DoD Awards $105M for MQ-9 Drones to General Atomics, Limiting Competition

Contract Overview

Contract Amount: $105,233,359 ($105.2M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-04-17

End Date: 2029-01-15

Contract Duration: 1,734 days

Daily Burn Rate: $60.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MQ-9 FMS NETHERLANDS, LOT 2 PRODUCTION CUT-IN UCA

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $105.2 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: MQ-9 FMS NETHERLANDS, LOT 2 PRODUCTION CUT-IN UCA Key points: 1. Significant contract awarded to a single, established provider. 2. Limited competition raises questions about price discovery and value. 3. Potential for higher costs due to sole-source nature. 4. Focus on advanced aircraft manufacturing within the defense sector.

Value Assessment

Rating: questionable

The contract value of $105.2 million for MQ-9 drones is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar advanced unmanned aerial vehicle procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract is designated as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition award. This approach bypasses the typical price discovery mechanisms inherent in open bidding, potentially leading to less favorable pricing for the government.

Taxpayer Impact: Taxpayers may bear a higher cost due to the lack of competitive pressure, as the government relies on a single source for this critical defense asset.

Public Impact

Enhances US and allied defense capabilities with advanced drone technology. Supports a key defense contractor and its manufacturing operations. Potential for follow-on contracts and sustainment services. Impacts geopolitical defense strategies through advanced surveillance and strike platforms.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Potential for overpricing

Positive Signals

Acquisition of critical defense technology
Supports established defense industrial base

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, specifically for Unmanned Combat Aircraft (UCA). Spending in this area is driven by evolving military needs for intelligence, surveillance, and reconnaissance (ISR) and strike capabilities.

Small Business Impact

The contract is awarded to General Atomics Aeronautical Systems, Inc., a large defense contractor. There is no indication of subcontracting opportunities for small businesses in the provided data, suggesting limited direct impact on the small business sector for this specific award.

Oversight & Accountability

The 'NOT AVAILABLE FOR COMPETITION' designation warrants scrutiny to ensure the justification for limited competition is robust and that the government is still achieving best value despite the lack of open bidding.

Related Government Programs

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

Risk Flags

Lack of competitive bidding
Potential for inflated pricing
Dependency on a single supplier
Limited transparency in price negotiation
Risk of obsolescence if innovation is stifled

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $105.2 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. MQ-9 FMS NETHERLANDS, LOT 2 PRODUCTION CUT-IN UCA

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 $105.2 million.

What is the period of performance?

Start: 2024-04-17. End: 2029-01-15.

What is the specific justification for limiting competition on this MQ-9 drone procurement, and has an independent cost analysis been performed?

The justification for limiting competition is crucial for understanding why open bidding was bypassed. An independent cost analysis is essential to validate the $105.2 million price tag, ensuring it aligns with market rates for similar advanced unmanned aerial systems and mitigating potential overspending.

What are the long-term strategic implications of relying on a sole-source provider for critical MQ-9 drone production and potential future upgrades?

Sole-source reliance can create dependency and limit future negotiation leverage. It may stifle innovation from competitors and potentially lead to higher sustainment and upgrade costs over the system's lifecycle. This could impact the DoD's ability to adapt quickly to evolving threats or adopt more cost-effective solutions.

How does the pricing of this contract compare to previous MQ-9 procurements or similar unmanned aircraft systems from other manufacturers, considering the firm-fixed-price structure?

A comparative analysis against historical MQ-9 contracts and equivalent systems from other manufacturers is vital. While firm-fixed-price offers cost certainty, without competitive benchmarking, it's challenging to ascertain if the $105.2 million represents a fair price or if the government is paying a premium due to the limited competition.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $173,568,509

Exercised Options: $173,568,509

Current Obligation: $105,233,359

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $66,563

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline