DoD awards $313M for MQ-9 Reaper production, a sole-source contract to General Atomics

Contract Overview

Contract Amount: $313,172,422 ($313.2M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-09-12

End Date: 2023-01-31

Contract Duration: 1,237 days

Daily Burn Rate: $253.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MQ-9 REAPER FY19 AIRCRAFT PRODUCTION

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $313.2 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MQ-9 REAPER FY19 AIRCRAFT PRODUCTION Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant investment in critical intelligence, surveillance, and reconnaissance (ISR) capabilities. 3. Long-term production contract indicates sustained demand for the MQ-9 platform. 4. Potential for cost overruns given the lack of competitive bidding. 5. Contract duration extends over multiple fiscal years, suggesting program stability. 6. Focus on aircraft manufacturing aligns with broader defense industrial base needs.

Value Assessment

Rating: fair

The contract value of $313 million for MQ-9 Reaper aircraft production is substantial. However, without competitive bidding, it is difficult to benchmark the value for money effectively. The contract's firm-fixed-price nature provides some cost certainty, but the absence of competition raises concerns about whether the government is achieving the best possible price. Historical spending on similar sole-source defense procurements often shows higher unit costs compared to competed programs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, General Atomics Aeronautical Systems, Inc., was solicited. This approach is typically used when a unique capability exists or when it's deemed not practical or advantageous to compete. The lack of competition means there was no direct price discovery through multiple bids, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure, which typically drives down prices and encourages innovation among bidders.

Public Impact

Provides critical intelligence, surveillance, and reconnaissance (ISR) capabilities to the Department of Defense. Supports ongoing military operations and national security objectives. Benefits the defense industrial base through sustained production and employment. Enhances the U.S. military's ability to conduct remote sensing and strike missions. Geographic impact is primarily within the defense sector, with production centered in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Long-term nature of the contract could mask inefficiencies if not closely monitored.
Reliance on a single supplier for a critical defense asset poses supply chain risks.

Positive Signals

MQ-9 Reaper is a proven and essential platform for ISR and strike missions.
Firm-fixed-price contract provides cost predictability for the government.
Sustained production supports the defense industrial base and ensures platform availability.

Sector Analysis

The MQ-9 Reaper falls within the Unmanned Aerial Vehicle (UAV) segment of the aerospace and defense industry. This sector is characterized by high R&D investment, long production cycles, and significant government procurement. The market for advanced UAVs is competitive, but specific platforms like the Reaper, due to their unique capabilities and established operational history, often become sole-source procurements. Comparable spending benchmarks are difficult without competed data, but multi-billion dollar annual investments are common for advanced military aircraft.

Small Business Impact

This contract does not appear to include specific small business set-asides. General Atomics Aeronautical Systems, Inc. is a large business. While the prime contractor may engage small businesses for subcontracting, the primary award is not directed towards small business participation. The impact on the small business ecosystem is indirect, relying on the prime contractor's subcontracting strategy.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which ensures compliance with contract terms and quality standards. Accountability measures are embedded within the firm-fixed-price structure, which shifts some risk to the contractor. Transparency is facilitated through contract award databases, though detailed cost breakdowns may not be publicly available due to the sole-source nature.

Related Government Programs

MQ-1 Predator
RQ-4 Global Hawk
Unmanned Aerial Systems (UAS) Procurement
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Programs

Risk Flags

Sole-source award
Lack of competitive benchmarking
Potential for cost inefficiencies

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $313.2 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. MQ-9 REAPER FY19 AIRCRAFT PRODUCTION

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 $313.2 million.

What is the period of performance?

Start: 2019-09-12. End: 2023-01-31.

What is the track record of General Atomics Aeronautical Systems, Inc. with DoD contracts, particularly for the MQ-9 Reaper?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a long and established history as the developer and primary manufacturer of the MQ-9 Reaper and its predecessor, the MQ-1 Predator. They have consistently been awarded contracts for the production, sustainment, and upgrades of these platforms. Their track record with the DoD is extensive, marked by successful delivery of thousands of UAVs and associated support services. While specific performance metrics on past contracts are often proprietary, GA-ASI is recognized as a leader in the unmanned aircraft systems sector, holding numerous sole-source and competitive contracts over the years. Their deep expertise with the Reaper platform makes them the incumbent and often sole provider for new production.

How does the cost of the MQ-9 Reaper under this sole-source contract compare to similar platforms or previous procurements?

Direct cost comparisons for the MQ-9 Reaper under this sole-source contract are challenging due to the lack of competitive bidding. Sole-source awards generally do not provide the same level of price transparency or downward pressure as competed contracts. However, historical data and industry analyses suggest that sole-source procurements for complex defense systems can result in higher unit costs compared to what might be achieved through competition. Benchmarking against other large, sole-source aircraft production contracts within the DoD can offer some context, but each platform's unique technological requirements and production scale influence pricing. Without access to detailed cost breakdowns or competed alternatives, a precise value-for-money assessment relative to market rates is difficult.

What are the primary risks associated with awarding a large production contract like this on a sole-source basis?

The primary risk associated with awarding a large production contract on a sole-source basis is the potential for reduced cost-effectiveness. Without competitive pressure, the government may not achieve the lowest possible price for the aircraft. There's also a risk of contractor complacency, where the lack of competition might disincentivize efficiency improvements or aggressive cost management. Furthermore, sole-source awards can create a dependency on a single supplier, posing supply chain risks if that supplier faces production issues, financial instability, or geopolitical challenges. This dependency can also limit the government's leverage in future negotiations for upgrades, spare parts, or sustainment services.

How effective is the MQ-9 Reaper platform in fulfilling its intended ISR and strike missions, and how does this contract support that effectiveness?

The MQ-9 Reaper is widely regarded as a highly effective platform for Intelligence, Surveillance, and Reconnaissance (ISR) and persistent strike missions. Its endurance, payload capacity, and sensor suite allow it to provide persistent "eyes on target" and engage threats in denied or dangerous environments. This contract, by ensuring the continued production of new MQ-9 airframes, directly supports the DoD's ability to maintain and expand its fleet of these critical assets. Sustained production ensures that the military can replace aging airframes, equip new units, and maintain the necessary number of operational aircraft to meet global demand for ISR and strike capabilities, thereby underpinning its effectiveness.

What are the historical spending patterns for the MQ-9 Reaper program, and how does this FY19 award fit within that trend?

Historical spending on the MQ-9 Reaper program has been substantial, reflecting its status as a key component of the DoD's unmanned systems strategy. Annual procurement funding has varied based on program milestones, fleet size goals, and budget allocations, often ranging in the hundreds of millions of dollars for aircraft production and associated support. This $313 million award for FY19 aircraft production aligns with previous years' significant investments in the platform. It indicates a consistent, long-term commitment to the MQ-9 program, suggesting that the platform remains a high priority for the Department of Defense, and that annual spending for its continued production is expected to remain robust.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $313,219,191

Exercised Options: $313,219,191

Current Obligation: $313,172,422

Actual Outlays: $10,184,326

Subaward Activity

Number of Subawards: 119

Total Subaward Amount: $50,574,552

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862015G4040

IDV Type: BOA

Timeline