DoD awards $52M for MQ-9 software, a sole-source contract with General Atomics

Contract Overview

Contract Amount: $52,026,980 ($52.0M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-01-28

End Date: 2020-11-30

Contract Duration: 1,037 days

Daily Burn Rate: $50.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LEAD-OFF HITTER 3 SOFTWARE LINE DEVELOPMENT FOR THE MQ-9 PLATFORM

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $52.0 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: LEAD-OFF HITTER 3 SOFTWARE LINE DEVELOPMENT FOR THE MQ-9 PLATFORM Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Significant investment in software development for a key defense platform. 3. Contract duration of over 1000 days suggests a complex, long-term project. 4. No small business set-aside indicates potential for large prime contractor focus. 5. The cost-plus-fixed-fee structure may incentivize cost increases. 6. Performance context is critical given the platform's strategic importance.

Value Assessment

Rating: fair

The contract value of $52 million for software line development is substantial. Without comparable sole-source contracts for similar MQ-9 software enhancements, a precise value-for-money assessment is difficult. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher costs than fixed-price contracts if not managed closely. Benchmarking against industry standards for software development on complex defense platforms would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically used when only one responsible source can provide the required supplies or services. While it ensures access to specialized expertise, it bypasses the price discovery benefits that open competition provides, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive bidding, which could have driven down the price. This necessitates strong oversight to ensure fair pricing.

Public Impact

The primary beneficiary is the Department of Defense, which receives enhanced software for the MQ-9 Reaper platform. Services delivered include software line development, crucial for the operational capabilities of the drone. The geographic impact is primarily within the defense sector, supporting military operations. Workforce implications may involve specialized software engineers and developers employed by General Atomics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type can incentivize higher costs if not managed effectively.
Lack of transparency in the sole-source justification requires scrutiny.

Positive Signals

Addresses critical software development needs for a key defense asset (MQ-9 Reaper).
Contract awarded to a known entity with established expertise in the MQ-9 platform.
Delivery order structure suggests phased development and potential for flexibility.

Sector Analysis

The defense sector, particularly unmanned aerial systems (UAS), is a significant area of government spending. The MQ-9 Reaper is a prominent platform, and ongoing investment in its software capabilities is essential for maintaining its technological edge. Spending on software development within defense contracts is substantial, reflecting the increasing reliance on advanced digital systems for military operations. Comparable spending benchmarks would involve looking at other software development contracts for major defense platforms.

Small Business Impact

This contract does not appear to have a small business set-aside. The prime contractor, General Atomics Aeronautical Systems, Inc., is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. This means the primary focus of the contract is on the capabilities of the large prime, and the impact on the small business ecosystem is indirect, potentially through opportunities if the prime subcontracts.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, including cost reporting and milestone achievement. 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-9 Reaper Program
Unmanned Aerial Systems (UAS) Development
Defense Software Modernization
Aircraft Manufacturing Support

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.0 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. LEAD-OFF HITTER 3 SOFTWARE LINE DEVELOPMENT FOR THE MQ-9 PLATFORM

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 $52.0 million.

What is the period of performance?

Start: 2018-01-28. End: 2020-11-30.

What is the specific nature of the 'software line development' being procured for the MQ-9 platform?

The provided data indicates 'LEAD-OFF HITTER 3 SOFTWARE LINE DEVELOPMENT FOR THE MQ-9 PLATFORM.' While the exact technical specifications are not detailed, 'lead-off hitter' suggests a critical or foundational software component. This could involve developing new functionalities, enhancing existing systems, or integrating new capabilities into the MQ-9's operational software suite. Given the platform's role in intelligence, surveillance, and reconnaissance (ISR) and strike missions, this software likely pertains to mission planning, data processing, communication systems, or flight control enhancements. Further details would be found in the contract's Statement of Work (SOW).

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for similar defense software development?

The Cost Plus Fixed Fee (CPFF) contract type is common for research and development (R&D) or when the scope of work is not well-defined at the outset, as is often the case with innovative software development. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This differs from fixed-price contracts, where the price is set regardless of actual costs, offering greater cost certainty to the government but potentially higher risk for the contractor. CPFF can incentivize contractors to incur costs to achieve a target, but the fixed fee limits the contractor's profit potential compared to cost-plus-incentive-fee (CPIF) contracts. For well-defined software projects, fixed-price contracts are generally preferred for better cost control.

What are the potential risks associated with a sole-source award for critical software development?

Sole-source awards carry inherent risks, primarily related to cost and innovation. Without competition, the government lacks the leverage to negotiate the lowest possible price, potentially leading to inflated costs for taxpayers. There's also a reduced incentive for the contractor to innovate or become highly efficient, as they are the only option. Furthermore, reliance on a single source can create vulnerabilities if that contractor faces financial difficulties, operational issues, or decides to discontinue support. The government may also miss out on potentially superior solutions or technologies offered by other capable firms.

What is the historical spending trend for software development related to the MQ-9 platform or similar UAS?

Historical spending on software for the MQ-9 Reaper and similar UAS platforms has been substantial and is generally increasing. As these platforms become more sophisticated and their roles expand, the demand for advanced software capabilities—including AI, improved ISR data processing, secure communications, and autonomous operations—grows. Defense budgets consistently allocate significant funds to modernize existing platforms and develop new software features. Tracking specific spending on 'software line development' for the MQ-9 over time would reveal trends in investment in its digital infrastructure, likely showing a consistent or upward trajectory as technology evolves and operational requirements change.

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) is the prime contractor for the MQ-9 Reaper program and has a long-standing, established relationship with the Department of Defense for this platform. They are widely recognized for their expertise in designing, manufacturing, and supporting the MQ-9. GA-ASI has historically received numerous sole-source contracts and delivery orders for the MQ-9, reflecting their unique position as the original equipment manufacturer and primary sustainment provider. While this sole-source history ensures continuity and deep platform knowledge, it also underscores the importance of rigorous oversight to ensure fair pricing and performance.

What are the implications of the contract duration (1037 days) on project management and cost control?

A contract duration of 1037 days (approximately 2.8 years) for software development indicates a significant, long-term undertaking. This extended timeline suggests the project involves complex integration, extensive testing, and potentially iterative development cycles. For project management, it necessitates robust planning, phased execution, and continuous monitoring of progress against milestones. From a cost control perspective, a longer duration increases the risk of cost overruns due to potential changes in requirements, inflation, or unforeseen technical challenges. The CPFF structure, while accommodating flexibility, requires diligent oversight throughout this extended period to manage expenditures effectively and ensure the project remains within budget expectations.

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: $54,411,233

Exercised Options: $53,425,824

Current Obligation: $52,026,980

Actual Outlays: $182,725

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $270,639

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