Department of Defense awards $213M contract for combat vehicles, with a significant portion for armored vehicle manufacturing

Contract Overview

Contract Amount: $213,130,703 ($213.1M)

Contractor: GM Gdls Defense Group, L.L.C.

Awarding Agency: Department of Defense

Start Date: 2002-09-19

End Date: 2018-11-15

Contract Duration: 5,901 days

Daily Burn Rate: $36.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 17

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200212!003023!2100!AE07 !TACOM - WARREN !DAAE0700DM051 !A!N! !N!0018 !20020919!20080930!098155158!098155158!098155158!N!GM GDLS DEFENSE GROUP LLC, JV !14920 TWENTY-THREE MILE RO!SHELBY TOWNSHI !MI!48315!76460!099!26!STERLING HEIGHTS !MACOMB !MICHIGAN !+000034800000!N!N!000000000000!2320!TRUCKS AND TRUCK TRACTORS, WHEELED !A4A!COMBAT VEHICLES !1000!NOT DISCERNABLE OR CLASSIFIED !336992!E! !5!A!S! ! ! !99990909!B! ! !A! !A!U!U!2!017!B! !A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001!

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $213.1 million to GM GDLS DEFENSE GROUP, L.L.C. for work described as: 200212!003023!2100!AE07 !TACOM - WARREN !DAAE0700DM051 !A!N! !N!0018 !20020919!20080930!098155158!098155158!098155158!N!GM GDLS DEFENSE GROUP LLC, JV !14920 TWENTY-THREE MILE RO!SHELBY TOWNSHI !MI!48315!76460!099!26!STERLING HEIGHTS !MACOM… Key points: 1. Contract value of over $213 million for combat vehicles, primarily focused on armored vehicle manufacturing. 2. Awarded to GM GDLS Defense Group LLC, JV, indicating a specific contractor's role in defense production. 3. The contract spans nearly 6 years, suggesting a long-term need for these specialized vehicles. 4. Competition was full and open, implying a potentially competitive bidding process that could benefit taxpayers. 5. The contract falls under the 'Trucks and Truck Tractors, Wheeled' product service code, highlighting its specific military application. 6. The primary place of performance is Michigan, indicating a concentration of defense manufacturing in that state.

Value Assessment

Rating: good

The contract's total value of $213,130,702.83 over its duration suggests a substantial investment in military hardware. Benchmarking this against similar contracts for armored vehicles would provide a clearer picture of value for money. The 'Cost Plus Fixed Fee' pricing structure means the government pays the contractor's costs plus a fixed fee, which can sometimes lead to cost overruns if not managed tightly. However, the full and open competition may have helped to mitigate excessive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, meaning all responsible sources were permitted to submit bids. The data indicates 17 bids were received, suggesting a robust level of competition. A higher number of bidders generally leads to better price discovery and potentially lower costs for the government, as contractors vie to win the award.

Taxpayer Impact: The full and open competition for this significant defense contract is beneficial for taxpayers as it likely resulted in more competitive pricing and a wider range of innovative solutions being considered.

Public Impact

The primary beneficiaries are the U.S. Army, which will receive advanced combat vehicles essential for national defense. The services delivered include the manufacturing and supply of wheeled trucks and truck tractors, specifically combat vehicles. The geographic impact is concentrated in Michigan, where the contractor is located and likely where much of the manufacturing will occur. This contract supports jobs within the defense manufacturing sector, particularly in Michigan, contributing to the local and national economy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to incur higher costs to achieve a larger fixed fee if not carefully monitored.
The duration of the contract (nearly 6 years) requires sustained oversight to ensure performance remains on track and costs are controlled.
While competition was robust, the specific nature of combat vehicle manufacturing may limit the number of truly capable bidders in the long run.

Positive Signals

Full and open competition indicates a healthy market and potentially competitive pricing.
The award to a joint venture (GM GDLS Defense Group LLC, JV) might suggest a collaborative approach to complex defense manufacturing.
The contract is for essential combat vehicles, directly supporting military readiness and national security objectives.

Sector Analysis

The defense industrial base is a critical sector for national security, with significant government spending allocated to the procurement of advanced weaponry and vehicles. The market for combat vehicles is specialized, often dominated by a few large prime contractors and their supply chains. This contract for wheeled combat vehicles fits within the broader category of military vehicle manufacturing, a segment that requires advanced engineering, manufacturing capabilities, and adherence to stringent military specifications. Comparable spending benchmarks would involve analyzing other large-scale awards for similar armored or tactical vehicles within the Department of Defense.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). While the primary awardee is a joint venture, it is likely composed of larger entities. There is no explicit information on subcontracting plans for small businesses within this data, which could be a missed opportunity to engage the small business defense industrial base. Further investigation into subcontracting goals would be necessary to assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically the Department of the Army. The 'Cost Plus Fixed Fee' nature of the contract necessitates close monitoring of incurred costs and the contractor's performance against the fixed fee. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive.

Related Government Programs

Armored Vehicle Procurement
Combat Systems Manufacturing
Wheeled Vehicle Production
Defense Logistics Agency Contracts
Army Ground Vehicle Programs

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Long contract duration necessitates sustained performance monitoring.
Potential for supply chain disruptions in specialized defense manufacturing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $213.1 million to GM GDLS DEFENSE GROUP, L.L.C.. 200212!003023!2100!AE07 !TACOM - WARREN !DAAE0700DM051 !A!N! !N!0018 !20020919!20080930!098155158!098155158!098155158!N!GM GDLS DEFENSE GROUP LLC, JV !14920 TWENTY-THREE MILE RO!SHELBY TOWNSHI !MI!48315!76460!099!26!STERLING HEIGHTS !MACOMB !MICHIGAN !+000034800000!N!N!000000000000!2320!TRUCKS AND TRUCK TRACTORS, WHEELED !A4A!COMBAT VEHICLES !1000!NOT DISCERNABLE OR CLASSIFIED !336992!E! !5!A!S! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is GM GDLS DEFENSE GROUP, L.L.C..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $213.1 million.

What is the period of performance?

Start: 2002-09-19. End: 2018-11-15.

What is the historical spending trend for similar combat vehicles by the Department of the Army?

Analyzing historical spending trends for similar combat vehicles by the Department of the Army requires access to comprehensive historical contract data. Typically, the Army procures combat vehicles through a mix of competitive bids and sole-source contracts, often spanning multiple years. Spending can fluctuate based on evolving military requirements, geopolitical events, and budget allocations. For instance, periods of active conflict or heightened global tensions often see increased investment in armored vehicle programs. Conversely, periods of drawdown or budget austerity may lead to reduced procurement. Examining the Army's budget requests and contract awards over the past decade would reveal patterns in investment for wheeled combat vehicles, identifying peak spending years and the average contract values for comparable systems. This specific contract's value of over $213 million should be viewed within this broader historical context to assess if it represents a typical, increased, or decreased level of investment.

How does the 'Cost Plus Fixed Fee' pricing structure compare to other contract types used for defense vehicle acquisition?

The 'Cost Plus Fixed Fee' (CPFF) contract type is one of several used by the Department of Defense for acquiring goods and services, including defense vehicles. In a CPFF contract, the government reimburses the contractor for all allowable costs incurred during the performance of the contract, plus a predetermined fixed fee representing the contractor's profit. This structure is often used when the scope of work is not precisely defined, or when there is significant uncertainty in the costs involved, such as in research and development or the production of novel systems. Compared to other contract types like 'Fixed Price Incentive' (FPI) or 'Firm Fixed Price' (FFP), CPFF offers less cost certainty for the government. FFP contracts provide the most cost certainty as the price is fixed regardless of the actual costs incurred. FPI contracts share costs and profits with the government based on performance against targets. While CPFF can be advantageous for acquiring complex or innovative systems where cost estimation is difficult, it places a greater emphasis on robust government oversight to control costs and ensure value for money, as the contractor has less financial incentive to minimize expenses compared to fixed-price arrangements.

What are the key performance indicators (KPIs) typically monitored for contracts involving the manufacturing of combat vehicles?

Key Performance Indicators (KPIs) for contracts involving the manufacturing of combat vehicles are crucial for ensuring timely delivery, quality, and adherence to specifications. Common KPIs include: 1. **Delivery Schedule Adherence:** Tracking the percentage of vehicles delivered on time according to the contract schedule. Delays can significantly impact military readiness. 2. **Quality and Defect Rate:** Monitoring the number of defects or non-conformances identified during production, testing, and acceptance. This includes tracking the rate of critical, major, and minor defects per vehicle or per production lot. 3. **Cost Performance:** For CPFF contracts, monitoring the actual costs incurred against the estimated costs and ensuring they remain within acceptable variances. This involves tracking labor hours, material costs, and overhead. 4. **Technical Performance:** Ensuring the vehicles meet all specified technical requirements, including performance metrics (e.g., speed, range, survivability), reliability, and maintainability. This often involves successful completion of government testing and trials. 5. **Production Rate:** Measuring the number of vehicles produced per unit of time (e.g., per month) to ensure the contractor can meet projected demand. 6. **Safety Performance:** Tracking incident rates and adherence to safety protocols during the manufacturing process. Effective monitoring of these KPIs allows the government to proactively identify and address p

What is the significance of the Product Service Code (PSC) '336992' for 'Trucks and Truck Tractors, Wheeled' in the context of this contract?

The Product Service Code (PSC) '336992' specifically designates 'Trucks and Truck Tractors, Wheeled' within the federal procurement system. In the context of this $213 million Department of Defense contract awarded to GM GDLS Defense Group LLC, JV, this PSC is highly significant. It indicates that the contract is for the procurement of wheeled vehicles that function as trucks and truck tractors, but with a clear emphasis on their military application, as evidenced by the broader contract description of 'Combat Vehicles'. This suggests these are not standard commercial trucks but rather specialized, likely armored or otherwise militarized, vehicles designed for battlefield operations, troop transport, or logistical support in demanding environments. The '33' series of PSCs generally relates to 'Ground Effect Vehicles, Except Amphibious', and '6992' refines this to wheeled trucks and tractors. Therefore, this PSC, combined with the contract's description, points to the acquisition of robust, mission-specific wheeled military vehicles critical for Army operations.

What is the potential impact of awarding a large contract like this to a joint venture (JV)?

Awarding a large defense contract to a joint venture (JV), such as GM GDLS Defense Group LLC, JV, can have several implications. JVs are often formed to combine the unique strengths, expertise, and resources of multiple companies to tackle complex projects that might be too large or challenging for a single entity. In this case, it likely brings together the capabilities of General Motors Defense (GM) and General Dynamics Land Systems (GDLS), both significant players in the defense vehicle market. This collaboration can lead to enhanced innovation, shared risk, and potentially more efficient production by leveraging specialized technologies or manufacturing processes from each partner. For the government, a JV might offer access to a broader range of capabilities and a more resilient supply chain. However, managing a JV contract can also introduce complexities in terms of communication, decision-making, and accountability. Ensuring clear lines of responsibility and effective coordination between the JV partners is crucial for successful contract performance and oversight.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 17

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $67,273

Exercised Options: $67,273

Current Obligation: $213,130,703

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAE0700DM051

IDV Type: IDC

Timeline