DoD's $333M MQ-9 Reaper CLS Contract Awarded to General Atomics, Lacking Competition

Contract Overview

Contract Amount: $332,781,283 ($332.8M)

Contractor: General Atomics Aeronautical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-01-01

End Date: 2022-12-31

Contract Duration: 1,460 days

Daily Burn Rate: $227.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CONTRACTOR LOGISTICS SUPPORT AND SERVICES (CLS) FOR MQ-9 REAPER

Place of Performance

Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $332.8 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: CONTRACTOR LOGISTICS SUPPORT AND SERVICES (CLS) FOR MQ-9 REAPER Key points: 1. The contract awarded to General Atomics Aeronautical Systems, Inc. for MQ-9 Reaper CLS is substantial at over $332 million. 2. Lack of competition is a significant factor, raising concerns about potential overpricing and reduced innovation. 3. The sector is critical for defense intelligence, surveillance, and reconnaissance capabilities. 4. The contract's duration of 1460 days (4 years) indicates a long-term need for these services.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to assess if the $332.8 million price represents fair value. The cost-plus-fixed-fee structure can incentivize contractors to increase costs, especially without strong oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to offer the best price.

Taxpayer Impact: The absence of competition likely results in higher costs for taxpayers compared to a competitively awarded contract.

Public Impact

Ensures continued operational readiness of the MQ-9 Reaper, a key asset for ISR missions. Potential for higher costs impacts overall defense budget allocation. Lack of competition may stifle technological advancements in CLS for unmanned aerial systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

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

Positive Signals

Essential for critical defense asset operation
Long-term contract provides stability

Sector Analysis

This contract falls within the aerospace and defense sector, specifically supporting unmanned aerial systems. Spending benchmarks for CLS can vary widely based on system complexity and operational tempo, but a sole-source award warrants scrutiny.

Small Business Impact

The contract was awarded to a large prime contractor, General Atomics Aeronautical Systems, Inc. There is no indication of small business participation in this sole-source award, suggesting limited opportunities for small businesses in this specific contract.

Oversight & Accountability

Oversight is crucial for cost-plus contracts, especially sole-source awards. The Defense Contract Management Agency (DCMA) is responsible for oversight, but the effectiveness of this oversight in controlling costs for this specific contract is not detailed.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award limits competition and potentially increases costs.
Cost-plus contract type can lead to cost overruns if not properly managed.
Lack of transparency regarding the justification for sole-sourcing.
Potential for reduced innovation due to lack of competitive pressure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $332.8 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. CONTRACTOR LOGISTICS SUPPORT AND SERVICES (CLS) FOR 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $332.8 million.

What is the period of performance?

Start: 2019-01-01. End: 2022-12-31.

What specific justification was provided for the sole-source award of this critical CLS contract?

The provided data does not specify the justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. Without this justification, it's difficult to assess the necessity of foregoing competition.

How are cost overruns or inefficiencies managed under this Cost Plus Fixed Fee (CPFF) contract structure?

Under a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. While the fee is fixed, the contractor is incentivized to control costs to maximize their profit margin. However, without robust oversight and clear performance metrics, there's a risk of cost creep. The effectiveness of cost control depends heavily on the government's monitoring and auditing processes.

What is the projected long-term cost implication of relying on a sole-source provider for MQ-9 Reaper CLS?

Relying on a sole-source provider for extended periods can lead to escalating costs over time due to the absence of competitive pressure. The contractor may face less incentive to innovate or reduce prices. This could result in higher lifecycle costs for the MQ-9 program and potentially divert funds from other critical defense needs.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852818R0001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $332,904,259

Exercised Options: $332,904,259

Current Obligation: $332,781,283

Actual Outlays: $7,410,124

Subaward Activity

Number of Subawards: 206

Total Subaward Amount: $46,511,907

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline