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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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{ 28 comments… read them below or add one }

Musson June 14, 2013 at 1:08 pm

No money down.

Dock fee, license fee, sales taxes and security deposit due at signing.

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tiger June 14, 2013 at 5:40 pm

And no rentals to troops under 25. Then you get to Hertz and find all the cool drones are rented. You get left with the mini van drones in the lot…………

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hibeam June 14, 2013 at 1:54 pm

Why not fly loops on the Southern border? I'll tell you why. That would allow us to easily see all the folks flowing in here. Too painful to look at.

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hibeam June 14, 2013 at 2:43 pm

Don't forget hibeam. One drone replaces about 100 clueless border patrol agents sipping coffee in big SUV's while illegals sneak by 100 yards away. Can't have that now can we?

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tiger June 14, 2013 at 5:46 pm

Actually drones are being used by the Border Patrol. Problem is costs of running them & You still need guys on the ground to make a arrest or catch people. Heard a news report on the topic this week…. At Last check They only have a force of 2000 to cover the Southern border. Plus the Canadian border is not as quiet as some may think. Need folk there too…

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blight_ June 14, 2013 at 6:12 pm

Clearly the UGV market calls for autonomous cars with machineguns to intimidate and detain at the border. We'll just contract it out.

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USS ENTERPRISE June 14, 2013 at 2:07 pm

Maybe if you rent enough drones, they will pitch in a launcher for free.

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tiger June 14, 2013 at 5:49 pm

Hertz drones? Will there be a shuttle bus to the Drone lot? Will they have only Ford made drones? Can I order a Shelby GT 500H Model Reaper???

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USS ENTERPRISE June 14, 2013 at 6:29 pm

I prefer Enterprise rentals, obviously :-)

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JoeSovereign June 14, 2013 at 2:56 pm

I wonder what the companies get in return.

It has been reported that the NSA was giving cooperating corporations information about, and corporate espionage tips on their corporate competitors. Also some Companies were giving access to the NSAs everything about everyone database in exchange for cooperation. The phone and Internet companies already have complete civil and criminal immunity for violating their own privacy agreements with customers, it was in the original Patriot Act.

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blight_ June 14, 2013 at 6:12 pm

I saw an amusing tidbit that suggested companies would give zero-day exploits to the US government instead of immediately fixing and releasing a patch. Very sad day for America…

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JEFF June 14, 2013 at 3:56 pm

You break it, you buy it?

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RWB123 June 14, 2013 at 6:38 pm

Does this mean that both side of a conflict can rent the same drone?

Do they have to alternate turns flying or can they maybe just rent a weapon hard point? Actually, renting the hard points would probably be the most cost effective – the drone operators can bomb both sides on the same mission and thus cut down on overhead costs.

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blight_ June 14, 2013 at 6:58 pm

Sounds like Italian mercenaries during the condotteri days. Yeech!

Renting might free us from the perils of ownership, but the real owner intends to make a buck, and that will come out of government pockets. If the government "rented" B-52s, it would be paying 50 years worth of rent to the manufacturer…think of the lifetime costs of that versus ownership.

Of course, we would've been spared expensive duds kept around only because we bought and owned them.

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USS ENTERPRISE June 16, 2013 at 8:08 pm

Flip a coin. Or play rock, paper, scissors.

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hibeam June 14, 2013 at 7:47 pm

Drones at the southern border are too expensive. Unless you consider square miles monitored per dollar expended. Then they are about 100 times less expensive than border patrol clowns in SUVs waiting to retire.

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Don June 15, 2013 at 4:50 pm

Just a matter of time before we have 18 year old nerds making start up companies manufacturing weapons and uav's, renting them out for the highest bidder. 3D printing files with data that contains the design for advanced drones will flood the internet. Sickening.

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hibeam June 15, 2013 at 8:30 pm

Don't be silly. Innovation comes from the government. That's why we have guys in oversized shorts delivering the mail by hand. That's innovation. Google would probably use tiny flying robots.

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shawn1999 June 17, 2013 at 8:05 am

Didn't they try this in Alaska with aircraft (a cargo craft comes to mind- maybe C-130s?) and the Senator that approved it turned out to be part owner and took the Govt/Taxpayers for millions?

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SJE June 18, 2013 at 11:34 am

Corruption occurs in all contexts. That is not a reason to outsource.

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Blackbird74 June 17, 2013 at 10:07 am

Rent-a-bot

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PrahaPartizan June 17, 2013 at 10:42 am

If the government is going to have to indemnify the lessor, then this idea is stupid beyond belief. Civilian auto rental companies can afford to rent/lease their vehicles because they can insure the vehicle. The same applies to aircraft rentals/leases to individuals or businesses. What happens when those vehicles are taken into a war zone? The lessors void the agreement, making the lessee responsible for all damage or loss. If you expect to bite the bullet on the item from the git-go, you might as well just own the vehicle. Otherwise, the "savings" are illusory.

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blight_ June 17, 2013 at 11:20 am

This would only work in peacetime (perhaps for training, or demonstration purposes?). As you note, combat damage isn't part of the insurance plan…just like renting a Chevy Aveo at Hertz and trying to offroad it on a sand dune will end with you paying the bill.

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shawn1999 June 17, 2013 at 12:05 pm

Quick! Check the Congressmen's investments and see how many are investors or have family/friends who are investors in Textron Inc.’s and/or AAI Corp- then such an idiot move will make perfect sense

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SJE June 18, 2013 at 11:33 am

Not true: you just have to adapt the contract and business model. Mercenary forces have been around for centuries, with different business plans. Sometimes its strict employment for a period, or a campaign. Of course, the bonus plan usually involved the chance to loot and pillage.

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hibeam June 17, 2013 at 11:32 am

Can we assume these rented drones will be used to buzz the homes of conservative talk show hosts?

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SJE June 17, 2013 at 1:14 pm

Outsourcing worked so well for the NSA

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Lance June 17, 2013 at 1:27 pm

See the future if war comes we rent our arsenal to defeat them its far cheaper….. LOL Does that mean we can pick the weapons we want????? NAHHHHH LOL

Joke.

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