DoD's $394.7M MQ-9 Production Contract Awarded to General Atomics in FY15

Contract Overview

Contract Amount: $394,694,282 ($394.7M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-08-15

End Date: 2019-12-31

Contract Duration: 1,233 days

Daily Burn Rate: $320.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: ACAT 1C, MQ-9, FY15 MQ-9 PRODUCTION

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $394.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: ACAT 1C, MQ-9, FY15 MQ-9 PRODUCTION Key points: 1. Significant investment in MQ-9 Reaper drone production. 2. Sole-source award to General Atomics raises competition concerns. 3. Fixed Price Incentive contract type aims to balance cost and performance. 4. Long-term production run suggests sustained operational need.

Value Assessment

Rating: fair

The $394.7 million award for MQ-9 production appears to be a significant investment. Benchmarking against similar large-scale defense manufacturing contracts is difficult without more detailed cost breakdowns, but the scale suggests a substantial per-unit cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition for this substantial contract may result in higher costs for taxpayers, as there was no market pressure to drive down prices.

Public Impact

Enhances US military intelligence, surveillance, and reconnaissance capabilities. Supports ongoing global military operations and national security objectives. Contributes to the technological advancement of unmanned aerial systems. Potential for export to allied nations, bolstering international partnerships.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Fixed Price Incentive contract risk

Positive Signals

Critical defense asset
Long-term production
Advanced technology

Sector Analysis

The defense sector, particularly aircraft manufacturing, involves high R&D costs and specialized production capabilities. Spending benchmarks for similar unmanned aerial systems are often proprietary, but this award represents a significant portion of the Air Force's procurement budget for this platform.

Small Business Impact

This contract was awarded directly to General Atomics Aeronautical Systems, Inc., a large prime contractor. There is no explicit information provided regarding subcontracting opportunities for small businesses within this award.

Oversight & Accountability

As an ACAT 1C program, the MQ-9 likely undergoes significant oversight from the Department of Defense. However, the sole-source nature of this award warrants scrutiny to ensure fair pricing and program justification.

Related Government Programs

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

Risk Flags

Sole-source award limits competition.
Potential for inflated costs due to lack of competition.
Fixed Price Incentive contract can lead to cost overruns if not managed carefully.
Dependence on a single supplier for critical defense assets.
Vulnerability of the platform to advanced air defense systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $394.7 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. ACAT 1C, MQ-9, FY15 MQ-9 PRODUCTION

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 $394.7 million.

What is the period of performance?

Start: 2016-08-15. End: 2019-12-31.

What was the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or a lack of viable alternatives. To ensure fair and reasonable pricing, the DoD would likely conduct a thorough cost and technical analysis of the contractor's proposal, potentially comparing it to historical data or independent cost estimates. However, without competitive pressure, the effectiveness of these measures in achieving optimal value is inherently limited.

What are the long-term sustainment and upgrade costs associated with the MQ-9 fleet produced under this contract?

The initial production contract focuses on manufacturing the airframes. Long-term sustainment and upgrade costs are typically addressed through separate contracts for maintenance, spare parts, software updates, and potential future enhancements. These ongoing costs can often exceed the initial procurement expenditure and require separate, rigorous oversight to manage effectively and ensure the platform remains operationally relevant and cost-efficient over its lifecycle.

How does the performance of the MQ-9 platform, as influenced by this production contract, compare to its intended mission requirements and potential adversaries' capabilities?

The MQ-9 Reaper is designed for intelligence, surveillance, reconnaissance (ISR), and strike missions. Its performance is generally considered effective for these roles, particularly in permissive or semi-permissive air environments. However, its vulnerability to advanced air defenses necessitates careful operational planning. Continuous upgrades and production under contracts like this aim to maintain its relevance against evolving threats and ensure it meets evolving mission requirements.

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: FIXED PRICE INCENTIVE (L)

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: $394,805,831

Exercised Options: $394,694,282

Current Obligation: $394,694,282

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $2,422,871

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862015G4040

IDV Type: BOA

Timeline