Air Force awards $200M contract for MQ-9 Reaper depot activation to L3 Technologies

Contract Overview

Contract Amount: $19,991,019 ($20.0M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-10-03

End Date: 2026-12-01

Contract Duration: 1,520 days

Daily Burn Rate: $13.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MQ-9 REAPER ORGANIC DEPOT ACTIVATION II AT WARNER ROBBINS

Place of Performance

Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84116

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $20.0 million to L3 TECHNOLOGIES, INC. for work described as: MQ-9 REAPER ORGANIC DEPOT ACTIVATION II AT WARNER ROBBINS Key points: 1. Contract value appears reasonable given the scope of depot activation for a critical unmanned aerial system. 2. Sole-source award limits price discovery and potentially increases costs for taxpayers. 3. Contract duration of over 1500 days suggests a long-term need for sustainment and readiness. 4. The contract is for organic depot activation, indicating a focus on in-house capabilities for the MQ-9. 5. Performance risk may be moderate due to the complexity of depot activation and sustainment.

Value Assessment

Rating: fair

The contract value of approximately $200 million for depot activation of the MQ-9 Reaper is difficult to benchmark without specific details on the scope of work. However, given the complexity of maintaining and activating depot-level capabilities for a sophisticated unmanned aerial system, the overall value seems within a plausible range. The cost-plus-fixed-fee structure means the government pays actual costs plus a negotiated fee, which can lead to cost overruns if not managed tightly. Further analysis would require comparing specific labor rates, material costs, and overhead allocations to industry standards for similar depot activation projects.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning L3 Technologies was the only vendor considered. This approach bypasses the competitive bidding process, which typically leads to better pricing and innovation. Without competition, there is a reduced incentive for the contractor to offer the most cost-effective solution. The justification for a sole-source award would need to be thoroughly reviewed to understand why full and open competition was not feasible.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring readiness and sustainment of the MQ-9 Reaper fleet. Services delivered include depot-level activation, maintenance, repair, and overhaul for MQ-9 aircraft and associated components. The geographic impact is likely concentrated around Warner Robbins Air Force Base in Utah, a key logistics and maintenance hub. Workforce implications include the potential for job creation and the utilization of skilled technicians and engineers in depot operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type can incentivize cost overruns if not closely monitored.
Long contract duration may increase exposure to economic fluctuations and changing technology.

Positive Signals

Award to an established contractor with experience in aerospace and defense.
Focus on organic depot activation suggests a strategic move towards internal capability development.
Contract supports a critical national defense asset, the MQ-9 Reaper.

Sector Analysis

The MQ-9 Reaper is a key platform in the Unmanned Aerial Systems (UAS) sector, which is experiencing significant growth driven by defense modernization efforts. This contract falls within the broader aerospace and defense manufacturing industry, specifically focusing on aircraft parts and auxiliary equipment. The market for UAS sustainment and depot-level support is competitive, but specialized capabilities like those required for the MQ-9 can lead to limited vendor pools. Comparable spending benchmarks for depot activation of similar UAS platforms are scarce due to the proprietary nature of such services.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The prime contractor, L3 Technologies, is a large business. There is no explicit information regarding subcontracting plans for small businesses within this award. The absence of a set-aside or clear subcontracting goals may limit opportunities for small businesses to participate in this significant defense contract, potentially impacting the small business ecosystem supporting the MQ-9 program.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but proactive oversight is crucial for managing performance and cost.

Related Government Programs

MQ-9 Reaper Sustainment Contracts
Unmanned Aerial Systems (UAS) Maintenance
Aerospace Depot Operations
Defense Logistics and Maintenance Services

Risk Flags

Sole-source award raises concerns about price competition.
Cost-plus-fixed-fee contract requires diligent cost oversight.
Lack of public detail on specific performance metrics.
Limited visibility into small business subcontracting opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.0 million to L3 TECHNOLOGIES, INC.. MQ-9 REAPER ORGANIC DEPOT ACTIVATION II AT WARNER ROBBINS

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, 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 $20.0 million.

What is the period of performance?

Start: 2022-10-03. End: 2026-12-01.

What is L3 Technologies' track record with Department of Defense contracts, particularly for unmanned aerial systems?

L3 Technologies, now part of L3Harris Technologies, has a substantial track record with the Department of Defense, encompassing a wide range of aerospace and defense services. They have been involved in various aspects of aircraft manufacturing, sustainment, and technology integration. For unmanned aerial systems, L3Harris has provided components, integrated systems, and support services for platforms beyond the MQ-9. Their experience includes complex avionics, sensor integration, and communication systems, which are critical for UAS operations. While specific details on their involvement with MQ-9 depot activation prior to this contract are not publicly detailed, their broader experience in the defense sector suggests a capability to handle such requirements. A review of their past performance ratings and any past issues on similar DoD contracts would provide further insight into their reliability and effectiveness.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for depot activation, and what are the associated risks?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not precisely defined or when there is uncertainty in the costs involved, such as in depot activation or research and development. Under CPFF, the contractor is reimbursed for all allowable costs incurred plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the contractor agrees to a set price regardless of actual costs, incentivizing efficiency. The primary risk with CPFF for the government is the potential for cost overruns, as the contractor has less incentive to control expenses beyond what is necessary to complete the work. The fixed fee, however, provides some predictability in profit. Effective government oversight, including detailed cost monitoring and audits, is crucial to mitigate the risk of inflated costs and ensure value for money.

What are the specific performance metrics and key performance indicators (KPIs) for this MQ-9 Reaper depot activation contract?

Specific performance metrics and Key Performance Indicators (KPIs) for this MQ-9 Reaper Organic Depot Activation II contract are not publicly detailed in the award notice. However, typical KPIs for such depot activation and sustainment contracts would likely include metrics related to aircraft availability, turnaround time for repairs and maintenance, quality of work (e.g., defect rates), adherence to schedules, and cost control. For depot activation, specific milestones related to facility readiness, equipment installation, and initial operational capability would be critical. The Air Force would establish these KPIs within the contract's Performance Work Statement (PWS) to ensure L3 Technologies meets the required standards for MQ-9 readiness and operational effectiveness. Regular performance reviews would assess the contractor's progress against these metrics.

What is the historical spending pattern for MQ-9 Reaper sustainment and depot support by the Department of the Air Force?

Historical spending by the Department of the Air Force on MQ-9 Reaper sustainment and depot support has been substantial and is expected to continue growing as the fleet expands and ages. While specific figures for 'depot activation' as a distinct category are not readily available, overall sustainment costs for the MQ-9 program encompass a wide range of activities including spare parts, contractor logistics support, software updates, training, and maintenance. Over the past decade, the Air Force has consistently allocated significant portions of its budget to unmanned systems, with the MQ-9 being a cornerstone platform. Annual spending on MQ-9 sustainment can run into hundreds of millions of dollars, reflecting the operational tempo and complexity of maintaining these advanced aircraft. This $200 million contract for depot activation represents a significant investment in ensuring the long-term operational readiness and capability of the MQ-9 fleet.

What are the implications of this contract being awarded to L3 Technologies, a large defense contractor, for the broader small business industrial base?

Awarding a large, sole-source contract like this to a major defense contractor like L3 Technologies can have mixed implications for the small business industrial base. On one hand, large contractors often utilize small businesses as subcontractors for specialized services, components, or support functions, potentially creating opportunities. However, the absence of a small business set-aside or specific subcontracting goals in the award notice suggests these opportunities may not be guaranteed or prioritized. Furthermore, large sole-source awards can sometimes consolidate work within prime contractors or their preferred large subcontractors, potentially limiting direct opportunities for smaller, innovative firms. The Air Force's small business advocacy efforts and the contractor's own subcontracting plans will be critical in determining the actual impact on the small business ecosystem supporting the MQ-9 program.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

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

Address: 640 N 2200 W, SALT LAKE CITY, UT, 84116

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: $19,991,019

Exercised Options: $19,991,019

Current Obligation: $19,991,019

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $1,880,658

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline