Over $1 billion awarded to General Dynamics for Abrams tank production and support over 7 years

Contract Overview

Contract Amount: $1,081,997,452 ($1.1B)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 1996-11-21

End Date: 2003-09-30

Contract Duration: 2,504 days

Daily Burn Rate: $432.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 199707!2100!0546!AE07 !USA TANK-AUTOMOTIVE & ARMAMENTS !DAAE0795C0292 !A!*!A00011 !19961121!19961211!131266926!131266926!001381284!N!7W356!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACOMB !MICHIGAN !0001!-000000282092!N!N!000000000000!2350!COMBAT ASSAULT & TACTICAL VEH, TRACKED !A4A!COMBAT VEHICLES !1DJN!ABRAMS SERIES (M1/M1A1/M1A2) !3795!3!*!*!C!B!A!*!D !N!J!1!001!N!1G!A!Y!D!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $1.08 billion to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: 199707!2100!0546!AE07 !USA TANK-AUTOMOTIVE & ARMAMENTS !DAAE0795C0292 !A!*!A00011 !19961121!19961211!131266926!131266926!001381284!N!7W356!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACOMB… Key points: 1. Contract value represents significant investment in armored vehicle sustainment and modernization. 2. Sole-source award suggests limited competition, potentially impacting price negotiation. 3. Long contract duration indicates a sustained need for Abrams platform support. 4. Awarded by the Department of the Army, highlighting a critical defense capability. 5. Focus on combat vehicles positions this contract within a key defense sector.

Value Assessment

Rating: fair

The total award of over $1 billion for Abrams tank production and support over a seven-year period is substantial. Benchmarking this against similar long-term defense vehicle contracts is challenging due to the unique nature of major weapon system sustainment. However, the firm-fixed-price structure aims to control costs, but the lack of competition in this sole-source award raises questions about whether the government achieved the best possible pricing. Further analysis would require detailed cost breakdowns and comparisons to historical Abrams program costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to General Dynamics Land Systems, indicating that the Department of the Army determined no other source could fulfill the requirement. This often occurs with highly specialized or proprietary systems where only one contractor possesses the necessary technical expertise, intellectual property, or manufacturing capabilities. The lack of competition means that price discovery through a bidding process was bypassed, relying instead on negotiation and cost analysis.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure that could drive down prices. While the government may conduct negotiations, the potential for savings through a competitive process is lost.

Public Impact

Benefits the U.S. Army by ensuring the continued readiness and modernization of its Abrams main battle tanks. Provides essential production, spare parts, and support services for a critical component of ground warfare. Impacts the defense industrial base, particularly in Michigan where General Dynamics Land Systems has significant operations. Supports a specialized workforce involved in the manufacturing, engineering, and maintenance of advanced armored vehicles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing advantages for the government.
Long-term nature of the contract may reduce flexibility in adapting to future technological changes without renegotiation.
Potential for cost overruns if not meticulously managed, despite firm-fixed-price structure.

Positive Signals

Ensures continued availability of a vital defense asset (Abrams tanks).
Provides stable, long-term support for a key military platform.
Leverages the specialized expertise of the incumbent contractor, General Dynamics Land Systems.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on combat vehicles. The market for major armored vehicle production and sustainment is highly concentrated, with a few prime contractors dominating. General Dynamics Land Systems is a key player in this niche. Spending on such platforms is cyclical and driven by defense budgets, modernization priorities, and geopolitical factors. Comparable spending benchmarks would typically involve other major weapon system production contracts or long-term sustainment agreements for similar platforms.

Small Business Impact

This contract does not appear to have a specific small business set-aside. However, as a large prime contractor, General Dynamics Land Systems is likely to engage small businesses as subcontractors for various components and services. The extent of small business participation would depend on the subcontracting plan negotiated with the prime contractor, which is a standard requirement for major defense contracts.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army's contracting and program management offices. The Defense Contract Management Agency (DCMA) would likely provide on-site oversight for production and quality assurance. Transparency is generally maintained through contract awards databases, but detailed cost performance reports are often considered sensitive. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Abrams Tank Program
Combat Vehicle Modernization
Department of the Army Procurement
Defense Logistics Agency Support
Armored Vehicle Production Contracts

Risk Flags

Sole-source award may limit cost savings.
Long contract duration requires sustained oversight.
Dependency on a single contractor for critical defense asset.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.08 billion to GENERAL DYNAMICS LAND SYSTEMS INC.. 199707!2100!0546!AE07 !USA TANK-AUTOMOTIVE & ARMAMENTS !DAAE0795C0292 !A!*!A00011 !19961121!19961211!131266926!131266926!001381284!N!7W356!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACOMB !MICHIGAN !0001!-000000282092!N!N!000000000000!2350!COMBAT ASSAULT & TACTICAL VEH, TRACKED !A4A!COMBAT VEHICLES !1DJN!ABRAMS SERIES (M1/M1A1/M1A2) !3795!3!*!*!C!B!A!*!D !N!J!1!0

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 $1.08 billion.

What is the period of performance?

Start: 1996-11-21. End: 2003-09-30.

What is the historical spending trend for the Abrams tank program under General Dynamics Land Systems?

The provided data indicates a significant award of over $1 billion from 1996 to 2003 for Abrams tank production and support. To understand the historical trend, one would need to examine contract awards over a longer period, including previous contracts for Abrams production, upgrades, and sustainment awarded to General Dynamics Land Systems and potentially its predecessors or competitors. Analyzing annual spending, contract modifications, and the evolution of contract types (e.g., from R&D to full-rate production to sustainment) would reveal patterns related to modernization cycles, fleet size, and operational tempo. This specific contract's duration and value suggest a substantial, ongoing commitment to the platform during that era.

How does the per-unit cost of Abrams tanks under this contract compare to industry benchmarks or other government contracts?

Determining a precise per-unit cost benchmark for Abrams tanks under this specific contract is complex. The total award of over $1 billion covers production, spare parts, and support services over several years, not just new tank units. Furthermore, the contract is sole-source, limiting direct comparison through competitive bidding. To assess value, one would need to isolate the cost of newly produced tanks versus sustainment costs and compare these figures to historical Abrams unit costs, costs of similar heavy armored vehicles from other nations, or projections based on manufacturing efficiency. The firm-fixed-price nature suggests an attempt to cap costs, but without detailed breakdowns, a definitive per-unit cost comparison against market rates is difficult.

What are the key performance indicators (KPIs) used to measure the success of this Abrams tank support contract?

While the specific KPIs are not detailed in the provided data, typical performance indicators for major defense weapon system sustainment contracts include: readiness rates (percentage of operational tanks), Mean Time Between Failures (MTBF) for critical components, Mean Time To Repair (MTTR), delivery timeliness for spare parts, contractor performance metrics (e.g., quality of work, adherence to schedule), and cost performance against budget. For production aspects, KPIs would focus on production rate, defect rates, and adherence to technical specifications. The Department of the Army would establish these KPIs in the contract's Performance Work Statement (PWS) to ensure the contractor meets the required levels of availability and maintainability for the Abrams fleet.

What is the risk associated with relying on a single contractor (General Dynamics Land Systems) for such a critical defense system?

The primary risk associated with relying on a single contractor for a critical defense system like the Abrams tank is the potential for reduced leverage in price negotiations and a lack of competitive innovation. If General Dynamics Land Systems were to face production issues, financial instability, or significantly increase prices, the Department of the Army would have limited immediate alternatives, potentially impacting readiness. This sole-source arrangement necessitates robust government oversight, including thorough cost analysis and performance monitoring, to mitigate these risks. Dependency also means the government must ensure the contractor maintains the necessary industrial base and technical expertise over the long term.

How has the scope of work or total value of Abrams-related contracts evolved since this 1996-2003 award?

This contract, awarded in 1996 and ending in 2003 with a value exceeding $1 billion, represents a significant period of Abrams tank sustainment and potentially production. Since then, the Abrams platform has undergone numerous upgrades (e.g., M1A2 SEPv2, SEPv3, SEPv4) to maintain its technological edge. Subsequent contracts would likely reflect these modernization efforts, potentially involving different contract structures, values, and durations. Analyzing post-2003 contracts would reveal shifts in focus from basic sustainment to incorporating new technologies, addressing evolving threats, and potentially different competitive landscapes for upgrade packages or new production runs. The overall value and scope have likely continued to be substantial, reflecting the Abrams' central role in the Army's armored force.

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

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

Timeline