DoD Awards $646M MQ-9 Reaper Support Contract to General Atomics, Extending to 2027

Contract Overview

Contract Amount: $646,404,052 ($646.4M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-01-01

End Date: 2027-12-31

Contract Duration: 1,460 days

Daily Burn Rate: $442.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CY24-25 MQ-9 (REAPER) SUPPORT AND SERVICES.

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $646.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: CY24-25 MQ-9 (REAPER) SUPPORT AND SERVICES. Key points: 1. Significant contract value for critical drone sustainment. 2. Sole-source award raises questions about competition and potential cost savings. 3. Long-term nature of the contract requires ongoing oversight. 4. Focus on advanced aerospace manufacturing sector.

Value Assessment

Rating: fair

The contract type is Cost Plus Fixed Fee, which can lead to higher costs if not managed carefully. Benchmarking against similar sole-source sustainment contracts for complex defense systems is difficult without more data, but the award amount suggests a substantial investment.

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 limits price discovery and potentially increases costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition may result in higher spending than if multiple vendors were considered, impacting the efficient use of taxpayer funds.

Public Impact

Ensures continued operational readiness of the MQ-9 Reaper, a key intelligence, surveillance, and reconnaissance (ISR) platform. Supports advanced aerospace manufacturing jobs in California. Potential for cost overruns due to sole-source nature and cost-plus contract type.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Cost-plus contract type can incentivize higher spending.
Long contract duration (4 years) requires sustained oversight.

Positive Signals

Ensures critical platform sustainment.
Supports established provider of advanced drone technology.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically supporting unmanned aerial vehicle (UAV) systems. Spending benchmarks for sole-source sustainment of complex defense platforms are highly variable, but this represents a significant investment in maintaining a critical capability.

Small Business Impact

The data indicates no specific set-aside for small businesses in this contract. General Atomics is a large prime contractor, and any subcontracting opportunities for small businesses are not detailed here.

Oversight & Accountability

Given the sole-source nature and cost-plus contract type, robust oversight by the Department of the Air Force is crucial to ensure cost control, performance, and adherence to contract terms. Regular audits and performance reviews will be essential.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition.
Potential for cost overruns.
Long-term contract duration.
Reliance on sole-source provider.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $646.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. CY24-25 MQ-9 (REAPER) SUPPORT AND SERVICES.

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 $646.4 million.

What is the period of performance?

Start: 2024-01-01. End: 2027-12-31.

What is the justification for the sole-source award, and what steps are being taken to ensure fair pricing?

The justification for a sole-source award typically stems from unique capabilities or proprietary technology held by a single vendor. To ensure fair pricing, the Department of Defense likely relies on detailed cost proposals, historical pricing data, and potentially independent cost estimates. However, without a competitive process, the inherent price discovery benefits are absent, necessitating stringent oversight and negotiation.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for long-term sustainment?

CPFF contracts can pose risks of cost escalation if the contractor's costs exceed initial estimates, although the fixed fee provides some incentive for efficiency. For long-term sustainment, there's a risk that the contractor may not aggressively pursue cost-saving innovations, knowing that costs are largely covered. Effective oversight is critical to monitor expenditures and ensure the government receives value.

How does this contract contribute to the overall effectiveness and readiness of the MQ-9 Reaper program?

This contract is vital for ensuring the operational readiness and continued effectiveness of the MQ-9 Reaper fleet. By providing necessary support and services, it guarantees the platform remains functional, maintained, and capable of executing its critical intelligence, surveillance, and reconnaissance missions. This sustainment is fundamental to the program's overall success and the Air Force's operational capabilities.

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: FA857723R0001

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: $646,404,052

Exercised Options: $646,404,052

Current Obligation: $646,404,052

Actual Outlays: $1,660,636

Subaward Activity

Number of Subawards: 170

Total Subaward Amount: $29,898,330

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline