DoD awards $277.7M for MQ-9 Reaper sustainment to General Atomics, a sole-source contract

Contract Overview

Contract Amount: $277,668,910 ($277.7M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-01-01

End Date: 2024-09-30

Contract Duration: 1,368 days

Daily Burn Rate: $203.0K/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 $277.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MQ-9 REAPER CLS SUPPORT. Key points: 1. Contract awarded to the sole manufacturer, raising questions about competitive pricing. 2. Sustainment costs represent a significant portion of the MQ-9 program's lifecycle expenses. 3. Performance risk is moderate given the contractor's sole-source position and specialized knowledge. 4. The contract duration extends over three fiscal years, indicating long-term support needs. 5. This contract falls within the aerospace and defense manufacturing sector, dominated by a few large players. 6. The absence of competition limits opportunities for cost savings through market forces.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source sustainment contract is challenging due to the lack of comparable bids. The cost-plus-fixed-fee structure means the government pays the actual costs plus a negotiated fee, which can lead to cost overruns if not carefully managed. Without competitive pressure, it's difficult to ascertain if the pricing reflects true market value or if there is an opportunity for significant savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to General Atomics Aeronautical Systems, Inc., the original manufacturer of the MQ-9 Reaper. This approach is often taken when only one entity possesses the necessary technical expertise, intellectual property, or manufacturing capabilities. However, the lack of competition means there were no other bidders to compare against, potentially impacting price discovery and the government's ability to secure the most favorable terms.

Taxpayer Impact: Taxpayers are potentially paying a premium due to the absence of competitive bidding. The government cannot leverage market forces to drive down costs, which could result in higher overall program expenditures.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the continued operational readiness of the MQ-9 Reaper drone fleet. Services delivered include sustainment, maintenance, repair, and logistics support for the MQ-9 aircraft and associated systems. The geographic impact is global, as MQ-9 Reapers are deployed in various operational theaters worldwide. Workforce implications include the continued employment of specialized technicians and engineers at General Atomics and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Cost-plus-fixed-fee contract type can incentivize higher spending if not rigorously managed.
Dependence on a single contractor for critical sustainment creates supply chain risk.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Ensures continued operational capability of a critical intelligence, surveillance, and reconnaissance (ISR) platform.
Contractor is the original equipment manufacturer, possessing unique technical knowledge.
Long-term contract provides stability for sustainment operations.
Fixed fee component provides some cost predictability for the contractor's profit.

Sector Analysis

The MQ-9 Reaper is a key asset in the Unmanned Aerial Vehicle (UAV) market, a rapidly growing segment of the aerospace and defense industry. This sector is characterized by high technological complexity and significant government investment. Major players often hold sole-source positions for specific platforms due to proprietary technology and extensive development history. Comparable spending benchmarks for UAV sustainment are difficult to isolate due to the unique nature of each platform and its operational requirements.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. Given the sole-source nature and the specialized requirements for MQ-9 Reaper sustainment, it is unlikely that small businesses would be primary contractors. However, General Atomics may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would be defined by the contract terms, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature, but contract awards and basic details are usually publicly available through federal procurement databases.

Related Government Programs

MQ-1 Predator Sustainment
Unmanned Aerial Vehicle (UAV) Procurement
Aerospace Manufacturing Support
Defense Logistics and Maintenance Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
High dollar value for sustainment
Dependence on single manufacturer

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $277.7 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 $277.7 million.

What is the period of performance?

Start: 2021-01-01. End: 2024-09-30.

What is General Atomics Aeronautical Systems, Inc.'s track record with the MQ-9 Reaper program?

General Atomics Aeronautical Systems, Inc. (GA-ASI) is the original designer and manufacturer of the MQ-9 Reaper, a highly successful Unmanned Aerial System (UAS). GA-ASI has a long-standing relationship with the Department of Defense (DoD) for the development, production, and sustainment of the MQ-9. Their track record includes delivering numerous aircraft, providing training, and offering ongoing support services. The company is a recognized leader in the UAS industry, and their expertise is critical for the continued operation and enhancement of the Reaper platform. This deep involvement means they possess unique knowledge and capabilities essential for sustainment, which often leads to sole-source awards for such critical support.

How does the cost of this sustainment contract compare to other similar defense contracts?

Direct comparison of this $277.7 million sustainment contract for the MQ-9 Reaper is difficult due to its sole-source nature and the specific requirements of supporting a complex UAS. Defense sustainment contracts vary widely based on the platform's age, complexity, operational tempo, and the number of units being supported. Contracts for manned aircraft sustainment, for example, can involve different cost structures and components. However, the significant dollar amount reflects the critical role of the MQ-9 and the ongoing need for specialized maintenance, logistics, and technical support to ensure its operational readiness across various global deployments. Without competitive bids, a precise value-for-money benchmark against market alternatives is not feasible.

What are the primary risks associated with this sole-source sustainment contract?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to higher costs than might be achieved in a competitive environment. Taxpayers may be overpaying for sustainment services. Another significant risk is contractor dependency; the Department of Defense relies heavily on General Atomics Aeronautical Systems, Inc. (GA-ASI) for critical support, creating a vulnerability if GA-ASI faces financial difficulties, production issues, or decides to alter its support strategy. Furthermore, the cost-plus-fixed-fee (CPFF) contract type, while providing some cost certainty for the contractor's fee, can incentivize higher spending if cost controls are not robustly managed by the government. Finally, the absence of competition limits opportunities for innovation that might arise from a more dynamic market.

How effective is the MQ-9 Reaper program, and does this contract support its effectiveness?

The MQ-9 Reaper program is widely considered highly effective, serving as a primary platform for intelligence, surveillance, and reconnaissance (ISR) missions, as well as for providing close air support. Its ability to loiter for extended periods over target areas provides persistent monitoring capabilities crucial for modern military operations. This sustainment contract is directly linked to maintaining that effectiveness. By ensuring the aircraft are operational, maintained, and supported with necessary parts and technical expertise, the contract directly enables the continued deployment and success of MQ-9 missions. The contract's duration and funding are essential for the program's ongoing operational readiness and its contribution to national security objectives.

What are the historical spending patterns for MQ-9 Reaper sustainment?

Historical spending on MQ-9 Reaper sustainment has been substantial, reflecting the platform's critical role and increasing operational tempo over the years. While specific annual figures fluctuate based on program needs, upgrades, and operational deployments, the overall trend indicates significant and consistent investment in keeping the Reaper fleet mission-ready. Prior contracts for sustainment have also been awarded to General Atomics Aeronautical Systems, Inc., often on a sole-source or limited-competition basis due to their unique position as the manufacturer. The current $277.7 million award over approximately three years aligns with the expected long-term support requirements for a major defense asset like the MQ-9, suggesting a continuation of previous spending levels necessary for maintaining a large and active drone fleet.

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: FA857720R0001

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: $408,563,709

Exercised Options: $408,563,709

Current Obligation: $277,668,910

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline