DoD awards $539M for MQ-1C Gray Eagle systems, including attrition aircraft and training
Contract Overview
Contract Amount: $539,429,940 ($539.4M)
Contractor: General Atomics Aeronautical Systems, Inc.
Awarding Agency: Department of Defense
Start Date: 2012-07-06
End Date: 2023-08-14
Contract Duration: 4,056 days
Daily Burn Rate: $133.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: FY 12 PROCUREMENT OF TWO (2) MQ-1C GRAY EAGLE SYSTEMS FOR FIELDING UNITS SIXTH AND SEVENTH UNIT EQUIPPED (UE) AND FIVE (5) ADDITIONAL ATTRITION AIRCRAFT, INCLUDING INITIAL SPARES, PLUS ADDITIONAL HARDWARE NECESSARY TO BACK-FILL FIELDED UNITS FIRST THRU THE FIFTH UE, UNMANNED AIRCRAFT SYSTEMS TRAINING BASE IN FT. HUACHUCA (FHU), AZ AND RAPID INTEGRATION AND ACCEPTANCE CENTER (RIAC) IN DUGWAY, UT WITH THE LATEST CONFIGURATION OF GROUND EQUIPMENT FOR LRIP (LOW RATE INITIAL PRODUCTION) III
Place of Performance
Location: POWAY, SAN DIEGO County, CALIFORNIA, 92064
Plain-Language Summary
Department of Defense obligated $539.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC. for work described as: FY 12 PROCUREMENT OF TWO (2) MQ-1C GRAY EAGLE SYSTEMS FOR FIELDING UNITS SIXTH AND SEVENTH UNIT EQUIPPED (UE) AND FIVE (5) ADDITIONAL ATTRITION AIRCRAFT, INCLUDING INITIAL SPARES, PLUS ADDITIONAL HARDWARE NECESSARY TO BACK-FILL FIELDED UNITS FIRST THRU THE FIFTH UE, UNMANNED AIRC… Key points: 1. The contract covers two MQ-1C Gray Eagle systems, five attrition aircraft, and associated training and ground equipment. 2. General Atomics Aeronautical Systems, Inc. is the sole contractor for this low-rate initial production (LRIP) III award. 3. The contract includes initial spares and back-filling for previously fielded units, indicating ongoing sustainment needs. 4. The fixed-price incentive contract type aims to balance cost control with contractor performance.
Value Assessment
Rating: fair
The total award amount is substantial, reflecting the complexity and quantity of unmanned aircraft systems and support equipment. Benchmarking against similar large-scale UAS procurements would be necessary for a precise value assessment.
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. The lack of competition may limit price discovery and potentially lead to higher costs for the government.
Taxpayer Impact: The sole-source nature of this award means taxpayers may not have benefited from competitive pricing, potentially increasing the overall cost of acquiring these critical defense assets.
Public Impact
Enhances intelligence, surveillance, and reconnaissance (ISR) capabilities for Army units. Supports ongoing military operations and readiness by providing advanced unmanned aerial vehicles. Invests in training infrastructure and personnel to effectively operate and maintain the Gray Eagle systems. Contributes to the modernization of the U.S. military's unmanned aircraft fleet.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing.
- Long contract duration (4056 days) increases exposure to cost overruns.
- Fixed-price incentive contract can lead to cost growth if targets are missed.
Positive Signals
- Acquisition of critical ISR assets.
- Includes training and support for operational readiness.
- Addresses attrition aircraft needs, ensuring fleet sustainability.
Sector Analysis
The Department of the Army's procurement of MQ-1C Gray Eagle systems falls within the broader aerospace and defense manufacturing sector. Spending on unmanned aerial systems (UAS) has been a significant trend, driven by evolving military requirements for ISR and strike capabilities.
Small Business Impact
This contract was awarded directly to a large prime contractor, General Atomics Aeronautical Systems, Inc. There is no indication of significant subcontracting opportunities for small businesses within the provided data.
Oversight & Accountability
The contract's long duration and sole-source nature warrant close oversight to ensure cost control and performance. Regular reviews of contractor progress and adherence to contract terms are essential for accountability.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competition may lead to inflated costs.
- Long contract duration increases risk of cost overruns and scope creep.
- Reliance on a single source can create supply chain vulnerabilities.
- Potential for performance issues if contractor incentives are misaligned.
- Uncertainty in future sustainment and upgrade costs.
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $539.4 million to GENERAL ATOMICS AERONAUTICAL SYSTEMS, INC.. FY 12 PROCUREMENT OF TWO (2) MQ-1C GRAY EAGLE SYSTEMS FOR FIELDING UNITS SIXTH AND SEVENTH UNIT EQUIPPED (UE) AND FIVE (5) ADDITIONAL ATTRITION AIRCRAFT, INCLUDING INITIAL SPARES, PLUS ADDITIONAL HARDWARE NECESSARY TO BACK-FILL FIELDED UNITS FIRST THRU THE FIFTH UE, UNMANNED AIRCRAFT SYSTEMS TRAINING BASE IN FT. HUACHUCA (FHU), AZ AND RAPID INTEGRATION AND ACCEPTANCE CENTER (RIAC) IN DUGWAY, UT WITH THE LATEST CONFIGURATION OF GROUND EQUIPMENT FOR LRIP (LOW RATE INITIAL PRODUCTION) III
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 $539.4 million.
What is the period of performance?
Start: 2012-07-06. End: 2023-08-14.
What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or a lack of viable alternatives. To ensure fair and reasonable pricing, the government would likely conduct detailed cost analyses, review historical pricing data, and potentially negotiate profit margins. However, without competition, the inherent price discovery mechanism is absent, making robust government negotiation and analysis even more critical.
How does the cost of the MQ-1C Gray Eagle systems compare to similar unmanned aircraft systems procured competitively?
Direct comparison is challenging without specific competitive procurement data for similar systems. However, sole-source awards are generally expected to be higher than competitively bid contracts due to the absence of market pressure. A thorough analysis would involve benchmarking against other medium-altitude, long-endurance UAS programs, considering their capabilities, payload, and operational lifecycles to assess value.
What are the long-term cost implications of this contract, considering the inclusion of spares, training, and potential sustainment needs?
This contract includes initial spares and training, but the long duration (4056 days) suggests significant sustainment costs beyond the initial award. Future sustainment, maintenance, upgrades, and potential follow-on procurements represent substantial long-term financial commitments. The government must plan for these lifecycle costs to accurately assess the total ownership cost and budget accordingly.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W58RGZ11R0320
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $539,429,940
Exercised Options: $539,429,940
Current Obligation: $539,429,940
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2012-07-06
Current End Date: 2023-08-14
Potential End Date: 2023-08-14 12:08:00
Last Modified: 2023-08-08
More Contracts from 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 — $1.9B (Department of Defense)
- Award of Undefinitized Contract Action (UCA) for FY 12 MQ-1C Gray Eagle Program of Record and Quick Reaction Capability Performance-Based Logistics Product Support — $1.1B (Department of Defense)
- FY 13 Full Rate Production of the Gray Eagle Unmanned Aircraft System and FY 12 Backfill Requirements — $1.1B (Department of Defense)
- FY17 Gray Eagle Performance Based Logistics (PBL) Effort — $936.9M (Department of Defense)
- Federal Contract — $646.6M (Department of Defense)
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