DoD Awards $58.5M for MQ-9 Reaper Mid-Life Modernization to Italy, Sole-Sourced

Contract Overview

Contract Amount: $58,466,883 ($58.5M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-09-08

End Date: 2023-12-01

Contract Duration: 814 days

Daily Burn Rate: $71.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: MQ-9 REAPER FOREIGN MILITARY SALES ITALY MID-LIFE MODERNIZATION LOT 1

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $58.5 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MQ-9 REAPER FOREIGN MILITARY SALES ITALY MID-LIFE MODERNIZATION LOT 1 Key points: 1. Significant investment in advanced drone technology for a key NATO ally. 2. Sole-source award to General Atomics raises questions about competition and price. 3. Mid-life modernization suggests a long-term commitment to the MQ-9 platform. 4. Focus on aircraft manufacturing, a critical defense industrial base sector.

Value Assessment

Rating: fair

The contract value of $58.5M for modernization appears substantial. Benchmarking against similar mid-life upgrades for complex aircraft is difficult without more data, but the sole-source nature may have limited price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded sole-source, meaning competition was not sought. This approach can expedite delivery but often results in higher prices compared to competitive procurements, as there is no market pressure to reduce costs.

Taxpayer Impact: Taxpayer funds are being used for foreign military sales, supporting allied defense capabilities. The lack of competition could mean a higher cost to the U.S. taxpayer if the price isn't optimized.

Public Impact

Enhances Italy's intelligence, surveillance, and reconnaissance capabilities. Supports interoperability between U.S. and Italian air forces. Contributes to the sustainment and modernization of a key U.S. defense export. Potential for follow-on sustainment and upgrade contracts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Lack of transparency in pricing justification.
Potential for cost overruns in modernization efforts.

Positive Signals

Strengthens NATO alliance capabilities.
Maintains critical defense industrial base.
Provides advanced ISR capabilities to an ally.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a vital component of the defense industrial base. Spending in this area is often high due to the complexity and cost of advanced aerospace systems.

Small Business Impact

The prime contractor is General Atomics Aeronautical Systems, Inc., a large business. There is no indication of small business participation in this specific contract award, which is common for large, sole-source defense procurements.

Oversight & Accountability

The Department of the Air Force awarded this contract. Oversight would focus on ensuring the modernization meets technical specifications and stays within budget, especially given the sole-source nature and potential for scope creep.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award may lead to higher costs.
Lack of competitive bidding limits price discovery.
Potential for scope creep in modernization efforts.
Foreign Military Sales can be complex to manage.
Dependence on a single contractor for critical upgrades.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.5 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. MQ-9 REAPER FOREIGN MILITARY SALES ITALY MID-LIFE MODERNIZATION LOT 1

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 $58.5 million.

What is the period of performance?

Start: 2021-09-08. End: 2023-12-01.

What is the specific scope of the 'mid-life modernization' and how does it enhance the MQ-9's capabilities?

The 'mid-life modernization' likely encompasses upgrades to avionics, sensors, communication systems, and potentially structural enhancements to extend the operational life of the MQ-9 Reaper. These upgrades are crucial for maintaining the platform's effectiveness against evolving threats, improving its intelligence, surveillance, and reconnaissance (ISR) capabilities, and ensuring compatibility with future operational requirements and networked warfare environments.

What justification was provided for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves factors like unique capabilities, urgent need, or lack of viable alternatives. For fair and reasonable pricing, the government would likely rely on historical pricing data, should-cost analysis, or independent government cost estimates. However, without direct competition, the government's negotiation leverage is reduced, making robust cost analysis and negotiation critical to mitigate potential overpricing.

What is the long-term strategic value of modernizing the MQ-9 for Italy, and how does it align with NATO objectives?

Modernizing the MQ-9 provides Italy with a significantly enhanced ISR and strike capability, crucial for national defense and contributing to collective security within NATO. This aligns with NATO objectives by improving interoperability, burden-sharing, and the alliance's overall technological edge. A modernized MQ-9 fleet allows Italy to conduct more complex missions, share real-time intelligence effectively, and project power in critical regions, thereby bolstering regional stability and deterrence.

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: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

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: $58,466,883

Exercised Options: $58,466,883

Current Obligation: $58,466,883

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $829,670

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA868920D2020

IDV Type: IDC

Timeline