DoD awards $150M for MQ-9 Reaper follow-on enhancements to General Atomics

Contract Overview

Contract Amount: $149,806,387 ($149.8M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-05-16

End Date: 2023-07-18

Contract Duration: 1,889 days

Daily Burn Rate: $79.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: MQ-9 FOLLOW-ON REAPER CAPABILITY ENHANCEMENT

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $149.8 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MQ-9 FOLLOW-ON REAPER CAPABILITY ENHANCEMENT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Fixed-price incentive contract type suggests shared risk between government and contractor. 3. Long contract duration of 1889 days indicates a significant, multi-year effort. 4. The contract focuses on capability enhancement for a key unmanned aerial system. 5. This award represents a substantial investment in advanced defense technology. 6. The primary contractor, General Atomics, is a major player in the defense sector.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and focus on specialized capability enhancements for the MQ-9 Reaper. Without competitive bids, it's difficult to definitively assess if the $150 million represents optimal value for money. The fixed-price incentive structure aims to control costs, but the ultimate price depends on performance against targets. Comparisons to similar follow-on enhancement contracts for advanced drone systems would be necessary for a more robust 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 among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or intellectual property essential for the requirement, or in cases of urgent need. The lack of competition means there was no direct price discovery through bidding, potentially leading to higher costs than if multiple firms had vied for the contract.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from the cost savings that can arise from a competitive bidding process. The government relied on negotiation to establish the price, which may not have yielded the lowest possible cost.

Public Impact

The U.S. Air Force benefits from enhanced capabilities for its MQ-9 Reaper fleet. This contract supports the continued development and modernization of unmanned aerial systems. The geographic impact is primarily within the United States, where the contractor is based and where the enhancements will likely be integrated. Workforce implications include skilled engineers, technicians, and manufacturing personnel at General Atomics and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Fixed-price incentive contracts can lead to cost overruns if targets are not met efficiently.
Long contract duration increases exposure to potential scope creep or changing requirements.

Positive Signals

Focus on capability enhancement for a critical defense asset (MQ-9 Reaper).
Contractor (General Atomics) has established expertise in unmanned aerial systems.
Fixed-price incentive structure aligns contractor and government interests in achieving performance goals.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on unmanned aerial systems (UAS). The MQ-9 Reaper is a significant platform for intelligence, surveillance, and reconnaissance (ISR) and strike missions. Spending in this area is driven by the need for advanced, persistent surveillance capabilities and the ongoing evolution of drone technology. Comparable spending benchmarks would include other major UAS development and sustainment contracts within the Department of Defense.

Small Business Impact

This contract was awarded directly to General Atomics Aeronautical Systems, Inc., a large defense contractor. There is no explicit indication of a small business set-aside. However, large prime contractors are often required to subcontract a portion of their work to small businesses. The extent to which small businesses will participate in this specific contract, either directly or indirectly through subcontracting, is not detailed in the provided data but is a common practice in defense contracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Air Force. The fixed-price incentive contract type includes performance metrics that would be monitored to ensure delivery and quality. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

MQ-9 Reaper Sustainment
Unmanned Aerial Vehicle (UAV) Development
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Aircraft Manufacturing
Aerospace Technology Research and Development

Risk Flags

Sole-source award
Potential for cost overruns in FPI contracts
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $149.8 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. MQ-9 FOLLOW-ON REAPER CAPABILITY ENHANCEMENT

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 $149.8 million.

What is the period of performance?

Start: 2018-05-16. End: 2023-07-18.

What is the historical spending trend for MQ-9 Reaper capability enhancements?

Historical spending on MQ-9 Reaper capability enhancements has been significant, reflecting the platform's strategic importance to the Air Force and other branches. Prior to this $150 million follow-on award, numerous contracts have been issued for upgrades, modifications, and new system integrations for the Reaper fleet. These have included enhancements to sensors, communication systems, weapons integration, and operational software. Analyzing past contract awards reveals a consistent investment in maintaining and improving the MQ-9's effectiveness in ISR and strike roles. The total cumulative spending on the MQ-9 program, including procurement, sustainment, and enhancements, runs into billions of dollars over its lifecycle, indicating a sustained commitment to this unmanned aerial system.

How does the fixed-price incentive (FPI) contract type typically perform in terms of cost control compared to other contract types?

Fixed-Price Incentive (FPI) contracts are designed to provide a middle ground between fixed-price and cost-reimbursement contracts, aiming for better cost control than cost-plus types while allowing for some flexibility. In an FPI contract, the final price is adjusted based on the contractor's performance against mutually agreed-upon targets for cost, delivery, and performance. If the contractor achieves lower costs than targeted, both the government and contractor share in the savings. Conversely, if costs exceed the target, the contractor bears a larger share of the overrun up to a ceiling price. This structure incentivizes the contractor to manage costs effectively to maximize their profit, thereby offering better cost control than pure cost-plus contracts. However, poorly defined targets or inadequate oversight can still lead to cost increases.

What are the primary risks associated with a sole-source award for advanced defense systems?

Sole-source awards for advanced defense systems carry several primary risks. The most significant is the lack of price competition, which can lead to inflated costs as the government does not benefit from the downward pressure that multiple bids would typically exert. This can result in taxpayers paying more than necessary for the capabilities acquired. Another risk is reduced innovation; without the stimulus of competition, the sole-source provider may have less incentive to pursue novel or more cost-effective solutions. Furthermore, dependence on a single supplier can create supply chain vulnerabilities and limit the government's leverage in future negotiations or in addressing performance issues. Finally, sole-source awards can sometimes raise concerns about fairness and the equitable distribution of government contracts.

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

General Atomics Aeronautical Systems, Inc. (GA-ASI) has an extensive and well-established track record as the prime contractor for the MQ-9 Reaper program. GA-ASI designed, developed, and has been the primary manufacturer of the MQ-9 since its inception. They have consistently delivered production aircraft, provided sustainment services, and developed numerous upgrades and enhancements for the platform over its operational life. Their deep institutional knowledge and technical expertise regarding the MQ-9 are unparalleled, making them the logical choice for follow-on development and capability enhancements. The company has a long history of working with the U.S. Air Force and other military branches on this critical unmanned aerial system.

How does the MQ-9 Reaper fit into the broader landscape of U.S. military unmanned aerial systems?

The MQ-9 Reaper occupies a crucial niche within the U.S. military's diverse fleet of unmanned aerial systems (UAS). It is primarily classified as a Medium-Altitude, Long-Endurance (MALE) UAS, excelling in intelligence, surveillance, reconnaissance (ISR), and armed attack missions. Compared to smaller tactical drones, the MQ-9 offers significantly longer flight times and greater payload capacity, allowing for persistent monitoring of large areas and the deployment of precision-guided munitions. It serves as a workhorse platform, complementing higher-altitude, faster reconnaissance assets like the U-2 or Global Hawk, and more specialized or tactical drones. The ongoing 'follow-on' enhancements reflect the military's continued reliance on the MQ-9's capabilities while also exploring next-generation UAS technologies.

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: FIXED PRICE INCENTIVE (L)

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: $205,832,428

Exercised Options: $149,806,387

Current Obligation: $149,806,387

Actual Outlays: $6,866,049

Subaward Activity

Number of Subawards: 63

Total Subaward Amount: $34,504,174

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