DoD's $27.8M Predator Datalink Contract Awarded to General Atomics Amidst Diminishing Sources

Contract Overview

Contract Amount: $27,872,506 ($27.9M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-06-28

End Date: 2020-12-31

Contract Duration: 1,282 days

Daily Burn Rate: $21.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DIMINISHING MANFUCTURING SOURCES RESOLUTION FOR MQ9 PREDATOR PRIMARY DATALINK

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $27.9 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: DIMINISHING MANFUCTURING SOURCES RESOLUTION FOR MQ9 PREDATOR PRIMARY DATALINK Key points: 1. Contract addresses critical need for MQ9 Predator datalink components due to diminishing manufacturing sources. 2. Sole-source award to General Atomics, the original equipment manufacturer, suggests limited alternatives for specialized parts. 3. The contract's cost-plus-fixed-fee structure may allow for cost overruns, requiring close monitoring. 4. Performance period spans over three years, indicating a sustained requirement for these components. 5. The award falls under Aircraft Manufacturing, a sector vital for defense readiness. 6. Lack of competition raises concerns about potential price inflation and limited innovation.

Value Assessment

Rating: fair

The contract's value is difficult to benchmark due to its sole-source nature and specialized components. As a cost-plus-fixed-fee contract, the final cost is not predetermined, making direct price comparisons challenging. However, the absence of competition suggests that the government may not be achieving the best possible price. The fixed fee component provides some predictability, but the variable cost component requires diligent oversight to ensure value for money.

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. This approach was likely taken due to the specialized nature of the MQ9 Predator datalink components and the identified issue of diminishing manufacturing sources. Awarding to the original equipment manufacturer is often necessary in such cases to ensure continued support and availability of critical parts. However, the lack of a competitive bidding process means that alternative suppliers and potentially more cost-effective solutions were not explored.

Taxpayer Impact: The sole-source nature of this award means taxpayers are likely paying a premium, as competition is a key driver for lower prices. Without competitive pressure, there's a risk of less favorable pricing and terms.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the continued operational readiness of the MQ9 Predator drone fleet. The contract delivers essential datalink components, crucial for the command, control, and data transmission capabilities of the MQ9. Geographic impact is primarily within the United States, supporting domestic defense manufacturing and supply chains. Workforce implications include sustaining specialized manufacturing jobs within General Atomics and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee contract structure can incentivize higher spending if not rigorously managed.
Diminishing manufacturing sources present a long-term risk to supply chain stability and future procurement.
Lack of transparency in pricing due to sole-source and cost-plus nature.

Positive Signals

Addresses a critical operational need for the MQ9 Predator, a key intelligence, surveillance, and reconnaissance asset.
Ensures the continued availability of essential components, maintaining the effectiveness of a vital defense platform.
Awarded to the original equipment manufacturer, likely ensuring technical compatibility and quality.
The contract duration provides stability for a critical defense supply chain.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of the broader aerospace and defense industry. The market for specialized drone components, particularly for platforms like the MQ9 Predator, is often concentrated among a few key manufacturers. The challenge of diminishing manufacturing sources highlights a common issue in defense procurement where reliance on legacy systems can lead to supply chain vulnerabilities. Comparable spending benchmarks are difficult to establish due to the unique nature of the components and the sole-source award.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded sole-source to a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within this specific award. The focus on specialized components for a legacy platform may limit opportunities for small businesses unless they are part of the original equipment manufacturer's established supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. Given the sole-source and cost-plus-fixed-fee nature, rigorous oversight of costs, performance, and schedule is essential. Transparency may be limited due to the nature of the award, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) would be standard oversight mechanisms. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

MQ9 Predator Sustainment Programs
Unmanned Aerial Vehicle (UAV) Component Procurement
Defense Industrial Base Supply Chain Initiatives
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Diminishing manufacturing sources
Potential for price escalation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.9 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. DIMINISHING MANFUCTURING SOURCES RESOLUTION FOR MQ9 PREDATOR PRIMARY DATALINK

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 $27.9 million.

What is the period of performance?

Start: 2017-06-28. End: 2020-12-31.

What is the specific nature of the 'diminishing manufacturing sources' issue for the MQ9 Predator datalink, and what are the long-term implications?

The 'diminishing manufacturing sources' (DMS) issue refers to the potential unavailability of critical components due to the obsolescence of manufacturing processes, the closure of original suppliers, or a lack of commercial viability for continued production. For the MQ9 Predator datalink, this likely means that the original manufacturers of certain sub-components are no longer in business or have ceased production. The long-term implications are significant: it can lead to increased costs for replacement parts, extended lead times, and a potential reduction in the operational readiness of the MQ9 fleet if these components cannot be reliably sourced. This necessitates either finding alternative suppliers, redesigning components, or securing sole-source contracts with existing manufacturers, as seen here, to maintain supply.

How does the cost-plus-fixed-fee (CPFF) contract type potentially impact the final cost and value for money compared to other contract types?

A Cost-Plus-Fixed-Fee (CPFF) contract type reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or when there is significant uncertainty, such as in addressing diminishing manufacturing sources. While it ensures the contractor is compensated for necessary work and provides an incentive to complete the project, it shifts much of the cost risk to the government. Unlike fixed-price contracts, the final cost is not capped, potentially leading to higher expenditures if costs escalate. Value for money is achieved through diligent oversight of allowable costs and ensuring the fixed fee remains reasonable relative to the effort and risk undertaken by the contractor.

What are the risks associated with a sole-source award for critical defense components like the MQ9 datalink?

Sole-source awards, while sometimes necessary, carry inherent risks. The primary risk is the lack of price competition, which can lead to the government paying a higher price than if multiple bidders were involved. This reduces the government's negotiating leverage and potentially inflates costs for taxpayers. Another risk is reduced innovation, as there is less incentive for the sole contractor to develop more efficient or cost-effective solutions when competition is absent. Furthermore, reliance on a single source can create supply chain vulnerabilities; if that contractor experiences production issues, the government has limited alternatives. Ensuring fair and reasonable pricing and robust performance monitoring becomes paramount in sole-source situations.

What is the historical spending pattern for MQ9 Predator datalink components or similar aircraft manufacturing contracts by the Department of the Air Force?

Analyzing historical spending patterns for specific components like the MQ9 datalink is challenging without access to detailed procurement databases. However, general trends in aircraft manufacturing and UAV support indicate consistent, often significant, investment by the Department of the Air Force. Contracts for major platforms like the MQ9 typically involve substantial sustainment costs over their lifecycle, encompassing spare parts, upgrades, and maintenance. Spending often increases as platforms age and face challenges like diminishing manufacturing sources. The Air Force frequently utilizes sole-source or limited-competition contracts for specialized or proprietary components, especially when dealing with original equipment manufacturers to ensure system integrity and availability, which aligns with the nature of this award.

How does the contract's performance period (2017-2020) and duration (1282 days) align with the operational needs and lifecycle of the MQ9 Predator?

The contract performance period from June 28, 2017, to December 31, 2020, with a duration of approximately 1282 days (around 3.5 years), aligns reasonably well with the sustainment needs of a major defense asset like the MQ9 Predator. The MQ9 is a relatively mature platform, and sustainment contracts are crucial for ensuring its continued operational capability. A multi-year contract of this length provides the necessary time to address issues like diminishing manufacturing sources and procure the required components without frequent, short-term contract actions. This duration allows for more predictable planning and execution, supporting the long-term operational readiness and deployment schedules of the MQ9 fleet.

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

Parent Company: General Atomics

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: $29,295,028

Exercised Options: $29,295,028

Current Obligation: $27,872,506

Actual Outlays: $225,355

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $19,235,375

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