DoD's $358.6M contract for Predator/Reaper logistics services awarded to General Atomics, a sole-source procurement

Contract Overview

Contract Amount: $358,604,405 ($358.6M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-01-01

End Date: 2019-12-31

Contract Duration: 1,094 days

Daily Burn Rate: $327.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF CONTRACTOR LOGISTICS SERVICES FOR MQ-1 PREDATOR AND MQ-9 REAPER

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $358.6 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: IGF::OT::IGF CONTRACTOR LOGISTICS SERVICES FOR MQ-1 PREDATOR AND MQ-9 REAPER Key points: 1. The contract value represents a significant investment in maintaining critical unmanned aerial vehicle fleets. 2. Sole-source award raises questions about potential price inflation and lack of competitive pressure. 3. The duration of the contract (1094 days) suggests a long-term need for these specialized services. 4. The 'Aircraft Manufacturing' NAICS code indicates a focus on the production and support of aircraft. 5. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 6. Geographic concentration in California for the contractor may indicate specialized facilities or workforce.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized services for specific drone platforms. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The Cost Plus Fixed Fee structure requires rigorous oversight to ensure costs remain reasonable and that the fixed fee is appropriate for the services rendered. Comparisons to similar logistics contracts for other high-value defense assets would be necessary for a more robust assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a single contractor possesses unique capabilities or intellectual property essential for the requirement. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a single supplier for these critical drone support services.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the contractor faces no direct pressure to reduce costs or improve efficiency through market competition.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, ensuring the operational readiness of MQ-1 Predator and MQ-9 Reaper drones. Services delivered include logistics support, crucial for the sustained operation and maintenance of these advanced unmanned aerial systems. The geographic impact is primarily within the United States, supporting military operations and potentially involving personnel at various Air Force bases. Workforce implications include the employment of skilled technicians, engineers, and support staff by General Atomics, likely concentrated in areas with defense industry presence.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
Cost Plus Fixed Fee contract type can create incentives for cost escalation if not managed effectively.
Lack of competition may reduce pressure on the contractor to innovate or improve service efficiency.
Dependence on a single contractor for critical drone logistics poses a supply chain risk.

Positive Signals

General Atomics is a known and established provider of these specific drone systems and support.
The contract ensures continued operational capability for vital intelligence, surveillance, and reconnaissance (ISR) platforms.
The fixed fee component provides some level of cost predictability for the government, despite the cost-plus element.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on unmanned aerial vehicles (UAVs). The market for military UAVs and their associated support services is highly specialized and dominated by a few key players. General Atomics is a significant entity in this space, known for its development and production of the Predator and Reaper platforms. Spending benchmarks for similar high-value, specialized defense logistics contracts can vary widely based on system complexity and duration.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses explicitly detailed in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless General Atomics voluntarily engages small businesses for specific support roles. Further investigation into subcontracting plans would be needed to fully assess the impact.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The Inspector General's office for the Department of the Air Force would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is often limited for sole-source, defense-related contracts, but contract modifications, performance reports, and payment data are usually maintained internally and subject to audit.

Related Government Programs

MQ-1 Predator Operations and Maintenance
MQ-9 Reaper Operations and Maintenance
Unmanned Aerial Vehicle Logistics Support
Defense Contractor Services
Aerospace Manufacturing Support

Risk Flags

Sole Source Procurement
Cost Plus Fixed Fee Contract Type
Potential for Cost Overruns
Lack of Competitive Benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $358.6 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. IGF::OT::IGF CONTRACTOR LOGISTICS SERVICES FOR MQ-1 PREDATOR AND MQ-9 REAPER

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 $358.6 million.

What is the period of performance?

Start: 2017-01-01. End: 2019-12-31.

What is General Atomics Aeronautical Systems, Inc.'s track record with the DoD, particularly concerning the MQ-1 and MQ-9 programs?

General Atomics Aeronautical Systems, Inc. (GA-ASI) has a long and established history as the prime contractor and developer of both the MQ-1 Predator and MQ-9 Reaper unmanned aerial systems. They have been instrumental in the design, production, and sustainment of these platforms for the U.S. Air Force and other government agencies for many years. Their track record includes numerous contract awards for aircraft, upgrades, training, and logistics support related to these specific drone families. While generally recognized for their expertise in this niche, like any large defense contractor, they have been subject to scrutiny regarding contract pricing and performance on various programs over time. Their deep integration with these systems makes them a logical, albeit sole-source, provider for ongoing sustainment and logistics.

How does the $358.6 million contract value compare to historical spending on similar logistics services for these drone platforms?

Directly comparing this $358.6 million contract to historical spending is challenging without access to detailed historical contract data for the MQ-1 and MQ-9 logistics. However, given the advanced nature and operational tempo of these platforms, significant and sustained investment in their logistics and maintenance is expected. The duration of this contract (approximately three years) suggests a substantial annual spend. Historical data would likely show consistent, multi-million dollar annual expenditures for sustainment, spare parts, and technical support for these critical ISR assets. The sole-source nature of this award means that year-over-year comparisons might not reflect competitive market dynamics, but rather the evolving needs and costs associated with maintaining a fleet of sophisticated drones.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for critical drone logistics?

The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for critical drone logistics are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated prices as the government lacks alternative bids to benchmark against. This can result in less value for taxpayer money. Secondly, the CPFF structure, while providing some cost certainty with the fixed fee, allows the contractor to recoup all allowable costs plus a predetermined profit. This can create a disincentive for the contractor to control costs rigorously, as higher costs directly translate to higher absolute profit dollars (though the fee percentage remains fixed). Effective oversight is crucial to mitigate these risks by scrutinizing allowable costs and ensuring the fixed fee is appropriate for the scope of work.

How effective is the Department of the Air Force in overseeing sole-source contracts of this magnitude?

The Department of the Air Force (DAF) employs various mechanisms to oversee sole-source contracts, including dedicated contracting officers, program managers, and financial auditors. For contracts of this magnitude ($358.6 million), oversight is typically rigorous, involving detailed cost analysis, performance monitoring, and regular reporting requirements. However, the effectiveness can vary depending on the specific program, the contractor's transparency, and the resources allocated to oversight. Sole-source awards inherently present a greater challenge for oversight because the government cannot rely on competitive benchmarking to validate pricing and performance. Therefore, the DAF must rely heavily on robust internal controls, audits, and negotiation expertise to ensure fair pricing and satisfactory performance, which can be resource-intensive.

What are the potential implications of this contract on the future development and sustainment of U.S. unmanned aerial vehicle capabilities?

This contract signifies a continued reliance on and investment in the MQ-1 Predator and MQ-9 Reaper platforms, which remain vital assets for intelligence, surveillance, and reconnaissance (ISR) missions. By ensuring the logistics and sustainment of these drones, the contract supports ongoing military operations and readiness. However, the sole-source nature and the long-term relationship with General Atomics might influence future competition for next-generation UAV support or alternative platforms. It underscores the importance of maintaining strong organic capabilities and strategic partnerships within the defense industrial base for critical technologies like unmanned systems. The continued operation of these platforms also informs requirements and lessons learned for future UAV development.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852817R0001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Atomics

Address: 14200 KIRKHAM WAY, POWAY, CA, 92064

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $358,604,405

Exercised Options: $358,604,405

Current Obligation: $358,604,405

Actual Outlays: $625

Subaward Activity

Number of Subawards: 52

Total Subaward Amount: $38,995,110

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline