DoD's $26.2M MQ-9 REAPER ATLC/TME contract awarded to General Atomics, raising questions on competition and value

Contract Overview

Contract Amount: $26,222,544 ($26.2M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-04-19

End Date: 2021-01-18

Contract Duration: 1,005 days

Daily Burn Rate: $26.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MQ-9 REAPER AUTOMATIC TAKEOFF&LANDING CAPABILITY (ATLC) TECHNICAL MATURATION EFFORT (TME)

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $26.2 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MQ-9 REAPER AUTOMATIC TAKEOFF&LANDING CAPABILITY (ATLC) TECHNICAL MATURATION EFFORT (TME) Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 3. Lack of competition suggests potential market concentration for MQ-9 Reaper technical services. 4. Performance period of nearly three years indicates a significant, long-term investment. 5. The contract focuses on technical maturation, suggesting it's an early-stage development effort. 6. The specific NAICS code (336411) points to aircraft manufacturing, aligning with the MQ-9 platform.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific technical focus. Without competitive bids, it's difficult to ascertain if the $26.2 million represents a fair market price. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher overall costs if not carefully managed, as the contractor is reimbursed for allowable costs plus a fixed fee. This contrasts with fixed-price contracts which offer greater cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, General Atomics Aeronautical Systems, Inc., was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in less price competition and may not yield the best value for the government compared to a fully competed contract with multiple bidders.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from potential cost savings that could arise from a bidding war among multiple qualified vendors. This could translate to a higher overall expenditure for the capability developed.

Public Impact

The primary beneficiary is the Department of the Air Force, which will receive enhanced capabilities for the MQ-9 Reaper drone. The services delivered include technical maturation for an automatic takeoff and landing capability, improving drone operational flexibility. The geographic impact is primarily within the United States, where General Atomics operates and where the MQ-9 Reaper is deployed. Workforce implications include specialized engineering and technical roles within General Atomics, supporting the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost-plus-fixed-fee structure may incentivize increased spending without guaranteed cost efficiencies.
Lack of transparency in the procurement process due to sole-source nature.
Potential for contractor lock-in given the specialized nature of MQ-9 Reaper development.

Positive Signals

Addresses a critical capability gap for the MQ-9 Reaper platform.
Award to a known incumbent with existing expertise on the MQ-9 system.
Focus on technical maturation suggests progress towards a deployable solution.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on unmanned aerial vehicle (UAV) technology. The market for UAVs, particularly for military applications like the MQ-9 Reaper, is characterized by high technological barriers to entry and significant government investment. General Atomics is a key player in this market. Spending in this area is driven by the need for advanced surveillance, reconnaissance, and strike capabilities, with ongoing research and development crucial for maintaining technological superiority.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements explicitly mentioned. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal. However, General Atomics may engage small businesses as subcontractors for specific components or services, though this is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Air Force's contracting officers and program managers are responsible for monitoring performance and costs. Inspector General (IG) offices within the DoD can investigate allegations of fraud, waste, or abuse. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review.

Related Government Programs

MQ-9 Reaper Program
Unmanned Aerial Systems (UAS) Development
Defense Aviation Manufacturing
Aerospace Technical Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.2 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. MQ-9 REAPER AUTOMATIC TAKEOFF&LANDING CAPABILITY (ATLC) TECHNICAL MATURATION EFFORT (TME)

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 $26.2 million.

What is the period of performance?

Start: 2018-04-19. End: 2021-01-18.

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

General Atomics Aeronautical Systems, Inc. (GA-ASI) is the prime contractor and developer of the MQ-9 Reaper remotely piloted aircraft system. They have a long and established history with the platform, having been responsible for its design, production, and sustainment for many years. GA-ASI has consistently delivered MQ-9 aircraft and associated systems to the U.S. Air Force and other international partners. Their expertise is deeply rooted in the MQ-9's development, including various upgrades and modifications over its lifecycle. This specific contract for the Automatic Takeoff & Landing Capability (ATLC) Technical Maturation Effort (TME) leverages this extensive experience, focusing on enhancing the aircraft's operational autonomy.

How does the $26.2 million cost compare to similar technical maturation efforts for UAVs?

Direct comparison of the $26.2 million cost for this specific technical maturation effort is difficult without access to detailed cost breakdowns and data from comparable sole-source contracts. However, the cost appears reasonable for a multi-year R&D effort focused on a critical system enhancement for a major platform like the MQ-9 Reaper. Technical maturation often involves significant engineering, testing, and integration activities. The cost-plus-fixed-fee (CPFF) structure means the final cost could fluctuate based on actual expenses incurred, plus a predetermined profit margin. Without competitive bids, it's hard to establish a definitive 'market rate' for this specific type of work.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract include a lack of price competition, which could lead to the government paying a premium compared to a competitively awarded contract. There's also the risk of contractor complacency or reduced incentive to innovate aggressively when competition is absent. The Cost-Plus-Fixed-Fee (CPFF) structure carries inherent risks of cost growth, as the contractor is reimbursed for allowable costs plus a fixed fee, potentially leading to higher overall expenditures if not managed tightly. Finally, reliance on a single source can create dependency and limit future flexibility if alternative solutions or suppliers were ever desired.

How effective is the MQ-9 Reaper ATLC/TME in improving program effectiveness?

The MQ-9 Reaper Automatic Takeoff & Landing Capability (ATLC) Technical Maturation Effort (TME) is designed to significantly enhance the program's effectiveness by enabling the aircraft to perform takeoff and landing operations autonomously. This capability reduces the reliance on ground support personnel and potentially expands the operational envelope, allowing for operations from a wider range of locations, including austere or forward-deployed bases. Improved autonomy can lead to increased mission flexibility, reduced logistical burden, and potentially faster response times. The technical maturation phase aims to de-risk the technology, ensuring it is viable for future integration and operational deployment, thereby contributing to the overall effectiveness and utility of the MQ-9 platform.

What are the historical spending patterns for MQ-9 Reaper technical development and upgrades?

Historical spending patterns for the MQ-9 Reaper program, particularly for technical development and upgrades, have been substantial, reflecting its importance as a key intelligence, surveillance, and reconnaissance (ISR) and strike platform. The U.S. Air Force and other agencies have consistently allocated significant funds towards the platform's sustainment, modernization, and the development of new capabilities. This includes efforts to improve its payload capacity, sensor suites, communication systems, and operational autonomy, such as the ATLC/TME. While specific figures for past technical maturation efforts vary, the overall trend indicates a sustained investment in evolving the MQ-9's capabilities to meet changing operational requirements and maintain its technological edge.

What is the significance of the 'Technical Maturation Effort' designation?

The 'Technical Maturation Effort' (TME) designation signifies that this contract is focused on advancing a specific technology or capability from an earlier concept or prototype stage towards a more mature, demonstrable level. It implies that the core concept has been proven, but significant engineering, integration, testing, and refinement are still required to ensure the technology is robust, reliable, and ready for potential full-scale development or integration into the operational system. This phase is crucial for identifying and mitigating technical risks before committing to larger production or deployment contracts, ultimately aiming to increase the probability of successful system implementation.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics (UEI: 859181984)

Address: 14200 KIRKHAM WAY, POWAY, CA, 92064

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $26,499,799

Exercised Options: $26,499,799

Current Obligation: $26,222,544

Actual Outlays: $1,602,267

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $32,205

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862017D2000

IDV Type: IDC

Timeline