Army Awards $1.9B Performance-Based Logistics Contract for MQ-1C Gray Eagle UAS to General Atomics

Contract Overview

Contract Amount: $1,896,157,069 ($1.9B)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-04-24

End Date: 2027-04-23

Contract Duration: 2,921 days

Daily Burn Rate: $649.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: REQUIREMENT IS FOR THE PROCUREMENT OF PERFORMANCE BASED LOGISTICS SUPPORT SERVICES FOR THE MQ-1C GRAY EAGLE UNMANNED AIRCRAFT SYSTEM.

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $1.90 billion to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: REQUIREMENT IS FOR THE PROCUREMENT OF PERFORMANCE BASED LOGISTICS SUPPORT SERVICES FOR THE MQ-1C GRAY EAGLE UNMANNED AIRCRAFT SYSTEM. Key points: 1. The contract focuses on performance-based logistics support, aiming for operational readiness of the MQ-1C Gray Eagle. 2. General Atomics Aeronautical Systems, Inc. is the sole awardee, raising questions about competition. 3. The contract's duration of nearly 8 years and significant value present potential long-term risks. 4. Spending in the Aircraft Manufacturing sector (NAICS 336411) can be substantial, requiring careful oversight.

Value Assessment

Rating: questionable

The contract value of $1.9 billion over approximately 8 years is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar logistics support services for unmanned aircraft systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to General Atomics Aeronautical Systems, Inc. This lack of competition limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The absence of competition for a contract of this magnitude means taxpayers may not be receiving the best possible price for these critical logistics services.

Public Impact

Ensures continued operational capability of the MQ-1C Gray Eagle, a key asset for intelligence, surveillance, and reconnaissance missions. Supports military readiness by providing essential maintenance and logistics for unmanned aircraft systems. Potential for cost overruns due to sole-source nature and performance-based contract type. Impacts the defense industrial base, specifically in the unmanned aerial vehicle sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Cost-plus contract type
Lack of transparency in pricing

Positive Signals

Performance-based approach incentivizes desired outcomes
Supports critical military asset readiness

Sector Analysis

The Department of the Army's procurement of logistics support for the MQ-1C Gray Eagle falls within the Aircraft Manufacturing sector. Spending in this sector is often characterized by high R&D costs, specialized labor, and long production cycles, making robust oversight crucial.

Small Business Impact

The data indicates this contract was not awarded to small businesses. Further analysis would be needed to determine if opportunities for small business subcontracting were adequately explored or mandated.

Oversight & Accountability

The sole-source nature of this large contract warrants close oversight from the Department of Defense and potentially Congress to ensure cost-effectiveness and accountability. Performance metrics within the contract should be rigorously monitored.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award limits competition and price discovery.
Long contract duration increases risk of cost overruns and obsolescence.
Cost-plus contract type can incentivize higher spending.
Lack of small business participation noted.
Potential for performance issues if metrics are not strictly enforced.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.90 billion to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. REQUIREMENT IS FOR THE PROCUREMENT OF PERFORMANCE BASED LOGISTICS SUPPORT SERVICES FOR THE MQ-1C GRAY EAGLE UNMANNED AIRCRAFT SYSTEM.

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 Army).

What is the total obligated amount?

The obligated amount is $1.90 billion.

What is the period of performance?

Start: 2019-04-24. End: 2027-04-23.

What is the justification for awarding this contract sole-source, and what steps were taken to ensure fair pricing without competition?

The justification for a sole-source award typically involves unique capabilities or proprietary technology. Without a competitive process, it is challenging to ascertain if fair pricing was achieved. The government should have conducted a thorough market research and price analysis to establish a reasonable cost baseline, even in a sole-source scenario.

What are the specific performance metrics tied to the 'performance-based' aspect of this contract, and how are they measured to ensure taxpayer value?

Performance-based contracts link payment to achieving specific, measurable outcomes. For this logistics support, metrics could include aircraft availability rates, response times for maintenance, and successful mission completion support. Robust tracking and independent verification of these metrics are essential to ensure the contractor is delivering value and that taxpayer funds are used effectively.

Given the long duration and significant value, what mechanisms are in place to manage potential cost growth and ensure the contract remains aligned with evolving military needs?

Long-term contracts require proactive management. Mechanisms like regular contract reviews, option period evaluations, and potential for contract modifications based on changing requirements are crucial. The cost-plus incentive fee structure should be closely monitored to prevent uncontrolled cost escalation, and contingency planning for technological obsolescence or shifts in strategic priorities should be considered.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ17R0115

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $3,758,172,422

Exercised Options: $2,089,271,033

Current Obligation: $1,896,157,069

Actual Outlays: $2,237,967

Subaward Activity

Number of Subawards: 280

Total Subaward Amount: $581,416,888

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline