DoD awards $285M for MQ-9 Reaper sustainment, a sole-source contract to General Atomics

Contract Overview

Contract Amount: $285,104,054 ($285.1M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-12-20

End Date: 2022-12-31

Contract Duration: 1,107 days

Daily Burn Rate: $257.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MQ-9 REAPER CLS SUPPORT.

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $285.1 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MQ-9 REAPER CLS SUPPORT. Key points: 1. Contract awarded to the original equipment manufacturer, raising potential value-for-money concerns. 2. Sole-source nature limits competitive pressure, potentially impacting pricing and innovation. 3. Long-term sustainment contract indicates critical reliance on the MQ-9 platform. 4. Performance period spans over three years, suggesting a significant operational commitment. 5. Contract type (Cost Plus Fixed Fee) may incentivize cost increases. 6. Geographic concentration in California for contractor operations.

Value Assessment

Rating: questionable

The contract's value of $285 million for sustainment services for the MQ-9 Reaper is substantial. However, as a sole-source award to the original manufacturer, it is difficult to benchmark against competitive offerings. The Cost Plus Fixed Fee (CPFF) structure, while common for complex systems, can lead to higher costs if not managed rigorously, as the contractor is reimbursed for allowable costs plus a fixed fee. Without competitive bids, assessing whether this price represents fair market value is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, General Atomics Aeronautical Systems, Inc., was solicited. This approach is typically justified when a unique product or service is required, or when the original manufacturer is the only viable source for sustainment. The lack of competition means there was no opportunity for price discovery through bidding, potentially leading to higher costs for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government has limited leverage to negotiate lower prices without alternative sources.

Public Impact

The primary beneficiaries are the U.S. Air Force and other Department of Defense branches utilizing the MQ-9 Reaper. Services include sustainment, logistics, and support for the MQ-9 Reaper unmanned aerial system. The contract supports critical intelligence, surveillance, and reconnaissance (ISR) capabilities. Geographic impact is primarily centered in California where the contractor is located, but operational use is global. Workforce implications include maintaining specialized technical and engineering jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type can incentivize cost growth.
Lack of transparency in pricing due to non-competitive nature.
Potential for contractor lock-in for future sustainment needs.

Positive Signals

Ensures continued operational readiness of a critical ISR platform.
Leverages the original manufacturer's expertise for specialized support.
Provides long-term stability for a key defense asset.

Sector Analysis

The MQ-9 Reaper is a significant platform in the Unmanned Aerial Systems (UAS) market, a rapidly growing sector within aerospace and defense. This contract falls under the "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" industry code. The overall market for UAS and related support services is substantial, driven by increasing global demand for ISR and combat capabilities. Benchmarking this specific sustainment contract is difficult without comparable sole-source agreements, but it represents a significant portion of the lifecycle cost for such advanced platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless General Atomics actively engages small businesses for specific support roles. Further investigation into subcontracting goals would be needed to assess broader small business implications.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Fixed Fee structure necessitates robust financial oversight to scrutinize allowable costs and ensure the fixed fee remains appropriate. Transparency is limited due to the sole-source nature, but contract modifications and performance reports should be available through federal procurement databases.

Related Government Programs

MQ-1 Predator Sustainment
Unmanned Aerial System (UAS) Procurement
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Defense Logistics and Maintenance Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $285.1 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. MQ-9 REAPER CLS SUPPORT.

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 $285.1 million.

What is the period of performance?

Start: 2019-12-20. End: 2022-12-31.

What is the track record of General Atomics Aeronautical Systems, Inc. in providing sustainment services for the MQ-9 Reaper?

General Atomics Aeronautical Systems, Inc. (GA-ASI) is the original designer and manufacturer of the MQ-9 Reaper. Their track record in providing sustainment services is extensive, as they have been integral to the platform's development and operational deployment since its inception. This includes providing technical support, spare parts, training, and system upgrades. Their long-standing relationship with the Department of Defense for the MQ-9 platform suggests a deep understanding of the system's requirements and operational context. However, the sole-source nature of this specific contract means that performance metrics and cost-effectiveness are primarily assessed internally by the DoD rather than through competitive benchmarking.

How does the pricing of this MQ-9 Reaper sustainment contract compare to similar contracts for other unmanned aerial systems?

Direct comparison of pricing for this MQ-9 Reaper sustainment contract to similar contracts for other unmanned aerial systems (UAS) is challenging due to several factors. Firstly, this is a sole-source award, limiting transparency and competitive benchmarking. Secondly, UAS vary significantly in size, capability, complexity, and operational role, influencing their sustainment costs. The MQ-9 is a large, medium-altitude, long-endurance (MALE) platform with advanced ISR capabilities, placing it at the higher end of UAS complexity. Sustainment costs are also influenced by factors like flight hours, depot-level maintenance requirements, and the availability of spare parts. Without access to detailed cost breakdowns and comparable sole-source agreements for similar high-end UAS, a precise value-for-money comparison is difficult.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for critical defense systems like the MQ-9 Reaper?

The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for critical defense systems like the MQ-9 Reaper include potential cost overruns and reduced incentive for efficiency. In a sole-source scenario, the government lacks the benefit of competitive bidding, which typically drives down prices and encourages innovation. The CPFF structure reimburses the contractor for allowable costs plus a predetermined fixed fee. While this structure is often used for complex projects where cost estimation is difficult, it can incentivize the contractor to incur higher costs, as their profit (the fixed fee) remains constant regardless of the actual costs incurred. This necessitates rigorous government oversight to scrutinize costs and prevent unnecessary expenditures. Additionally, sole-source awards can lead to contractor 'lock-in,' making it difficult and expensive to switch providers in the future.

What is the historical spending pattern for MQ-9 Reaper sustainment and support, and how does this contract fit within that trend?

Historical spending on MQ-9 Reaper sustainment and support has been significant, reflecting the platform's critical role in ISR missions. Prior to this contract, various contracts would have been awarded for sustainment, upgrades, and operational support. This $285 million contract, covering a period of approximately three years (from late 2019 to late 2022), represents a substantial, but not necessarily anomalous, annual expenditure for maintaining a fleet of advanced unmanned aircraft. The trend generally shows consistent investment in ensuring the operational readiness and technological relevance of the MQ-9. This specific contract's sole-source nature and CPFF structure are key characteristics that differentiate it from potentially competed or fixed-price contracts that might have been awarded in the past or could be awarded in the future if competition were introduced.

What are the implications of the contract's duration and value for the long-term strategy of the MQ-9 Reaper program?

The contract's duration of approximately three years and its value of $285 million indicate a sustained commitment to the MQ-9 Reaper program. This duration suggests that the platform is expected to remain a key asset within the Department of Defense's inventory for the foreseeable future, necessitating ongoing sustainment and support. The significant value underscores the complexity and cost associated with maintaining such advanced technology. This contract aligns with a strategy of continued reliance on the MQ-9 for intelligence, surveillance, and reconnaissance missions, rather than an immediate transition to a replacement platform. It implies that investments in sustainment are prioritized to ensure the platform's availability and effectiveness.

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: FA852819R0014

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $336,374,580

Exercised Options: $336,374,580

Current Obligation: $285,104,054

Actual Outlays: $60,821,522

Subaward Activity

Number of Subawards: 40

Total Subaward Amount: $4,723,980

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline