DoD's $49.9M MQ-9 Reaper camera upgrade and spares contract awarded to Raytheon Company

Contract Overview

Contract Amount: $49,926,609 ($49.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-07-09

End Date: 2025-09-30

Contract Duration: 1,544 days

Daily Burn Rate: $32.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: MQ-9 REAPER FY21 CAMERA UPGRADES AND SPARES

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $49.9 million to RAYTHEON COMPANY for work described as: MQ-9 REAPER FY21 CAMERA UPGRADES AND SPARES Key points: 1. Value for money assessed through fixed-price incentive contract structure. 2. Sole-source award raises questions about competition dynamics and potential price inflation. 3. Contract duration of over 4 years suggests a significant, long-term need. 4. Performance context is tied to critical MQ-9 Reaper drone capabilities. 5. Sector positioning within 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' is specific. 6. Risk indicators include sole-source nature and potential for cost overruns with incentive pricing.

Value Assessment

Rating: fair

The contract's fixed-price incentive (FPI) structure aims to balance cost control with contractor performance, but without competitive benchmarking, assessing true value for money is challenging. The $49.9 million award for camera upgrades and spares for the MQ-9 Reaper is significant, but its fairness cannot be definitively determined without comparable sole-source procurements or detailed cost breakdowns. The lack of competition inherently limits the government's ability to negotiate the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon Company was the only vendor considered. The justification for this approach is not provided in the data, but sole-source awards typically occur when only one vendor possesses the necessary technical expertise, proprietary technology, or when urgency precludes a competitive process. The lack of competition means the government did not benefit from multiple bids to drive down costs or encourage innovation.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, there is a reduced incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the Department of the Air Force, enhancing the surveillance and reconnaissance capabilities of the MQ-9 Reaper fleet. Services delivered include critical camera system upgrades and essential spare parts, ensuring operational readiness. The geographic impact is primarily within the operational theaters where MQ-9 Reapers are deployed, supporting national security interests. Workforce implications may involve specialized technicians for installation and maintenance of the upgraded camera systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Fixed-price incentive contract requires careful monitoring to ensure cost targets are met and avoid overruns.
Reliance on a single contractor for critical upgrades can create dependency and future sole-source risks.

Positive Signals

Awarding to Raytheon, a known defense contractor, suggests a level of trust in their capability to deliver.
The FPI contract structure, if managed well, can incentivize efficient performance.
Upgrading critical drone components like cameras directly supports enhanced intelligence, surveillance, and reconnaissance (ISR) capabilities.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft parts and equipment manufacturing. The market for drone components, particularly for advanced platforms like the MQ-9 Reaper, is specialized and often dominated by a few key players. Spending in this area is driven by the continuous need for technological advancement in unmanned aerial systems (UAS) for military applications. Comparable spending benchmarks would likely involve other major upgrade programs for military aircraft or specialized electronic systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans for small businesses. Consequently, the direct impact on the small business ecosystem from this specific award is likely minimal, unless Raytheon Company voluntarily engages small businesses for parts or services not covered by the primary contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are embedded within the Fixed Price Incentive (FPI) contract terms, which link contractor profit to achieving cost and performance targets. Transparency is limited due to the sole-source nature and lack of publicly available cost details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

MQ-9 Reaper Program
Unmanned Aerial Systems (UAS) Procurement
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Aircraft Component Manufacturing
Raytheon Company Defense Contracts

Risk Flags

Sole Source Award
Potential for Cost Overruns (FPI)
Lack of Competitive Benchmarking
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.9 million to RAYTHEON COMPANY. MQ-9 REAPER FY21 CAMERA UPGRADES AND SPARES

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

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 $49.9 million.

What is the period of performance?

Start: 2021-07-09. End: 2025-09-30.

What is Raytheon Company's track record with the MQ-9 Reaper program and similar drone upgrades?

Raytheon Company, now part of RTX, has a long-standing history as a prime contractor for various defense systems, including components for unmanned aerial vehicles. They are known for producing advanced sensors and avionics. While specific details on their past performance solely on MQ-9 Reaper camera upgrades are not detailed in this data, their extensive experience in aerospace and defense suggests a capability to handle such procurements. Historical data on their performance with the Air Force and other military branches would provide further context on their reliability, quality, and adherence to schedules and budgets for similar complex technology integration projects.

How does the $49.9 million cost compare to previous or similar MQ-9 Reaper camera upgrade efforts?

Direct comparison of the $49.9 million cost is difficult without specific historical data on previous MQ-9 Reaper camera upgrade contracts or benchmarks for similar systems. As a sole-source award, there's no immediate competitive baseline to assess if this price is favorable. Factors influencing this cost include the specific technological advancements in the cameras, the number of units being upgraded, the inclusion of spare parts, and the duration of the contract (over 4 years). A thorough value analysis would require access to detailed cost breakdowns, independent government cost estimates, and data from comparable sole-source procurements for advanced sensor systems on other military platforms.

What are the primary risks associated with this sole-source, fixed-price incentive contract?

The primary risks stem from its sole-source nature and the FPI contract type. Sole-sourcing limits price competition, potentially leading to higher costs for taxpayers than a competitively awarded contract. It also creates a dependency on Raytheon for these specific upgrades. The FPI structure, while aiming to incentivize cost control, carries risks if the target cost is set too high or if unforeseen technical challenges arise, leading to cost overruns that are shared between the government and the contractor. Additionally, the long contract duration (ending in 2025) increases the risk of technological obsolescence or changing operational requirements that may not be fully addressed by the current contract scope.

How effective are MQ-9 Reaper camera upgrades in enhancing the platform's overall mission effectiveness?

MQ-9 Reaper camera upgrades are crucial for enhancing the platform's Intelligence, Surveillance, and Reconnaissance (ISR) capabilities. Improved camera systems can offer higher resolution imagery, better low-light performance, wider fields of view, and advanced analytical features, allowing operators to gather more detailed and actionable intelligence. These enhancements are vital for mission success in diverse operational environments, from counter-terrorism operations to persistent surveillance. The effectiveness is directly tied to the quality of the upgrade and how well it integrates with the Reaper's existing systems and data processing pipelines, ultimately improving situational awareness and decision-making for ground forces and commanders.

What has been the historical spending trend for MQ-9 Reaper related upgrades and spares?

Historical spending on the MQ-9 Reaper program, including upgrades and spares, has been substantial, reflecting its importance as a key asset in the Air Force's inventory. While specific figures for camera upgrades alone are not provided, the overall program has seen consistent investment over the years to maintain and enhance its capabilities. Spending trends are influenced by factors such as the size of the Reaper fleet, the pace of technological advancement in sensor technology, and evolving operational requirements. Analyzing broader DoD spending on UAS and ISR platforms would provide context for the scale of this $49.9 million award within the larger budgetary landscape.

What are the implications of awarding this contract to Raytheon Company for future competition in the drone sensor market?

Awarding this contract solely to Raytheon Company, without a competitive process, could have implications for future competition. It reinforces Raytheon's position as a key supplier for MQ-9 Reaper components, potentially making it harder for other companies to enter the market or challenge existing contracts. If Raytheon possesses proprietary technology or unique integration capabilities for the MQ-9, it justifies the sole-source approach to some extent. However, a lack of competitive opportunities might disincentivize other firms from investing in developing comparable technologies or seeking to partner with the DoD for future drone sensor procurements, potentially leading to less innovation and higher prices in the long run.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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: $49,926,609

Exercised Options: $49,926,609

Current Obligation: $49,926,609

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $5,043,498

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA868921D2021

IDV Type: IDC

Timeline