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Drone-Makers Pitch Rentals Amid Budget Cuts

by Brendan McGarry on June 14, 2013

RQ-7B Shadow

Drone-makers such as Textron Inc.’s AAI Corp. are offering armed forces the option to rent drones for missions rather than buy the unmanned systems outright at a time of budget cuts.

The move, called fee for service, is designed to provide more flexibility for defense customers faced with declining procurement budgets. The U.S. Defense Department this year was forced to reduce spending by $37 billion because of automatic cuts that took effect in March, officials said.

“We have a partnership with the government where we are delivering and flying missions pretty much on what I’ll call on cost-per-mission basis,” Bill Irby, senior vice president and general manager of AAI, said in a telephone interview with Military​.com. “We envision that being a very substantial area of growth.”

The company, which makes the catapult-launched RQ-7B Shadow and the model plane-sized Aerosonde drone for ground forces, isn’t alone. Boeing Co.’s Insitu Inc. offers a similar service with its ScanEagle drone. The service is among the pricing options firms plan to pitch to potential customers at the upcoming Paris Air Show.

“We’re very flexible on what we can offer to the market,” Irby said.

The Defense Department faces $1 trillion in cuts over the next decade under deficit-reduction legislation passed in 2011. Half of that amount, about $500 billion, will come from automatic, across-the-board cuts — unless Congress and the White House agree to an alternative spending plan.

The Defense Department is projected to spend $20.6 billion on unmanned systems in the four years through fiscal 2016, down from $27.7 billion projected last year for the same period, according to figures presented by Dyke Weatherington, director of unmanned warfare and intelligence, surveillance and reconnaissance at the Pentagon, at a conference earlier this year in Washington, D.C.

The price tag of a drone can range from about $800,000 for a Shadow to about $220 million for a high-altitude RQ-4 Global Hawk made by Northrop Grumman Corp. And those figures don’t include the additional cost of acquiring multiple aircraft to conduct round-the-clock missions, launchers, ground control stations, spares and other equipment.

The idea of paying for individual missions as needed rather than buying unmanned systems makes sense for some buyers in an era of tightening budgets because the cost-per-mission is more affordable, Irby said.

“When you get into a fee-for-service model, it enables the government to tap into different dollars types than just procurement and development,” he said.

At the show, held at the Le Bourget airfield outside Paris, AAI also plans to tout the RQ-7 Shadow 200, the new Shadow M2, which can fly higher and longer than its predecessor, and a universal ground control station that can communicate with other drones such as the medium-altitude MQ-1C Gray Eagle, based on the Predator made by General Atomics Aeronautical Systems Inc.

Like major defense contractors and the U.S. government itself, the Association for Unmanned Vehicle Systems International, a trade group based in Arlington, Va., that represents drone manufacturers, plans to scale back its presence at the show. The organization won’t have a booth this year, though some employees still plant to attend the event.

Northrop Grumman plan to skip the event entirely, meaning attendees won’t be able to catch a glimpse of the Global Hawk or learn more about the X-47B, a stealthy, batwing-shaped craft that became the first unmanned jet to take off from and touch down on an aircraft carrier earlier this year.

Observers will looking out for displays of competing products such as the nEUROn, made by a unit of the Paris-based Dassault Group, and the Taranas, made by London-based BAE Systems Plc.

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