DoD awards $105M for high-explosive ordnance, with limited competition and a 5-year duration

Contract Overview

Contract Amount: $105,145,480 ($105.1M)

Contractor: General Dynamics Ordnance and Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-02-01

End Date: 2017-01-31

Contract Duration: 2,191 days

Daily Burn Rate: $48.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 120MM EFSS HIGH EXPLOSIVE

Place of Performance

Location: SAINT PETERSBURG, PINELLAS County, FLORIDA, 33716

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $105.1 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. for work described as: 120MM EFSS HIGH EXPLOSIVE Key points: 1. Contract awarded to a single supplier, raising questions about price competitiveness. 2. Long-term contract (5 years) may indicate a stable but potentially less dynamic market. 3. High dollar value suggests significant reliance on this specific ordnance type. 4. Fixed-price contract shifts performance risk to the contractor. 5. Geographic concentration in Florida for manufacturing. 6. No small business set-aside, indicating a focus on large prime contractors.

Value Assessment

Rating: fair

The contract's value of $105 million over five years for high-explosive ordnance requires careful benchmarking against similar defense procurements. Without specific unit cost data or comparisons to other contracts for similar munitions, it's difficult to definitively assess value for money. The fixed-price nature of the contract provides cost certainty for the government but relies on the contractor's efficiency to ensure a fair price. The lack of competition further complicates a direct value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This approach is typically used when a unique capability is required, or when only one responsible source exists. The limited competition means the government did not benefit from a bidding process that could drive down prices through market forces. This raises concerns about whether the government secured the best possible price.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the absence of competition removes a key incentive for contractors to offer their lowest possible prices.

Public Impact

The Department of Defense benefits from a consistent supply of high-explosive ordnance for its operations. This contract supports the production of essential munitions for military readiness. The primary geographic impact is in Florida, where the contractor's manufacturing facilities are located. The contract likely supports a specialized manufacturing workforce within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Long contract duration may reduce flexibility to adapt to changing technological needs or market conditions.
Lack of transparency in the sole-source justification requires scrutiny to ensure necessity.
Concentration of production in one location could pose supply chain risks.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Long-term award ensures a stable supply of critical ordnance.
Contractor is a known entity in defense ordnance manufacturing.
Award supports domestic manufacturing capabilities.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on the production of high-explosive ordnance. The market for such specialized munitions is often characterized by limited suppliers due to high barriers to entry, including technical expertise, specialized facilities, and stringent regulatory requirements. Comparable spending benchmarks would involve analyzing other DoD contracts for similar types of ammunition, considering factors like quantity, specifications, and contract type.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary contractor, General Dynamics Ordnance and Tactical Systems, Inc., is expected to fulfill the contract requirements directly or through its own facilities. The absence of small business participation means this contract will not directly contribute to the small business ecosystem within this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods within agreed-upon terms. Transparency is limited due to the sole-source nature of the award, but contract details and performance should be available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
High Explosive Munitions Manufacturing
Defense Industrial Base Contracts
General Dynamics Contracts

Risk Flags

Sole Source Justification
Long-Term Contract
Potential for Price Inflation
Supply Chain Concentration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $105.1 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC.. 120MM EFSS HIGH EXPLOSIVE

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $105.1 million.

What is the period of performance?

Start: 2011-02-01. End: 2017-01-31.

What is the historical spending pattern for high-explosive ordnance by the Department of the Navy?

Analyzing historical spending patterns for high-explosive ordnance by the Department of the Navy is crucial for context. This involves examining prior contracts for similar munitions, noting their duration, value, and whether they were competed or sole-sourced. Significant year-over-year increases or decreases in spending could indicate shifts in strategic priorities, operational tempo, or inventory management. Understanding past pricing trends and the success of previous competition strategies can inform future procurement decisions and highlight potential areas where costs may have been higher than necessary due to limited competition or market fluctuations. Without access to specific historical Navy spending data on this category, it's challenging to provide precise figures, but a trend analysis would typically reveal cycles of large-scale buys for modernization or sustainment, interspersed with smaller, more targeted procurements.

How does the unit cost of this ordnance compare to similar items procured by other branches of the military?

Comparing the unit cost of this ordnance to similar items procured by other military branches is essential for assessing value. However, without specific unit cost data for this $105 million contract, such a comparison is speculative. Factors influencing unit cost include the exact specifications of the explosive, the quantity ordered (larger orders often yield lower per-unit prices), the contract type (firm-fixed-price vs. cost-plus), and the level of competition. If this contract was sole-sourced, it is plausible that the unit cost is higher than if it had been competed. Benchmarking against similar items procured by, for example, the Army or Air Force, would require access to their respective contract databases and detailed specifications to ensure a like-for-like comparison. A significant deviation from established benchmarks could signal an issue with pricing or a unique requirement driving up costs.

What are the specific risks associated with a sole-source award for critical defense materiel?

Sole-source awards for critical defense materiel like high-explosive ordnance carry several inherent risks. Firstly, the lack of competition can lead to inflated prices, as the contractor faces no market pressure to offer the most competitive bid. This can result in taxpayers paying more than necessary. Secondly, it can reduce innovation and efficiency, as the contractor may have less incentive to invest in process improvements or cost-saving measures. Thirdly, it creates a dependency on a single supplier, which can be a significant supply chain vulnerability. If the sole-source contractor experiences production issues, financial instability, or geopolitical disruptions, the availability of critical materiel could be jeopardized, impacting military readiness. Finally, sole-source awards can sometimes be perceived as less transparent, potentially raising concerns about fairness and the justification for foregoing competition.

What is General Dynamics Ordnance and Tactical Systems, Inc.'s track record with similar DoD contracts?

General Dynamics Ordnance and Tactical Systems, Inc. (GD-OTS) has a significant track record with the Department of Defense (DoD) for manufacturing various types of ordnance and tactical systems. They are a well-established prime contractor in the defense industry, frequently awarded contracts for munitions, including artillery shells, mortar rounds, and other explosive devices. Their history with the DoD likely includes numerous firm-fixed-price contracts, reflecting their capability to produce these items at a set cost. Performance reviews and past contract data, often available through federal procurement databases like FPDS or SAM.gov, would provide insights into their on-time delivery rates, quality control, and overall performance on previous agreements. Given their specialization, it is probable that GD-OTS possesses the necessary infrastructure, expertise, and security clearances to fulfill this specific contract effectively.

How does the 5-year duration of this contract impact potential future technological advancements in ordnance?

The 5-year duration of this contract for high-explosive ordnance presents a mixed impact on future technological advancements. On one hand, the long-term commitment ensures a stable demand and production capability for current-generation munitions, which is vital for maintaining military readiness. This stability can allow the contractor to optimize production processes and potentially achieve economies of scale. On the other hand, a lengthy fixed-duration contract might disincentivize rapid adoption of potentially disruptive new technologies during its term. If significant advancements in ordnance technology emerge within the next few years, the DoD might be locked into purchasing older systems until this contract expires, potentially delaying the fielding of more capable or cost-effective solutions. However, the contract could also include provisions for incorporating upgrades or modifications, or the DoD might pursue separate, shorter-term contracts for R&D into next-generation systems.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: M6785410R1001

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 11399 16TH CT N STE 200, SAINT PETERSBURG, FL, 33716

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $105,145,480

Exercised Options: $105,145,480

Current Obligation: $105,145,480

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: M6785411D1011

IDV Type: IDC

Timeline