WASHINGTON — The Air Force edged out the Army as the leader in unmanned systems procurement in recent years, a shift driven in part by increasing demand for General Atomics’ MQ-9 Reaper and Northrop Grumman’s Global Hawk, according to a new study.
The uptick in Air Force spending on unmanned aerial systems, or UAS, is part of a recent rebound in overall Defense Department investment in unmanned after a peak in fiscal 2012, according to a recent report by business intelligence provider Govini. Despite war drawdown and sequestration cuts, the UAS market saw a 6 percent compound annual growth rate in the last five years, according to the study.
That rebound in UAS spending is driven primarily by the pivot to the Asia Pacific region, where surveillance missions over vast distances are crucial, and preparation for the so-called "Third Offset" technology push, according to Govini CEO and founder Eric Gillespie.
“In preparation for the Third Offset, preparation for unmanned systems is becoming even more vital to the long-term strategy,” said Gillespie in an interview Wednesday. “We’re seeing resources allocated and assets allocated to Third Offset preparation.”
Another factor is the growing sophistication of these systems and their performance in conflicts in the Middle East over the past decade, Gillespie said. UAS have “proven their value to the DoD” in the last 10 years, he noted.
"I think you’re seeing a double effect — UAS technology is getting more sophisticated, and as more of the burden of operations shift from boots on the ground in Iraq and Afghanistan to more maritime surveillance in Asia, we’re seeing more acquisition of larger platforms like the Reaper and carrier-launched UAVs by the Navy and Air Force, rather than hand-launched equipment," Gillespie said.
For the Air Force, investment is primarily in large platforms like the Reaper and Global Hawk for surveillance missions. The Air Force spent $1 billion in FY15 alone on UAS, mainly on acquisition of these systems, according to the report.
Investment in Reaper and related services represents a full 25 percent of all UAS defense awards, an increae from 9 percent in FY12, according to the study. Gillespie chalked this up to increasing demand for larger surveillance platforms, driven by the shift to the Asia Pacific region and the Third Offset.
Notably, General Atomics dominates the UAS market, owning more than a third of the defense market at more than $4 billion, the report states. Northrop is a distant second, with less than half that capture. Combined, these top two vendors account for more than 50 percent of the UAS market, according to the study.
Coming in at third and fourth, Textron owns 10 percent of the market, while Boeing has 7 percent, said Gillespie.
General Atomics’ clear dominance of the UAS market may make the company a target for acquisition by one of the bigger industry players, Gillespie noted.
“The way the market is evolving and given the consolidation of the market today, they own a platform or a set of platforms that should be of great interest to the others players in the market,” Gillespie said.