DoD's $24.4M MQ-9 Drone Kits Contract Awarded Sole-Source to General Atomics

Contract Overview

Contract Amount: $24,398,563 ($24.4M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-03-20

End Date: 2020-05-29

Contract Duration: 1,166 days

Daily Burn Rate: $20.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MALET MQ-9 BLOCK 5 KITS

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $24.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MALET MQ-9 BLOCK 5 KITS Key points: 1. Contract awarded without competition, raising questions about price discovery and potential cost savings. 2. Significant investment in advanced drone technology, indicating a focus on modernizing military capabilities. 3. Sole-source award to a single provider may limit opportunities for innovation and competitive pricing. 4. Contract duration of over 3 years suggests a sustained need for these specific drone kits. 5. The 'MALET MQ-9 BLOCK 5 KITS' designation points to specialized equipment for a specific drone platform. 6. Awarded by the Defense Contract Management Agency, highlighting the extensive oversight within the DoD. 7. California-based contractor suggests a concentration of defense manufacturing in that region.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The cost-plus-fixed-fee contract type can sometimes lead to higher costs if not managed closely, as the contractor is reimbursed for allowable costs plus a fixed fee. A comparison to similar drone kit procurements, especially those that were competed, would be necessary to assess if the $24.4 million price point represents a fair market value. The absence of competition inherently reduces the pressure on the contractor to offer the most cost-effective solution.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, General Atomics Aeronautical Systems, Inc., was solicited. This typically occurs when a specific capability is only available from a single source, or in cases of urgent need where competition is not feasible. The lack of multiple bidders means there was no opportunity for price negotiation or comparison among different suppliers, potentially leading to a higher price than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing bids, there's less assurance that the government secured the best possible price for these critical drone components.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, which receives advanced unmanned aerial vehicle (UAV) kits. These kits are essential for enhancing the operational capabilities of the MQ-9 Reaper drone platform. The services delivered include the provision of specialized hardware and potentially associated support for drone systems. The geographic impact is primarily within military operations, with potential implications for defense industry employment in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not rigorously managed.
Lack of competition may stifle innovation by not encouraging alternative solutions from other vendors.
Specific details on the 'Block 5' enhancements are not publicly detailed, making value assessment harder.

Positive Signals

Procurement of advanced MQ-9 drone kits supports critical national defense missions.
General Atomics is a known leader in UAV technology, suggesting a reliable supplier.
The contract duration indicates a stable, long-term need for these capabilities.
Awarded by the Defense Contract Management Agency, implying a level of established oversight.

Sector Analysis

The Unmanned Aerial Vehicle (UAV) market, particularly for military applications, is a rapidly growing sector within aerospace and defense. General Atomics is a dominant player in this space, especially with its Predator and Reaper series drones. This contract for MQ-9 Block 5 kits fits within the broader trend of increasing investment in autonomous and remotely piloted aircraft systems for intelligence, surveillance, reconnaissance, and strike missions. Comparable spending benchmarks are difficult without knowing the specific components of the 'kits,' but the overall MQ-9 program represents billions in federal spending.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting implications for small businesses based on the provided data. The sole-source nature of the award to a large prime contractor, General Atomics, suggests that the primary focus was on acquiring a specific, established capability rather than fostering small business participation through set-asides. Further investigation into General Atomics' subcontracting plans would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services for the Department of Defense. Oversight mechanisms would include monitoring contractor performance, ensuring compliance with contract terms, and auditing costs under the cost-plus-fixed-fee structure. Transparency is facilitated through contract databases like FPDS, although detailed justifications for sole-source awards are not always readily available to the public. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

MQ-9 Reaper Program
Unmanned Aerial Vehicle Procurement
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Aerospace Manufacturing Contracts
General Atomics Aeronautical Systems Contracts

Risk Flags

Sole-source award
Lack of competition
Cost-plus-fixed-fee contract type
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. MALET MQ-9 BLOCK 5 KITS

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 $24.4 million.

What is the period of performance?

Start: 2017-03-20. End: 2020-05-29.

What is the specific functionality and technological advancement of the 'MALET MQ-9 BLOCK 5 KITS' compared to previous blocks or other drone systems?

The 'MALET MQ-9 BLOCK 5 KITS' likely refer to specific upgrade or integration kits for the MQ-9 Reaper Block 5 variant. While detailed technical specifications are often classified or proprietary, Block 5 upgrades typically focus on enhancing the aircraft's payload capacity, sensor integration, communication systems, and potentially its software for improved mission execution. This could include support for new intelligence, surveillance, and reconnaissance (ISR) payloads, advanced electronic warfare systems, or improved data links for real-time transmission. Compared to earlier blocks, Block 5 aims for greater versatility and capability, allowing the MQ-9 to perform a wider range of missions, from persistent ISR to armed reconnaissance and potentially even strike operations in contested environments. The 'MALET' designation might refer to a specific mission equipment package or a particular integration process managed by General Atomics.

How does the $24.4 million cost compare to other sole-source awards for similar drone components or kits?

Benchmarking sole-source awards is inherently challenging due to the lack of competitive data. However, the $24.4 million figure for drone kits over a period of approximately 3 years (1166 days) suggests a significant investment per kit or per year. For context, major drone platforms like the MQ-9 itself have acquisition costs in the tens of millions, and individual advanced sensor payloads can cost millions. If these kits represent substantial hardware or integration services, the price might be justifiable. However, without knowing the exact number of kits, their specific components, and the level of integration or support included, a direct comparison is difficult. Sole-source awards often carry a premium, and the absence of competition means this price cannot be validated against market alternatives. Further analysis would require access to the contract's justification for sole-source procurement and potentially data from other agencies on similar, albeit likely different, procurements.

What are the primary risks associated with a sole-source contract for critical defense equipment like drone kits?

The primary risks associated with a sole-source contract for critical defense equipment are multifaceted. Firstly, there is a significant risk of inflated pricing, as the government lacks the leverage of competitive bidding to ensure the best possible value. The contractor may not feel the same pressure to optimize costs or offer innovative, cost-saving solutions. Secondly, there's a risk of vendor lock-in; the government becomes dependent on a single supplier, potentially limiting future flexibility and increasing long-term costs if the sole-source provider raises prices or experiences production issues. Thirdly, the absence of competition can stifle innovation, as alternative technologies or approaches from other companies are not explored or incentivized. Lastly, sole-source awards can raise concerns about fairness and transparency, potentially leading to perceptions of favoritism or missed opportunities for other capable suppliers, including small businesses.

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

General Atomics Aeronautical Systems, Inc. (GA-ASI) has an extensive and well-established track record as the prime contractor and developer of the MQ-9 Reaper and its predecessors. They are widely recognized as a leader in the field of unmanned aerial systems. GA-ASI has been the primary source for MQ-9 aircraft, associated systems, and upgrades for many years. Consequently, they have been involved in numerous sole-source procurements related to the MQ-9 program, often justified by the unique nature of their proprietary technology and the need for specialized integration and support. While this deep relationship ensures continuity and expertise, it also means that sole-source awards are a common contracting mechanism for them on this platform. Audits and performance reviews by the DoD and DCMA would provide insights into their performance history on specific contracts, including cost control and delivery timeliness.

How has federal spending on MQ-9 related procurements evolved over the past five years, and does this contract represent a significant shift?

Federal spending on MQ-9 related procurements has been substantial and relatively consistent over the past five years, reflecting the platform's critical role in ISR and combat operations. The total contract obligations for the MQ-9 program, including aircraft, kits, upgrades, training, and sustainment, typically run into hundreds of millions, if not billions, annually. This specific $24.4 million contract for 'MALET MQ-9 BLOCK 5 KITS' appears to be a component of the larger, ongoing sustainment and modernization efforts for the MQ-9 fleet. It does not necessarily represent a significant *shift* in overall spending levels but rather a specific, albeit substantial, procurement action within an established program. The trend has been towards enhancing the capabilities of existing platforms like the MQ-9, including upgrades to sensors, communication systems, and software, which this contract likely supports. The sole-source nature is consistent with how specialized upgrades for proprietary systems are often handled.

What are the potential implications of this contract for the future development or sustainment of the MQ-9 Reaper platform?

This contract for MALET MQ-9 Block 5 Kits signifies the continued investment in and reliance upon the MQ-9 Reaper platform by the Department of Defense. The Block 5 designation suggests ongoing efforts to enhance the platform's capabilities, likely incorporating advancements in sensor technology, data processing, or operational flexibility to meet evolving mission requirements. By awarding this contract, the DoD signals its intent to sustain and modernize the MQ-9 fleet, ensuring its relevance in current and future operational environments. It also reinforces General Atomics' position as the key provider for this critical system. The specific 'MALET' kits could enable new operational concepts or improve performance in challenging theaters, potentially influencing future platform development decisions or sustainment strategies for the Reaper and similar unmanned systems.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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

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: $29,513,032

Exercised Options: $26,994,085

Current Obligation: $24,398,563

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $575,925

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862015G4040

IDV Type: BOA

Timeline