12-31

Contract Duration: 1,460 days

Daily Burn Rate: $207.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF CONTRACTOR LOGISTIC SUPPORT AND SUSTAINMENT FOR THE PREDATOR/REAPER PROGRAM

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $302.3 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: IGF::OT::IGF CONTRACTOR LOGISTIC SUPPORT AND SUSTAINMENT FOR THE PREDATOR/REAPER PROGRAM Key points: 1. Contract awarded to the original equipment manufacturer, raising questions about competitive pricing. 2. Significant investment in sustainment suggests long-term reliance on Predator/Reaper platforms. 3. Cost-plus contract type introduces potential for cost overruns if not closely managed. 4. Limited competition may reduce pressure on the contractor to optimize costs. 5. Sustainment spending is a critical but often overlooked aspect of major defense programs. 6. The contract duration of four years indicates a stable, ongoing need for these services.

Value Assessment

Rating: questionable

The contract's value of over $302 million for four years of sustainment services for the Predator/Reaper program warrants scrutiny. Awarded on a cost-plus fixed-fee basis to the original equipment manufacturer, General Atomics Aeronautical Systems, Inc., there is a lack of direct comparison to similar sustainment contracts from other providers. Benchmarking the pricing against industry standards for drone sustainment is challenging without more detailed cost breakdowns. The absence of competitive bidding means the government may not have secured the most cost-effective solution.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to General Atomics Aeronautical Systems, Inc. This approach is often taken when the original manufacturer is the only entity capable of providing the necessary specialized support, particularly for proprietary systems like the Predator/Reaper drones. However, the lack of competition limits the government's ability to explore alternative pricing or service models that could potentially yield cost savings.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. This necessitates robust oversight to ensure the awarded price is fair and reasonable.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the Predator and Reaper Unmanned Aerial Systems (UAS). Services delivered include logistics support and sustainment, crucial for maintaining the operational readiness of these intelligence, surveillance, and reconnaissance (ISR) platforms. The geographic impact is global, as Predator/Reaper systems are deployed worldwide for various missions. Workforce implications include the need for specialized technical personnel to maintain and support these advanced aircraft.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus contract type increases risk of cost overruns.
Sole-source award limits price discovery and potential savings.
Lack of competition may reduce contractor incentive for efficiency.
Dependence on a single contractor for critical sustainment.

Positive Signals

Award to the original equipment manufacturer ensures specialized knowledge.
Long-term sustainment contract provides program stability.
Focus on critical ISR platforms vital for national security.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on unmanned aerial systems (UAS) and their associated support. The market for UAS sustainment is dominated by a few key manufacturers who also produce the platforms. Spending on UAS sustainment is a growing segment of defense budgets as these platforms become increasingly integral to military operations. Comparable spending benchmarks would involve looking at sustainment contracts for other major defense platforms, though direct comparisons are difficult due to the specialized nature of UAS.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the sole-source nature and the specialized requirements for sustaining advanced UAS, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available, unless the prime contractor proactively seeks them out for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the performance metrics outlined in the contract and the cost reporting requirements of the cost-plus fixed-fee structure. Transparency may be limited due to the sole-source nature and the proprietary information involved in sustainment. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Predator UAS Program
Reaper UAS Program
Unmanned Aerial Systems Sustainment
Aerospace Logistics Support
ISR Platform Maintenance

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive pricing benchmark

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $302.3 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. IGF::OT::IGF CONTRACTOR LOGISTIC SUPPORT AND SUSTAINMENT FOR THE PREDATOR/REAPER PROGRAM

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 Air Force).

What is the total obligated amount?

The obligated amount is $302.3 million.

What is the period of performance?

Start: 2015-01-01. End: 2018-12-31.

What is the track record of General Atomics Aeronautical Systems, Inc. in providing sustainment services for the Predator/Reaper program?

General Atomics Aeronautical Systems, Inc. (GA-ASI) is the original designer and manufacturer of the Predator and Reaper UAS. As such, they possess unique expertise and proprietary knowledge essential for the sustainment of these complex platforms. Their track record in this specific area is intrinsically linked to the operational history of the Predator/Reaper program itself, which has been in service for many years. GA-ASI has consistently been the primary provider of sustainment, maintenance, and upgrade services for these aircraft, supporting their deployment in various operational theaters. While this long-standing relationship ensures continuity and deep technical understanding, it also highlights the lack of competitive alternatives for sustainment, which is a key factor in assessing value for money.

How does the pricing of this sustainment contract compare to similar contracts for other unmanned aerial systems or defense platforms?

Direct comparison of this $302 million, four-year sustainment contract for the Predator/Reaper program to similar contracts is challenging due to several factors. Firstly, the contract is sole-source, awarded to the original equipment manufacturer (GA-ASI), which inherently limits price discovery compared to competed contracts. Secondly, the specific services included in 'logistics support and sustainment' can vary significantly between contracts. Thirdly, the complexity and operational tempo of the Predator/Reaper systems may necessitate higher sustainment costs than less advanced platforms. However, the cost-plus fixed-fee structure, while common for complex systems, carries an inherent risk of cost escalation if not rigorously managed and audited. Without detailed cost breakdowns and access to pricing data from comparable competed sustainment contracts for similar-class UAS, a definitive value-for-money assessment relative to the market is difficult.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract stem from its sole-source nature and the cost-plus fixed-fee (CPFF) pricing structure. The sole-source award to General Atomics Aeronautical Systems, Inc. (GA-ASI) means there is limited competitive pressure to drive down costs, potentially leading to higher prices for taxpayers. The CPFF structure, while allowing for flexibility in addressing unforeseen sustainment needs, carries the risk of cost overruns if GA-ASI's expenditures exceed initial estimates. Mitigation strategies would typically involve robust government oversight, including detailed auditing of contractor costs, performance monitoring against established metrics, and strong negotiation of the fixed-fee component. The Air Force would also need to ensure that contract requirements are clearly defined and that GA-ASI is held accountable for meeting performance standards to ensure the operational readiness of the Predator/Reaper fleet.

What is the historical spending pattern for Predator/Reaper sustainment, and how does this contract fit within that trend?

Historical spending on Predator/Reaper sustainment has been substantial, reflecting the long service life and critical role of these Unmanned Aerial Systems (UAS) in U.S. military operations. As the original equipment manufacturer, General Atomics Aeronautical Systems, Inc. (GA-ASI) has been the consistent recipient of these sustainment funds. Annual spending typically fluctuates based on operational tempo, upgrade requirements, and the overall fleet size. This $302 million contract, spanning four years (approximately $75.5 million per year), appears to represent a continuation of this established spending trend. It aligns with the ongoing need to maintain the readiness and operational capability of the Predator/Reaper fleet, which remains a key asset for intelligence, surveillance, and reconnaissance missions despite the introduction of newer platforms.

What are the implications of awarding this contract to the original equipment manufacturer (OEM) versus a third-party sustainment provider?

Awarding this sustainment contract to the original equipment manufacturer (OEM), General Atomics Aeronautical Systems, Inc. (GA-ASI), offers distinct advantages and disadvantages. The primary advantage is GA-ASI's unparalleled technical expertise, proprietary knowledge, and direct access to original parts and technical data, which can ensure the highest level of operational readiness and potentially faster issue resolution. However, the significant disadvantage is the lack of competition. Third-party sustainment providers, if capable, could potentially offer more competitive pricing through economies of scale or different business models. Furthermore, relying solely on the OEM can create vendor lock-in, making it difficult and costly to switch providers or negotiate favorable terms in the future. The government must therefore focus on rigorous oversight and fair pricing negotiations to maximize value in this OEM-centric arrangement.

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: $325,838,998

Exercised Options: $325,838,998

Current Obligation: $302,277,270

Actual Outlays: $230

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $68,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline