DoD awards $27.9M for MQ-9 Reaper ground control stations and airframe spares, a sole-source contract

Contract Overview

Contract Amount: $27,916,928 ($27.9M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-09-30

End Date: 2024-03-31

Contract Duration: 1,278 days

Daily Burn Rate: $21.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MQ-9 REAPER GROUND CONTROL STATION AND AIRFRAME SPARES ORGANIC DEPOT

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $27.9 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MQ-9 REAPER GROUND CONTROL STATION AND AIRFRAME SPARES ORGANIC DEPOT Key points: 1. Contract awarded to General Atomics Aeronautical Systems, Inc., the original equipment manufacturer, suggesting a sole-source justification. 2. The contract covers a significant period, extending over 3 years, indicating a sustained need for these critical components. 3. The contract type is Cost Plus Fixed Fee (CPFF), which can lead to cost overruns if not closely managed. 4. The North American Industry Classification System (NAICS) code 336411 points to Aircraft Manufacturing, a highly specialized sector. 5. The contract's value, while substantial, needs to be benchmarked against similar sole-source procurements for similar systems. 6. The absence of competition raises concerns about potential price inflation and limited opportunities for market innovation. 7. The contract is for spares and ground control stations, essential for the operational readiness of the MQ-9 Reaper fleet.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable data. However, the CPFF contract type inherently carries a higher risk of cost escalation compared to fixed-price contracts. The absence of competition means there's no market pressure to drive down prices, making it difficult to assess if the government is receiving optimal value. Further analysis would require comparing the pricing structure and escalation clauses to other sole-source procurements for similar complex aerospace components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one responsible source can provide the required supplies or services, often due to proprietary technology or unique capabilities. The lack of competition limits the government's ability to explore alternative solutions or leverage market dynamics to achieve better pricing. The justification for this sole-source award would need to be thoroughly reviewed to ensure it aligns with federal procurement regulations.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive bidding. Without competition, there is less incentive for the contractor to offer the lowest possible price, potentially leading to higher overall spending for these critical aircraft components.

Public Impact

The primary beneficiaries are the U.S. Air Force and other branches utilizing the MQ-9 Reaper drone, ensuring operational readiness. The services delivered include the provision of essential spare parts and ground control station components, vital for maintaining and operating the aircraft. The geographic impact is primarily within the U.S. military's operational theaters, though the manufacturing and support are likely concentrated in California. Workforce implications include supporting highly skilled jobs in aerospace manufacturing and maintenance, particularly at General Atomics Aeronautical Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not rigorously managed.
Lack of competition may stifle innovation and limit the adoption of potentially more cost-effective solutions.
Dependence on a single supplier for critical components poses a supply chain risk.

Positive Signals

Ensures continued operational readiness of the vital MQ-9 Reaper platform.
Award to the original equipment manufacturer likely guarantees compatibility and quality of parts.
Supports a critical defense industrial base supplier.

Sector Analysis

The MQ-9 Reaper is a significant platform in the Unmanned Aerial Vehicle (UAV) market, a rapidly growing segment of the aerospace and defense sector. This contract falls under Aircraft Manufacturing (NAICS 336411), a highly specialized industry characterized by high barriers to entry and significant R&D investment. Spending on UAVs and related support services has been increasing globally, driven by military modernization efforts. Comparable spending benchmarks would focus on sole-source procurements for other high-value, specialized military aircraft components or systems.

Small Business Impact

This contract was awarded to General Atomics Aeronautical Systems, Inc., a large defense contractor, and does not appear to have a small business set-aside component (ss: false, sb: false). Consequently, there are no direct subcontracting implications for small businesses arising from this specific award. The focus is on the prime contractor's capabilities. Opportunities for small businesses would typically arise if the contract were competed or if the prime contractor voluntarily engaged in subcontracting with small entities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of costs, performance, and schedule is crucial. The Inspector General of the Department of Defense may also conduct audits or investigations into the contract's execution and value. Transparency is enhanced through contract databases, but detailed justifications for sole-source awards and cost breakdowns are often less publicly accessible.

Related Government Programs

MQ-9 Reaper Program
Unmanned Aerial Vehicle (UAV) Procurement
Aerospace Manufacturing
Defense Logistics and Sustainment
Air Force Aircraft Spares

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.9 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. MQ-9 REAPER GROUND CONTROL STATION AND AIRFRAME SPARES ORGANIC DEPOT

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 $27.9 million.

What is the period of performance?

Start: 2020-09-30. End: 2024-03-31.

What is the historical spending trend for MQ-9 Reaper ground control stations and airframe spares with General Atomics Aeronautical Systems, Inc.?

Analyzing historical spending requires accessing contract databases for previous awards to General Atomics Aeronautical Systems, Inc. (GA-ASI) for MQ-9 Reaper components. Given GA-ASI is the original equipment manufacturer (OEM), it's probable that a significant portion of past spending on these items has been with them. Without specific historical data readily available in this summary, a deeper dive into federal procurement records (like FPDS or USASpending) would be necessary to identify trends in contract values, durations, and types (e.g., sole-source vs. competed) for these specific parts and systems over time. This would help establish a baseline for current spending and identify any significant deviations or escalations.

How does the pricing structure of this Cost Plus Fixed Fee (CPFF) contract compare to other sole-source procurements for similar complex aerospace systems?

Comparing the pricing structure of this CPFF contract requires detailed analysis of the fee, indirect cost rates, and direct cost ceilings, which are not fully detailed in the provided data. Generally, CPFF contracts aim to provide the contractor with cost recovery plus a fixed fee, incentivizing efficiency to some extent. However, they carry a higher risk of cost growth than fixed-price contracts. Benchmarking against similar sole-source procurements for complex aerospace systems (e.g., other UAV components, specialized aircraft parts) would involve examining the negotiated fee percentages, the methods used for estimating costs, and the government's oversight mechanisms to control expenditures. Without access to the specific contract details and comparable data, a precise comparison is difficult, but the CPFF structure itself warrants close monitoring for cost control.

What are the specific risks associated with relying on a sole-source provider for critical MQ-9 Reaper components, and what mitigation strategies are in place?

The primary risks of a sole-source award for critical MQ-9 Reaper components include potential price inflation due to lack of competition, limited innovation, and supply chain vulnerability if the sole provider faces production issues or business instability. Mitigation strategies typically involve robust government oversight of contractor performance and costs, negotiating favorable terms and pricing within the sole-source framework, and potentially developing alternative sources or repair capabilities over the long term. The government might also conduct thorough market research to ensure no other sources truly exist and may require the contractor to provide detailed cost breakdowns. Additionally, maintaining strong relationships and clear communication channels with the sole provider is crucial for proactive risk management.

What is the projected performance period and delivery schedule for these MQ-9 Reaper spares and ground control stations?

The provided data indicates a contract period of performance from September 30, 2020, to March 31, 2024, resulting in a duration of approximately 42 months (or 1278 days). This timeframe covers the delivery of the specified MQ-9 Reaper ground control station components and airframe spares. While the exact delivery schedule for individual items is not detailed, the contract's end date suggests the completion of all ordered items within this period. The 'Delivery Order' (aw: DELIVERY ORDER) status implies that specific quantities and delivery dates for the spares and stations would be managed through task orders issued against this contract.

Are there any performance metrics or key performance indicators (KPIs) associated with this contract to ensure the quality and timeliness of the delivered spares and components?

The provided summary data does not explicitly list performance metrics or Key Performance Indicators (KPIs) for this contract. However, for a Cost Plus Fixed Fee (CPFF) contract, especially one involving critical defense systems like the MQ-9 Reaper, performance monitoring is essential. The contracting officer and program management office would typically establish metrics related to delivery timeliness, quality of parts (e.g., defect rates), and contractor responsiveness. These might be outlined in the contract's Statement of Work (SOW) or incorporated through specific clauses. The effectiveness of the contractor's quality assurance system and adherence to technical specifications would be key areas of oversight, even if not explicitly labeled as formal KPIs in summary data.

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

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: $36,764,176

Exercised Options: $28,125,075

Current Obligation: $27,916,928

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $80,032

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862017D2000

IDV Type: IDC

Timeline