DoD's $355M Logistics Support Contract Awarded to GM GDLS Defense Group in 2012

Contract Overview

Contract Amount: $355,111,236 ($355.1M)

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

Awarding Agency: Department of Defense

Start Date: 2012-03-01

End Date: 2014-09-30

Contract Duration: 943 days

Daily Burn Rate: $376.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CONTRACTOR LOGISTICS SUPPORT FISCAL YEAR 2012 CALL-UP

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $355.1 million to GM GDLS DEFENSE GROUP, L.L.C. for work described as: CONTRACTOR LOGISTICS SUPPORT FISCAL YEAR 2012 CALL-UP Key points: 1. Contract awarded via a sole-source justification, raising questions about potential cost efficiencies. 2. Significant duration of over two years suggests a substantial and ongoing need for these services. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 4. Awarded to a single vendor, limiting opportunities for competitive pricing and innovation. 5. The specific product service code (PSC) is not detailed, making direct comparisons difficult. 6. Focus on armored vehicle logistics indicates a critical support function for military readiness.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of detailed service descriptions and the sole-source nature of the award. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex services, carries inherent risks of cost escalation if not managed with rigorous oversight. Without comparable sole-source contracts or open market pricing data, it's difficult to definitively assess if the $355 million represents a fair price for the services rendered over its two-year duration. The absence of competition inherently limits the government's ability to secure the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically reserved for situations where only one vendor possesses the necessary capabilities, proprietary technology, or is the only source capable of meeting urgent requirements. The lack of competition means that the Department of the Army did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than might have been achieved otherwise.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure to drive down costs. The sole-source award limits the government's leverage in negotiating favorable terms and pricing.

Public Impact

Directly benefits the Department of the Army by ensuring the operational readiness of military armored vehicles. Provides essential logistical support, including maintenance, repair, and parts management for critical defense assets. Geographic impact is likely concentrated around military installations where these armored vehicles are stationed or maintained. Supports a specialized workforce within GM GDLS Defense Group, likely involving skilled technicians and logistics personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
CPFF contract type carries risk of cost overruns without stringent oversight.
Lack of detailed service description hinders independent value assessment.
Long contract duration increases exposure to potential performance issues over time.

Positive Signals

Addresses a critical need for military vehicle sustainment, contributing to national security.
Awarded to a known defense contractor with presumed expertise in armored vehicle logistics.
Contract duration aligns with the expected lifecycle of support for major defense equipment.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically supporting military vehicle manufacturing and sustainment. The market for defense logistics and sustainment services is substantial, often characterized by long-term contracts with specialized providers. Spending in this area is driven by military readiness requirements and the need to maintain complex, high-value equipment. Comparable spending benchmarks are difficult to establish without more specific details on the services provided, but logistics support for major weapon systems often represents a significant portion of a platform's total lifecycle cost.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information suggesting subcontracting opportunities for small businesses. As a sole-source award to a large defense contractor, the primary focus is likely on direct service delivery rather than fostering small business participation. This contract may not significantly impact the small business ecosystem unless GM GDLS Defense Group voluntarily engages small businesses for specific components or support services.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined by the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature and the proprietary aspects of defense contracting. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Department of Defense Logistics and Maintenance Contracts
Armored Vehicle Sustainment Programs
Military Vehicle Component Manufacturing Support
Cost-Plus-Fixed-Fee Service Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of detailed service scope
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $355.1 million to GM GDLS DEFENSE GROUP, L.L.C.. CONTRACTOR LOGISTICS SUPPORT FISCAL YEAR 2012 CALL-UP

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 $355.1 million.

What is the period of performance?

Start: 2012-03-01. End: 2014-09-30.

What specific logistical services were included under this $355 million contract?

The provided data indicates the contract is for 'CONTRACTOR LOGISTICS SUPPORT FISCAL YEAR 2012 CALL-UP' related to 'Military Armored Vehicle, Tank, and Tank Component Manufacturing.' However, the specific breakdown of services is not detailed. Typically, contractor logistics support for such systems can encompass a wide range of activities including maintenance, repair and overhaul (MRO), spare parts management, technical support, training, field service representatives, and potentially depot-level maintenance. The exact scope would be defined in the contract's Statement of Work (SOW), which is not available in the provided data. Without this SOW, it's impossible to ascertain the precise nature and quantity of services procured.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the requirement. For defense contracts, this could be due to unique proprietary technology, specialized expertise held by only one contractor, urgent and compelling needs where competition is not feasible, or if the requirement is a follow-on to a previous contract where only the original contractor can provide the necessary integration or compatibility. The specific justification for this sole-source award to GM GDLS Defense Group is not provided in the data. However, given the nature of specialized defense contracting, it's plausible that GM GDLS possessed unique capabilities or intellectual property related to the specific armored vehicles being supported.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types for this type of service?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex services where the scope of work is not precisely defined at the outset, making it difficult to establish a firm fixed price. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure shares risks between the government and the contractor. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility but less cost certainty for the government. Compared to Cost-Plus-Incentive-Fee (CPIF) contracts, the profit (fee) is fixed, meaning there's less direct incentive for the contractor to control costs beyond what's necessary to meet performance requirements, unless specific performance incentives are also built in. For logistics support, FFP might be preferred if services are highly standardized, while CPFF or CPIF are more common for evolving or complex sustainment needs.

What is the historical spending trend for contractor logistics support for armored vehicles within the Department of the Army?

Historical spending on contractor logistics support (CLS) for armored vehicles within the Department of the Army is substantial and generally follows trends in military modernization, operational tempo, and equipment sustainment strategies. While specific figures for 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' logistics support are not readily available without deep dives into specific program budgets, the Army consistently allocates significant portions of its budget to maintaining its fleet of ground vehicles. This includes contracts for spare parts, maintenance, repair, overhaul, and technical support. Spending can fluctuate based on deployment cycles, the introduction of new vehicle platforms, and depot maintenance schedules. Over the past decade, there has been a continued emphasis on ensuring readiness, which often translates to sustained or increasing investment in CLS to keep aging fleets operational and new platforms supported.

What are the potential risks associated with a two-year contract for armored vehicle logistics support?

A two-year contract for armored vehicle logistics support, while providing continuity, carries several potential risks. Firstly, the Cost Plus Fixed Fee (CPFF) structure, as used here, can lead to cost overruns if the contractor does not diligently manage expenses, as their profit is fixed regardless of the final cost. Secondly, a sole-source award eliminates competitive pressure, potentially resulting in less favorable pricing and service levels over the contract's duration. Thirdly, over a two-year period, the specific needs or technological landscape might evolve, and a rigid contract might not adapt efficiently. Finally, performance degradation or unforeseen issues with the contractor's capabilities could arise, and the government's options for recourse or switching providers would be limited due to the sole-source nature, potentially impacting vehicle readiness.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $355,111,236

Exercised Options: $355,111,236

Current Obligation: $355,111,236

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV07DM112

IDV Type: IDC

Timeline