DoD's $298M Predator/Reaper Logistics Contract Awarded to General Atomics Aeronautical Systems, Inc

Contract Overview

Contract Amount: $298,220,556 ($298.2M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-01-01

End Date: 2018-09-19

Contract Duration: 992 days

Daily Burn Rate: $300.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF CONTRACTOR LOGISTICS 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 $298.2 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: IGF::OT::IGF CONTRACTOR LOGISTICS SUPPORT AND SUSTAINMENT FOR THE PREDATOR/REAPER PROGRAM Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Significant duration of the contract (992 days) suggests a long-term need for sustainment. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Focus on logistics and sustainment indicates a critical support role for a key defense asset. 5. The awardee is the original equipment manufacturer, potentially limiting competitive alternatives. 6. No small business set-aside was applied, indicating a focus on specialized capabilities.

Value Assessment

Rating: questionable

The contract's value of $298 million over approximately 2.7 years for logistics and sustainment of the Predator/Reaper program warrants scrutiny. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex systems, carries inherent risks of cost escalation if not managed diligently. The absence of a competitive process means that the government may not have secured the best possible value.

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. General Atomics Aeronautical Systems, Inc. is the original manufacturer of the Predator/Reaper systems, which likely led to the determination that they were the only source capable of providing the required specialized logistics and sustainment services. The lack of competition limits the government's ability to leverage market forces to drive down costs and ensure optimal pricing.

Taxpayer Impact: The sole-source nature of this award means taxpayers did not benefit from competitive pricing, potentially leading to a higher overall expenditure for these critical sustainment services.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the Predator and Reaper Unmanned Aerial Systems (UAS). The contract ensures the continued operational readiness and effectiveness of these vital intelligence, surveillance, and reconnaissance (ISR) platforms. Services include logistics support, maintenance, repair, and sustainment, crucial for maintaining the complex systems. Geographic impact is likely global, supporting deployed UAS operations worldwide. Workforce implications include the need for specialized technical personnel employed by the contractor and potentially government oversight personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher costs if not managed stringently.
Lack of competition may reduce pressure on the contractor to innovate or improve efficiency.
Long contract duration without clear performance metrics could mask inefficiencies.

Positive Signals

Awardee is the original equipment manufacturer, ensuring deep technical expertise for sustainment.
Focus on logistics and sustainment is critical for maintaining the operational readiness of key defense assets.
Contract provides stability for essential support services, ensuring mission continuity.

Sector Analysis

The Unmanned Aerial Systems (UAS) sector, particularly for intelligence, surveillance, and reconnaissance (ISR) platforms like the Predator and Reaper, is a highly specialized segment of the aerospace and defense industry. This contract falls within the domain of defense logistics and sustainment services, which are critical for maintaining the operational readiness of advanced military hardware. The market for such specialized support is often dominated by original equipment manufacturers due to the proprietary nature of the systems and the deep technical knowledge required. Comparable spending benchmarks are difficult to establish due to the unique nature of these platforms and the sole-source award.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. The nature of the specialized logistics and sustainment services for advanced UAS platforms typically requires deep integration with the original equipment manufacturer, which is General Atomics Aeronautical Systems, Inc. This focus on a prime contractor with specialized capabilities means that opportunities for small businesses within this specific contract may be limited, though they might participate in broader defense supply chains.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and CPFF structure, robust oversight is crucial to monitor costs, ensure performance, and prevent waste, fraud, and abuse. The Inspector General of the Department of Defense would have jurisdiction to investigate any allegations of impropriety. Transparency is enhanced through contract databases, but detailed performance metrics and cost breakdowns may be less publicly accessible due to the sensitive nature of defense programs.

Related Government Programs

Predator Program
Reaper Program
Unmanned Aerial Systems (UAS) Sustainment
Aerospace Logistics Support
Department of Defense Contractor Support Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns
Limited transparency on pricing benchmarks

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $298.2 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. IGF::OT::IGF CONTRACTOR LOGISTICS 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 $298.2 million.

What is the period of performance?

Start: 2016-01-01. End: 2018-09-19.

What is the track record of General Atomics Aeronautical Systems, Inc. in providing logistics and sustainment 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 extensive institutional knowledge and technical expertise regarding the sustainment requirements of these platforms. Their track record in this specific area is intrinsically linked to the operational history of the UAS themselves. Historically, GA-ASI has been the primary provider of support, maintenance, and upgrades for these systems, fulfilling numerous contracts over the years. While specific performance metrics for individual contracts are not always publicly detailed, the continued operation and evolution of the Predator/Reaper fleet suggest a generally capable, albeit sole-source, provider of these critical services. The long-standing relationship underscores their integral role in maintaining these key defense assets.

How does the pricing of this contract compare to similar logistics and sustainment contracts for other major defense platforms?

Direct comparison of pricing for this $298 million contract is challenging due to its sole-source nature and the specific requirements for the Predator/Reaper UAS. Unlike competed contracts where pricing can be benchmarked against multiple bids, sole-source awards lack this competitive transparency. Furthermore, the Cost Plus Fixed Fee (CPFF) structure means that the final cost can fluctuate based on actual expenses incurred, making a fixed price comparison difficult. Generally, logistics and sustainment for complex, high-value defense platforms represent a significant portion of their total lifecycle cost. Without competitive data or detailed cost breakdowns, it's difficult to definitively state if this contract's pricing is favorable or unfavorable relative to other major defense platforms. However, the absence of competition inherently removes a key mechanism for ensuring cost-effectiveness.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for critical defense logistics?

The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for critical defense logistics are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated prices and reduced incentives for efficiency or innovation by the contractor. Taxpayers may end up paying more than necessary. Secondly, the CPFF structure, while providing flexibility, can incentivize cost overruns. The contractor is reimbursed for allowable costs plus a fixed fee, meaning that higher costs do not necessarily reduce the contractor's profit margin and could even increase it if the fee is a percentage of costs. This can lead to a lack of cost discipline. Effective government oversight and stringent contract management are therefore paramount to mitigate these risks and ensure value for money.

What is the expected effectiveness of the Predator/Reaper program given this logistics and sustainment contract?

This contract is designed to ensure the continued effectiveness of the Predator/Reaper program by providing essential logistics and sustainment services. The Predator and Reaper Unmanned Aerial Systems (UAS) are critical assets for intelligence, surveillance, reconnaissance (ISR), and strike missions. Their operational effectiveness hinges on reliable maintenance, timely repairs, availability of spare parts, and technical support, all of which are covered by this contract. By securing these services, the Department of the Air Force aims to maintain high levels of readiness and operational availability for these platforms, enabling them to perform their missions effectively across various theaters of operation. The contract's duration suggests a commitment to sustaining these capabilities for the foreseeable future.

How has historical spending on Predator/Reaper logistics and sustainment evolved, and does this contract represent a significant change?

Historical spending on Predator/Reaper logistics and sustainment has been substantial, reflecting the significant operational tempo and complexity of these UAS platforms over two decades. As the original equipment manufacturer, General Atomics Aeronautical Systems, Inc. has consistently been a primary recipient of these funds through various contract vehicles. This specific $298 million contract, awarded from January 2016 to September 2018, represents a significant, but not unprecedented, investment in sustainment for a defined period. Without access to detailed historical spending data across all previous contracts and modifications, it's difficult to pinpoint precise year-over-year evolution or definitively state if this contract represents a major deviation. However, the trend has generally been towards sustained, high-value support contracts as the platforms mature and continue to be deployed.

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: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852815R0102

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: $298,220,556

Exercised Options: $298,220,556

Current Obligation: $298,220,556

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $2,833,039

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline