Over $519 million awarded to General Dynamics for Abrams tank upgrades, a sole-source contract

Contract Overview

Contract Amount: $519,014,030 ($519.0M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2006-08-01

End Date: 2013-06-28

Contract Duration: 2,523 days

Daily Burn Rate: $205.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200612!007834!2100!W56HZV!TACOM - WARREN !W56HZV06G0006 !A!N! !N!0001 ! !20060801!20091130!131266926!131266926!001381284!N!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACOMB !MICHIGAN !+000134690764!N!N!000000000000!2350!COMBAT ASSAULT & TACTICAL VEH, TRACKED !A4A!COMBAT VEHICLES !575 !ABRAMS UPGRADE !336992!E! !4! ! ! ! ! !99990909!B! ! !A! !C!N!J!1!001!N!1G!A!Y!F! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! !Y! ! !0001! !

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $519.0 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: 200612!007834!2100!W56HZV!TACOM - WARREN !W56HZV06G0006 !A!N! !N!0001 ! !20060801!20091130!131266926!131266926!001381284!N!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACO… Key points: 1. Significant investment in armored vehicle modernization, indicating a focus on maintaining technological superiority. 2. Sole-source award raises questions about potential cost efficiencies and market competition. 3. Long contract duration suggests a sustained need for Abrams tank upgrades and support. 4. Contract value represents a substantial portion of the overall spending in the combat vehicle sector. 5. Geographic concentration of the contractor in Michigan may have local economic implications.

Value Assessment

Rating: questionable

The contract value of over $519 million for Abrams tank upgrades is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition inherently limits the government's ability to secure the best possible price. Further analysis would be needed to determine if the awarded price reflects fair and reasonable costs for the services and equipment provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or is the sole provider of a required item. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple sources.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price. This limits the government's leverage in price negotiations.

Public Impact

The primary beneficiaries are the U.S. Army, which receives upgraded Abrams main battle tanks, enhancing its combat readiness. Services delivered include the upgrade and modification of combat vehicles, ensuring they meet current and future operational requirements. The geographic impact is concentrated in Michigan, where General Dynamics Land Systems is headquartered and likely performs much of the work, potentially supporting local jobs and the regional economy. Workforce implications include the employment of skilled engineers, technicians, and manufacturing personnel involved in the complex process of tank modernization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated costs for taxpayers.
Sole-source nature limits opportunities for smaller businesses to participate.
Long-term reliance on a single contractor could reduce flexibility and increase vendor lock-in.

Positive Signals

Ensures continued modernization of a critical military asset (Abrams tank).
Provides stability and predictability for a key defense contractor.
Supports specialized manufacturing capabilities essential for national defense.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on armored vehicle manufacturing and modernization. The market for military vehicles is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long development cycles. Spending in this area is driven by geopolitical factors and the need to maintain a technological edge. Comparable spending benchmarks would typically involve other major defense contracts for vehicle procurement and upgrades.

Small Business Impact

As a sole-source award, this contract does not appear to include specific small business set-asides. There is no explicit indication of subcontracting plans for small businesses within the provided data. This limits direct opportunities for small businesses to participate in this specific contract, though they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and auditing mechanisms. The Army Contracting Command would be responsible for monitoring performance and compliance. Transparency is limited due to the sole-source nature, but contract modifications and performance reports are usually subject to internal review and potentially Inspector General oversight if issues arise.

Related Government Programs

Abrams Main Battle Tank Program
Army Combat Vehicle Modernization
Defense Procurement
Heavy Armored Vehicle Manufacturing

Risk Flags

Sole-source award limits price competition.
Lack of transparency in pricing due to sole-source nature.
Potential for cost overruns without competitive pressure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $519.0 million to GENERAL DYNAMICS LAND SYSTEMS INC.. 200612!007834!2100!W56HZV!TACOM - WARREN !W56HZV06G0006 !A!N! !N!0001 ! !20060801!20091130!131266926!131266926!001381284!N!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACOMB !MICHIGAN !+000134690764!N!N!000000000000!2350!COMBAT ASSAULT & TACTICAL VEH, TRACKED !A4A!COMBAT VEHICLES !575 !ABRAMS UPGRADE !336992!E! !4! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS LAND SYSTEMS INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $519.0 million.

What is the period of performance?

Start: 2006-08-01. End: 2013-06-28.

What is the historical spending trend for Abrams tank upgrades with General Dynamics Land Systems?

Historical spending data for Abrams tank upgrades with General Dynamics Land Systems (GDLS) reveals a consistent and significant investment over the years. While this specific contract (NA 336992) spans from August 2006 to November 2013 with a value exceeding $519 million, it represents one of many engagements between the Army and GDLS for the Abrams platform. The Army has continuously funded upgrades to the Abrams tank to maintain its combat effectiveness and incorporate new technologies, such as improved armor, fire control systems, and power plants. GDLS, as the original equipment manufacturer and primary sustainment provider for the Abrams, has been the recipient of numerous contracts, including competitive ones for specific upgrade packages and sole-source awards for sustainment and unique modernization efforts. Analyzing broader spending patterns shows a multi-billion dollar lifecycle investment in the Abrams fleet, with upgrade contracts forming a substantial component of this expenditure.

How does the per-unit cost of this Abrams upgrade compare to other modernization efforts?

Determining an exact per-unit cost for this specific Abrams upgrade contract is challenging without detailed breakdowns of the number of units upgraded and the specific modifications included. The total award of over $519 million covers a period of approximately 7.5 years, suggesting a significant number of vehicles were likely involved. However, comparing this to other modernization efforts requires access to similar granular data, which is often not publicly available. Generally, Abrams upgrade costs can vary widely depending on the specific block upgrade (e.g., SEPv2, SEPv3) and the scope of work, ranging from hundreds of thousands to millions of dollars per tank. Given the sole-source nature of this contract and the lack of specific unit counts, a precise per-unit benchmark against other efforts is not feasible with the provided data. However, the substantial total value indicates a significant investment per vehicle.

What are the key performance indicators (KPIs) used to assess the success of this contract?

Key performance indicators (KPIs) for a contract like this, focused on military vehicle upgrades, typically revolve around meeting technical specifications, adhering to delivery schedules, and ensuring the operational readiness of the upgraded platforms. Specific KPIs would likely include: 1) **Technical Performance:** Ensuring the upgraded tanks meet or exceed all specified performance requirements, such as improved survivability, lethality, and mobility. This is often verified through rigorous testing and evaluation. 2) **Schedule Adherence:** Meeting key milestones for design, production, testing, and delivery of upgraded vehicles. Delays can impact operational deployment plans. 3) **Quality Assurance:** Minimizing defects and ensuring the reliability of the upgraded systems through robust quality control processes. 4) **Cost Control:** While this is a sole-source contract, there would still be expectations for the contractor to manage costs effectively within the awarded ceiling, though price reasonableness is harder to assess without competition. 5) **Operational Readiness:** Ultimately, the success is measured by the extent to which the upgraded Abrams tanks enhance the Army's combat capability and readiness.

What is the track record of General Dynamics Land Systems in delivering complex military vehicle programs?

General Dynamics Land Systems (GDLS) has a long and extensive track record of delivering complex military vehicle programs, most notably as the prime contractor for the M1 Abrams Main Battle Tank. They have been responsible for the production, sustainment, and modernization of the Abrams fleet for decades, demonstrating a deep understanding of the platform and its evolving requirements. GDLS has successfully managed numerous upgrade programs, incorporating advanced technologies to keep the Abrams relevant on the modern battlefield. Beyond the Abrams, their portfolio includes other significant programs such as the Stryker family of vehicles. While they possess a strong capability, like any large defense contractor, they have also faced challenges related to program execution, cost overruns, and schedule delays on various projects over their history. However, their sustained role as a primary provider of heavy armored vehicles to the U.S. Army underscores their established expertise and capacity.

Are there any known risks associated with the sole-source nature of this contract?

Yes, there are several known risks associated with the sole-source nature of this contract. The primary risk is **reduced price competition**, which can lead to the government paying a higher price than if the contract had been competed. Without competing bids, there is less incentive for the contractor to offer the lowest possible price, and the government's negotiating leverage is diminished. Another risk is **potential for complacency or reduced innovation** from the sole provider, as they face less pressure from competitors to improve their offerings or efficiency. Furthermore, **vendor lock-in** can occur, making it difficult and costly to switch to alternative providers or technologies in the future. There's also a risk that the government may not be fully aware of the most cost-effective solutions available in the broader market. Finally, sole-source awards can sometimes face greater scrutiny regarding **fairness and reasonableness of cost**.

What is the strategic importance of upgrading the Abrams tank fleet?

The strategic importance of upgrading the Abrams tank fleet is multifaceted and critical for maintaining U.S. military dominance and readiness. The Abrams is the backbone of the U.S. Army's armored force, and continuous upgrades are essential to ensure it can counter evolving threats on the modern battlefield. Key aspects of its strategic importance include: 1) **Maintaining Lethality and Survivability:** Upgrades incorporate advanced armor, improved weaponry, and better defensive systems to protect crews and enhance combat effectiveness against peer and near-peer adversaries. 2) **Technological Superiority:** Modernization efforts integrate new technologies, such as advanced sensors, networking capabilities, and potentially AI-driven systems, ensuring the Abrams remains technologically superior to potential adversaries' platforms. 3) **Force Projection and Deterrence:** A modern, capable armored force is a powerful tool for deterrence and projecting U.S. power globally. The Abrams' presence reassures allies and signals U.S. commitment. 4) **Adaptability:** Upgrades allow the platform to adapt to new mission requirements and operational environments, extending its service life and maximizing the return on the initial investment. Failure to upgrade would risk rendering the fleet obsolete and vulnerable.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 38500 MOUND RD, STERLING HEIGH, MI, 48310

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV06G0006

IDV Type: IDC

Timeline