Overtaxed

La Jolla–based General Atomics Aeronautical Systems, Inc., owned by La Jolla millionaires Linden and Neal Blue, has made millions of dollars on its best-known product, the Predator unmanned aerial vehicle, which has seen service over battlefields from Bosnia to Afghanistan. But the company’s lucrative franchise may be threatened by a recent review by the U.S. Government Accountability Office. The review was conducted after defense contractor Lockheed Martin, which had partnered with General Atomics to sell a specially outfitted version of the Predator to the Navy, protested the $1.1 billion contract’s award to competitor Northrop Grumman, maker of the Global Hawk, another unmanned aerial vehicle.

On August 8 the Government Accountability Office denied Lockheed’s protest, citing in part a long list of performance problems at General Atomics. According to the report, the choice of General Atomics, which would have done about half the work under Lockheed Martin’s proposal, “was determined to represent a high risk” that the project would come in late and over budget. Citing a December 10, 2007 Army evaluation of another Predator contract, the report said that General Atomics “has resisted hiring adequate engineering and technical staff to address all of the tasks they are currently contracted to perform.” It added that the company “had not met contracted…delivery schedules” and that “senior management continues to obligate the company without fully reviewing and understanding the current workload and commitments.”

The report concluded that General Atomics’ “engineering staff appears to be technically [competent], but in most cases are not empowered at the appropriate levels to make the necessary decisions to push the task forward in a timely manner to maintain schedule.” As a result, the review said, “as the program continues, and [General Atomics] takes on additional contracts, we are concerned about [General Atomics’] ability to successfully manage and deliver products to all customers on time and within cost.”

General Atomics issued a brief written response to the Government Accountability Office’s assertions, saying, “we don’t see the need to prolong the discussion.” The statement added that the company’s “record of delivering sophisticated and combat-proven aircraft to the war fighter speaks for itself.”