DoD awards $828M for fuel tanks, with General Dynamics leading armored vehicle component manufacturing

Contract Overview

Contract Amount: $828,168,500 ($828.2M)

Contractor: General Dynamics Land Systems - Canada Corporation

Awarding Agency: Department of Defense

Start Date: 2010-06-29

End Date: 2014-01-28

Contract Duration: 1,309 days

Daily Burn Rate: $632.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FRSS FUEL TANK AND RELOCATION - MATERIAL

Place of Performance

Location: LANSING, INGHAM County, MICHIGAN, 48901

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $828.2 million to GENERAL DYNAMICS LAND SYSTEMS - CANADA CORPORATION for work described as: FRSS FUEL TANK AND RELOCATION - MATERIAL Key points: 1. Contract value represents significant investment in armored vehicle sustainment and upgrades. 2. Sole awardee suggests specialized capabilities or intense competition for this specific requirement. 3. Long contract duration indicates a sustained need for these critical components. 4. Fixed-price contract type shifts performance risk to the contractor. 5. This award falls within the broader category of military vehicle manufacturing and support. 6. The contract's scale points to a substantial portion of the Navy's budget allocated to this area.

Value Assessment

Rating: good

The contract value of over $828 million for fuel tanks and relocation is substantial. Benchmarking against similar contracts for armored vehicle components is challenging without more specific details on the scope of 'relocation' and the exact type of fuel tanks. However, the fixed-price nature of the award suggests that the government has negotiated a price upfront, aiming for cost certainty. The number of bids received (10) indicates a degree of market interest, which can be a positive sign for value, though the final price is what matters most.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with 10 bids received. This indicates that multiple capable vendors were able to compete for the requirement, suggesting a healthy market for these specialized components. The presence of numerous bidders generally fosters price competition, which should theoretically lead to more favorable pricing for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: The full and open competition with 10 bidders is beneficial for taxpayers as it likely drove down the final contract price through competitive bidding, ensuring a better return on investment for this significant expenditure.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense requiring armored vehicle sustainment. The contract delivers essential fuel tank systems and relocation services for military vehicles. The geographic impact is primarily tied to the contractor's facilities and the deployment locations of the affected military vehicles. Workforce implications include employment opportunities at General Dynamics Land Systems - Canada Corporation and its subcontractors, particularly in manufacturing and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 3 years) could lead to potential cost overruns if market conditions change significantly.
Reliance on a single awardee for a large value contract, even with prior competition, concentrates risk.
The specific nature of 'relocation' services is not detailed, which could hide scope creep or unforeseen complexities.
Dependence on specific manufacturing capabilities for armored vehicle components can create bottlenecks if demand surges.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Fixed-price contract type provides cost certainty for the government.
The contractor, General Dynamics, is a well-established entity in defense manufacturing.
Multiple bidders (10) suggest a competitive market for these types of components.
The contract addresses a critical need for military vehicle operational readiness.

Sector Analysis

This contract falls within the broader defense industrial base, specifically the manufacturing sector for armored vehicles and their components. The market for military vehicle parts is characterized by high technical specifications, stringent quality control, and often long-term sustainment requirements. General Dynamics Land Systems is a major player in this sector. Comparable spending benchmarks would typically be found within other large-scale sustainment or upgrade contracts for ground combat vehicles.

Small Business Impact

The data indicates that small business participation was not a primary set-aside consideration for this contract (ss: false, sb: false). While General Dynamics Land Systems is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on General Dynamics' internal policies and the specific requirements of the fuel tank and relocation services, which are not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a large, multi-year contract, it likely involves regular reporting requirements from the contractor, performance reviews, and potentially audits. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this award.

Related Government Programs

Armored Vehicle Manufacturing
Military Vehicle Sustainment
Defense Logistics
Department of the Navy Procurement
Ground Combat Vehicle Components

Risk Flags

Potential for cost overruns due to long contract duration.
Lack of specific detail on 'relocation' services.
Concentration of award to a single entity.
Limited insight into specific performance metrics and historical comparisons.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $828.2 million to GENERAL DYNAMICS LAND SYSTEMS - CANADA CORPORATION. FRSS FUEL TANK AND RELOCATION - MATERIAL

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS LAND SYSTEMS - CANADA CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $828.2 million.

What is the period of performance?

Start: 2010-06-29. End: 2014-01-28.

What is the specific nature of the 'relocation' service included in the contract, and how does it impact the overall cost and scope?

The provided data does not specify the exact nature of the 'relocation' service. This could range from relocating existing fuel tanks within a vehicle chassis to moving production facilities or specialized equipment related to fuel tank manufacturing. Without further clarification, it is difficult to assess its cost contribution or potential risks. If it involves physical relocation of tanks on existing platforms, it could imply upgrades or modifications. If it pertains to manufacturing site logistics, it speaks more to the contractor's operational setup. Understanding this detail is crucial for a complete value assessment and risk analysis, as it could represent a significant, yet undefined, portion of the $828 million award.

How does the unit cost of these fuel tanks compare to similar components procured by other military branches or allied nations?

Direct unit cost comparison is not feasible with the provided data alone. The contract value of $828 million is for a large quantity of fuel tanks and relocation services over a multi-year period, not a simple per-unit price. To benchmark, one would need to identify the specific type and specifications of the fuel tanks (e.g., material, capacity, resistance ratings), the quantity procured under this contract, and then compare that derived unit cost against publicly available data for similar components. Factors like technological sophistication, volume discounts, and the inclusion of associated services (like relocation) heavily influence unit pricing, making direct apples-to-apples comparisons challenging without granular detail.

What is General Dynamics Land Systems - Canada Corporation's track record with similar large-scale defense manufacturing contracts, particularly regarding performance and delivery?

General Dynamics Land Systems (GDLS) has a long and extensive history in the defense sector, particularly in the manufacturing of armored vehicles and related systems. They are known for producing platforms like the Abrams Main Battle Tank and the Stryker family of vehicles. Their track record with large-scale contracts is generally robust, marked by significant program deliveries. However, like many large defense contractors, they have faced scrutiny and challenges on specific programs related to cost, schedule, and technical performance. For this specific contract involving fuel tanks, GDLS's established expertise in vehicle systems suggests a strong capability, but performance history on prior, comparable component manufacturing contracts would offer a more precise assessment.

Given the $828 million value and 10 bidders, what is the estimated cost avoidance for the government due to this competitive process?

Estimating precise cost avoidance from a competitive process is complex and often relies on internal government analysis or comparisons to non-competed scenarios. However, with 10 bidders participating in a full and open competition for an $828 million contract, it is reasonable to infer significant cost avoidance. Typically, competitive bidding drives prices down by 10-30% or more compared to sole-source awards, depending on the market maturity and specificity of the requirement. If we conservatively estimate a 15% cost reduction due to competition, the government could have saved approximately $124 million ($828M * 0.15). This figure represents potential savings that would likely have been incurred if the contract had been awarded without robust competition.

What are the key performance indicators (KPIs) used to measure the success of this contract, and how has the contractor performed against them?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. Typically, for defense manufacturing contracts like this, KPIs would likely include metrics related to on-time delivery, quality acceptance rates (e.g., defect rates below a certain threshold), adherence to technical specifications, and potentially cost control within the fixed-price framework. Performance against these KPIs would be monitored by the contracting officer's representative (COR) and documented in contract performance reports. Without access to these reports or the contract's statement of work, assessing GDLS's performance against specific KPIs is not possible from the given information.

How does this contract's spending compare to historical trends for military armored vehicle fuel systems over the past decade?

This contract represents a significant single award, totaling over $828 million. To compare it to historical trends, one would need to aggregate spending data for similar 'fuel tank' and 'armored vehicle component' procurements by the Department of Defense over the last decade. This specific award, being a large, multi-year contract, likely represents a substantial portion of annual spending in this niche category. If historical annual spending for such components averaged, for example, $100-$200 million, then this single award is exceptionally large, potentially indicating a major program upgrade, a large fleet-wide replacement initiative, or a consolidation of previously fragmented requirements.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: M6785407R5000

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 1991 OXFORD ST E BLDG 15, LONDON

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $828,168,500

Exercised Options: $828,168,500

Current Obligation: $828,168,500

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785407D5028

IDV Type: IDC

Timeline