DoD's $461M Predator-Reaper drone buy: 36 aircraft procured via sole-source contract

Contract Overview

Contract Amount: $461,123,951 ($461.1M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-05-16

End Date: 2021-06-30

Contract Duration: 1,506 days

Daily Burn Rate: $306.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACAT 1C, PREDATOR-REAPER, FISCAL YEAR 2016 PRODUCTION BUY OF 36 AIRCRAFT

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $461.1 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: ACAT 1C, PREDATOR-REAPER, FISCAL YEAR 2016 PRODUCTION BUY OF 36 AIRCRAFT Key points: 1. Value for money is difficult to assess due to sole-source nature, limiting price discovery. 2. Competition dynamics are absent, as the contract was not competed. 3. Risk indicators include potential for cost overruns and lack of market-driven pricing. 4. Performance context shows a significant investment in unmanned aerial vehicle (UAV) capabilities. 5. Sector positioning highlights the dominance of General Atomics in the armed UAV market.

Value Assessment

Rating: questionable

Benchmarking the value for money is challenging given the sole-source award. Without competitive bids, it's difficult to ascertain if the $461 million price for 36 Predator-Reaper aircraft represents a fair market value. Historical data on similar sole-source procurements for advanced UAVs would be needed for a more robust comparison, but the lack of competition inherently raises concerns about optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential suppliers. This approach is typically used when only one responsible source can provide the required supplies or services. The absence of competition means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. Without alternative bids, there is less assurance that the price reflects the lowest possible cost for these advanced drones.

Public Impact

The primary beneficiaries are the Department of Defense and the Air Force, enhancing their intelligence, surveillance, and reconnaissance (ISR) capabilities. The services delivered include the production and delivery of 36 Predator-Reaper Unmanned Aerial Vehicles (UAVs). The geographic impact is primarily within the defense sector, supporting military operations globally. Workforce implications include continued employment at General Atomics Aeronautical Systems and its supply chain, primarily in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Lack of transparency in pricing due to non-competitive nature.
Potential for vendor lock-in with specialized, high-cost systems.

Positive Signals

Procurement of critical intelligence, surveillance, and reconnaissance (ISR) assets.
Continued investment in advanced unmanned aerial vehicle technology.
Supports a key defense contractor and its associated workforce.

Sector Analysis

The Aircraft Manufacturing sector (NAICS 336411) is characterized by high barriers to entry, significant R&D investment, and long production cycles. This contract falls within the specialized niche of Unmanned Aerial Vehicle (UAV) manufacturing, a rapidly growing segment of the aerospace and defense industry. The Predator-Reaper platform is a well-established system, and General Atomics Aeronautical Systems is a dominant player in this market, often leading to sole-source or limited-competition procurements for upgrades and continued production.

Small Business Impact

This contract was awarded directly to General Atomics Aeronautical Systems, Inc., and there is no indication of a small business set-aside. While the prime contractor may utilize small businesses in its supply chain, the direct award does not provide a specific benefit or opportunity for small businesses to compete for the prime contract itself. Further investigation into subcontracting plans would be needed to assess small business impact.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and acquisition oversight mechanisms. The Air Force is responsible for managing the contract's performance and ensuring compliance with its terms. Transparency is limited due to the sole-source nature, but contract awards and modifications are generally reported in federal procurement databases. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

MQ-9 Reaper Program
Unmanned Aerial Vehicle Procurement
Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Defense Production Act Title III Investments

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $461.1 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. ACAT 1C, PREDATOR-REAPER, FISCAL YEAR 2016 PRODUCTION BUY OF 36 AIRCRAFT

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 $461.1 million.

What is the period of performance?

Start: 2017-05-16. End: 2021-06-30.

What is the historical spending trend for the Predator-Reaper program?

Historical spending data for the Predator-Reaper program indicates a consistent and significant investment by the Department of Defense over many fiscal years. The program has evolved from initial development and testing phases to sustained production and modernization efforts. Annual spending fluctuates based on production rates, upgrade packages, and sustainment requirements. For instance, prior fiscal years may have seen similar or even higher annual procurement values depending on the specific production buy and associated support contracts. Analyzing multi-year spending trends reveals a long-term commitment to this platform, underscoring its perceived strategic importance for intelligence, surveillance, and reconnaissance (ISR) missions. This sustained investment reflects the platform's operational success and the ongoing need for its capabilities in various theaters of operation.

How does the per-unit cost of the Predator-Reaper compare to similar UAV platforms?

Determining an exact per-unit cost for the Predator-Reaper in this specific $461 million buy of 36 aircraft (approximately $12.8 million per aircraft) is complex due to the sole-source nature and potential inclusion of various configurations, support equipment, and initial training packages within the total contract value. However, generally, advanced medium-altitude, long-endurance (MALE) UAVs like the Predator-Reaper are high-cost systems. Compared to less sophisticated drones or smaller tactical UAVs, the Predator-Reaper's per-unit cost is significantly higher, reflecting its advanced sensor suites, weaponization capabilities, and endurance. When compared to other MALE platforms, such as the Global Hawk (which is larger and primarily for reconnaissance) or emerging next-generation UAVs, the pricing can be competitive within its class. However, without direct competitive bids for the Reaper itself, precise benchmarking against market alternatives is challenging.

What are the primary risks associated with sole-source procurements of major defense systems like the Predator-Reaper?

Sole-source procurements of major defense systems like the Predator-Reaper carry several inherent risks. Firstly, the absence of competition can lead to higher prices than might be achieved in a competitive environment, as the government lacks the leverage of multiple bidders vying for the contract. This can result in suboptimal value for taxpayer money. Secondly, there is a reduced incentive for the sole-source provider to innovate or improve efficiency once they have secured the contract without competitive pressure. Thirdly, it can create vendor lock-in, making it difficult and costly to switch to alternative systems in the future. Finally, sole-source awards can sometimes mask inefficiencies or cost overruns, as the lack of comparative data makes them harder to detect and challenge. Robust contract management and oversight are crucial to mitigate these risks.

What is the track record of General Atomics Aeronautical Systems, Inc. as a defense contractor?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a long and established track record as a prime contractor in the defense industry, particularly renowned for its pioneering work and continued dominance in the field of Unmanned Aerial Systems (UAS). They are the developer and manufacturer of the Predator and Reaper series of aircraft, which have become cornerstone platforms for U.S. and allied military intelligence, surveillance, and reconnaissance (ISR) operations. GA-ASI has consistently secured large, high-value contracts from the Department of Defense and other government agencies over several decades. Their performance is generally viewed as technically proficient, delivering advanced capabilities. However, like many large defense contractors involved in sole-source or limited-competition programs, they have also faced scrutiny regarding contract pricing and program costs. Overall, their track record is one of technological leadership and significant contribution to the nation's defense capabilities.

How does this contract contribute to the overall modernization of the Air Force's ISR capabilities?

This contract for 36 Predator-Reaper aircraft represents a significant contribution to the modernization and sustainment of the Air Force's Intelligence, Surveillance, and Reconnaissance (ISR) capabilities. The MQ-9 Reaper is a key component of the Air Force's ISR fleet, providing persistent surveillance, target acquisition, and strike capabilities that are crucial in contemporary operational environments. By procuring these aircraft, the Air Force ensures the continued availability of a proven platform that offers a balance of endurance, sensor payload capacity, and weaponization. This acquisition helps maintain the necessary force structure to meet global ISR demands, supports the transition from legacy systems, and integrates with evolving command and control architectures. It underscores the Air Force's ongoing reliance on advanced unmanned systems to provide critical battlefield awareness and support combat operations.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics (UEI: 859181984)

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: $461,123,951

Exercised Options: $461,123,951

Current Obligation: $461,123,951

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $205,145

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862015G4040

IDV Type: BOA

Timeline