Thursday's Department of War contract update signals increased US Air Force investment in long-endurance surveillance drones that could complement the MQ-9 Reaper and help fill intelligence, surveillance, and reconnaissance mission gaps following reported heavy losses in the US-Iran conflict.
The USAF more than doubled the value of its contract with DZYNE Technologies, now part of Ondas, bringing the total to about $85.6 million.
As we noted last week, DZYNE's ULTRA platform represents a potential lower-cost Group 5 drone that could complement the MQ-9 Reaper and eventually assume some of its ISR missions.
DoW's contract update:
DZYNE Technologies LLC, Fairfax, Virginia, has been awarded a $46,087,217 modification (P00003) to a previously awarded contract (FA8691-26-C-B007) for Operational Assessment of Uncrewed Long-Endurance Tactical Reconnaissance Aircraft. This modification brings the total cumulative face value of the contract to $85,643,057 from $39,555,840.
Work will be performed stateside and at overseas locations and is expected to be completed by March 26, 2031. Fiscal 2025 research, development, test, and evaluation funds in the amount of $12,288,390 are being obligated at the time of award. The Air Force Life Cycle Management Center, Dayton, Ohio, is the contracting activity.
Our read here is that DoW's aircraft description fits DZYNE's ULTRA surveillance-drone program, developed with the Air Force Research Laboratory. The meaningful boost to the contract shows how urgently the USAF needs to replenish its Group 5 drones, given the reported Reaper losses (upwards of 25% of the fleet) in the US-Iran conflict so far.
Another signal that DoW is likely to boost DZYNE's ULTRA orders even more came at the Air & Space Forces Association's Air, Space & Cyber Conference earlier this month, when the USAF's Troy Meink commented on the need to upgrade the US military's unmanned aircraft fleet over the next six years.
Meink told the audience:
And this is not the only class of autonomous aircraft we are aggressively pursuing. As we saw in Epic Fury, ISR strike platforms have been essential. We have used MQ-9 and even now the ULTRA aircraft to great effect.
Building on these lessons, we are developing a family of low-cost multi-role strike platforms called the Mass Modular Aircraft, or MMAs.
MMAs will provide affordable, attritable, long-range strike, and we will be able to field them at scale. Our intent is to field 100 MMAs in 2029 at even a lower cost than the CCAs and a fraction of the cost of manned aircraft we build today. Then by 2032, 500 of these platforms will join our force operational fleet.
Follow-on orders would likely depend on available funding, with the Trump administration's proposed record defense budget potentially providing a runway for a lot more orders if passed.
Ondas, the company that acquired DZYNE earlier this year, closed around $7.64 on Friday and has a staggering 41% short float.
Any significant contract news on ULTRA orders, coupled with Wall Street waking up to the fact that this Group 5 drone can replace the Reaper for ISR missions, could spark a squeeze.