DoD awards $78.4M for PREDATOR REAPER aircraft manufacturing, a sole-source contract to General Atomics

Contract Overview

Contract Amount: $78,402,329 ($78.4M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-02-01

End Date: 2022-08-31

Contract Duration: 942 days

Daily Burn Rate: $83.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PREDATOR REAPER

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $78.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: PREDATOR REAPER Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Significant investment in advanced aircraft manufacturing capabilities. 3. Potential for cost overruns given the 'COST PLUS FIXED FEE' contract type. 4. Long contract duration of 942 days suggests a complex and lengthy project. 5. Focus on a single, high-value aircraft system. 6. California-based contractor indicates potential regional economic impact.

Value Assessment

Rating: questionable

The contract's value of $78.4 million for aircraft manufacturing warrants scrutiny, especially given its sole-source nature. Without competitive bidding, it's difficult to benchmark the pricing against market rates or similar contracts. The 'COST PLUS FIXED FEE' structure, while common for complex projects, can lead to costs exceeding initial estimates if not managed tightly. The absence of a competitive process means taxpayers may not be receiving the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source procurement method, meaning only one bidder was solicited. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition limits the government's ability to explore alternative solutions or negotiate more favorable pricing, potentially leading to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions and innovation that typically arise from a competitive bidding process.

Public Impact

The Department of Defense benefits from the acquisition of advanced PREDATOR REAPER aircraft. Services delivered include the manufacturing of critical aircraft components and systems. The geographic impact is concentrated in California, where the contractor is based. The contract supports specialized jobs in the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs.
Cost-plus contract type carries inherent risk of budget overruns.
Lack of competition may stifle innovation and alternative solution exploration.

Positive Signals

Acquisition of advanced PREDATOR REAPER aircraft enhances defense capabilities.
Contract supports a key defense contractor with established expertise.
Long-term contract provides stability for manufacturing operations.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on unmanned aerial vehicles (UAVs). The market for advanced UAVs is highly specialized and dominated by a few key players. General Atomics is a significant entity in this space. Benchmarking this spending is challenging without comparable sole-source awards for similar platforms, but it represents a substantial investment in a critical defense technology.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information regarding subcontracting plans for small businesses. This sole-source award to a large prime contractor may limit opportunities for small businesses to participate in the supply chain for this specific program.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The 'COST PLUS FIXED FEE' structure necessitates close monitoring of costs incurred by the contractor. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) would be standard oversight mechanisms.

Related Government Programs

Unmanned Aerial Vehicle Manufacturing
Defense Aircraft Procurement
Aerospace Industry Contracts
Sole-Source Defense Acquisitions

Risk Flags

Sole-source procurement
Cost-plus contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. PREDATOR REAPER

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 $78.4 million.

What is the period of performance?

Start: 2020-02-01. End: 2022-08-31.

What is the track record of General Atomics Aeronautical Systems, Inc. with similar sole-source contracts?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a well-established track record in the defense sector, particularly in the development and manufacturing of unmanned aerial systems (UAS), including the Predator and Reaper families. While specific data on their sole-source contracts is not provided here, GA-ASI has historically been a primary, and often sole, source for certain advanced UAS technologies due to their specialized expertise and proprietary systems. Their performance on previous contracts, including those awarded competitively and non-competitively, would be a key factor in assessing the risk and value of this current award. A review of past performance metrics, delivery timelines, and cost adherence on similar sole-source procurements would offer insight into their reliability and efficiency.

How does the pricing of this contract compare to market rates for similar aircraft, if available?

Directly comparing the pricing of this $78.4 million contract to market rates for similar aircraft is challenging due to several factors. Firstly, the PREDATOR REAPER is a highly specialized and advanced unmanned aerial system, and direct comparisons to off-the-shelf or less sophisticated platforms would be misleading. Secondly, the contract type ('COST PLUS FIXED FEE') means the final price is not fixed upfront and can fluctuate based on incurred costs, making a simple per-unit cost comparison difficult without detailed cost breakdowns. Lastly, the sole-source nature of the award means there was no competitive bidding process to establish a market-driven price. To assess value, one would need to compare the cost components against industry benchmarks for R&D, manufacturing, and overhead for similar complex defense systems, and analyze historical pricing trends for GA-ASI's products.

What are the primary risks associated with a sole-source, cost-plus fixed fee contract for aircraft manufacturing?

The primary risks associated with a sole-source, cost-plus fixed fee (CPFF) contract for aircraft manufacturing are multifaceted. For a sole-source award, the main risk is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved in a competitive environment. This reduces the incentive for the contractor to be cost-efficient. For a CPFF contract, the risk lies in potential cost overruns. While the contractor receives a fixed fee, the government bears the risk of actual costs exceeding estimates. This structure can incentivize contractors to incur higher costs, as their fee is based on those costs, potentially leading to budget unpredictability and exceeding the initially allocated $78.4 million. Effective oversight and stringent cost controls are crucial to mitigate these risks.

What is the historical spending pattern for PREDATOR REAPER aircraft manufacturing by the Department of Defense?

Historical spending on PREDATOR REAPER aircraft manufacturing by the Department of Defense (DoD) indicates a consistent and significant investment in this platform over several years. The PREDATOR REAPER, and its predecessors like the Predator, have been key components of the DoD's unmanned aerial vehicle fleet. While the specific total historical spend for manufacturing is not detailed in the provided data, the recurring nature of these awards suggests a sustained need and ongoing production. The DoD has historically relied on General Atomics Aeronautical Systems, Inc. for these platforms, often through sole-source or limited competition contracts due to the specialized nature of the technology. Analyzing past contract awards for the PREDATOR REAPER and related UAS programs would reveal trends in contract values, durations, and procurement quantities, highlighting the long-term commitment to this aerial system.

How does the contract duration of 942 days impact the overall value and risk assessment?

The contract duration of 942 days (approximately 2.6 years) for the PREDATOR REAPER aircraft manufacturing has several implications for value and risk. A longer duration suggests a complex manufacturing process, potentially involving advanced technologies, extensive testing, and integration phases. This extended timeline can provide manufacturing stability for the contractor and ensure a steady supply of critical assets for the DoD. However, it also increases the exposure to potential cost escalations due to inflation, material price fluctuations, and unforeseen technical challenges over the project's life. For a cost-plus fixed fee contract, a longer duration amplifies the risk of cost overruns, as there are more opportunities for costs to deviate from initial estimates. Conversely, it allows for more thorough development and quality assurance, potentially leading to a higher-quality end product, which could enhance long-term value if performance is exceptional.

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: $89,432,342

Exercised Options: $89,432,342

Current Obligation: $78,402,329

Actual Outlays: $3,123,670

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $107,084

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862015G4040

IDV Type: BOA

Timeline