Pentagon Passes Over Big Firms for $30B Drone Contract

Privately owned General Atomics and Anduril will develop a program called the Collaborative Combat Aircraft (CCA) for the US Air Force.

This program will include manned fighter planes accompanied by armed military drones.

Last month, the Pentagon revealed the deal, and the government selected these two firms instead of the usual Northrop Grumman, Lockheed Martin, or Boeing. They have all missed out on prospective income worth at least $30 billion.

Under the program, 1,000 CCA drones will be deployed, with two drones installed on each of the 300 F-35 stealth fighter planes and 200 Next Generation Air Dominance fighters. Given that each drone is expected to cost about $30 million to produce, the CCA program has the potential to balloon in size and value to as high as $180 billion in the long run.

General Atomics and/or Anduril will fulfill an initial order of 1,000 military drones. Even though they weren’t chosen to construct production-representative CCA vehicles, the Air Force said that the businesses that weren’t would remain in the vendor pool of industry partners and compete for future projects, including production contracts. Depending on who secures the first production contract or contracts, Boeing, Lockheed, and Northrop may be able to get subcontracting employment.

The contract might be recompeted if the CCA program develops beyond its initial needs, providing publicly listed military equities with another opportunity to gain market share. Meanwhile, General Atomics and Anduril, two military companies that are not listed on the public market, are riding the wave of enthusiasm. They are in a commanding position going into the second round after winning the first. Those hoping to profit from the most extensive military drone program in Pentagon history may want to keep their fingers crossed for an Anduril IPO.

Finally, Northrop Grumman, Boeing, and Lockheed have a lot to lose since the Pentagon picked General Atomics and Anduril for the Collaborative Combat Aircraft program.