DoD awards $14.6M for electronic components, raising questions about competition and value

Contract Overview

Contract Amount: $14,614,377 ($14.6M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2004-05-06

End Date: 2008-09-30

Contract Duration: 1,608 days

Daily Burn Rate: $9.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 200408!000184!5700!GJ65 !WR-ALC/LXKA ISR MGNT DIR !FA852704C0170 !A!N! !N! ! !20040506!20050117!125190467!125190467!001381284!N!GENERAL DYNAMICS ADVANCED INFO!100 FERGUSON DR !MOUNTAIN VIEW !CA!94043!49880!013!06!MOUNT VIEW !CONTRA COSTA !CALIFORNIA!+000001046895!N!N!000001046895!5999!MISC ELECTRICAL & ELECTRONIC COMPONENTS !C9E!ALL OTHER SUPPLIES AND EQUIPMENT !000 !* !541330!E! !3! ! ! ! ! !99990909!B! ! !N!Z!D!U!V!1!001!N!6A!A!Y!Z! ! !N!C!N! ! ! !A!B!A!A!000!A!B!N! ! ! !Y! ! !0001! !

Place of Performance

Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95134

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $14.6 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: 200408!000184!5700!GJ65 !WR-ALC/LXKA ISR MGNT DIR !FA852704C0170 !A!N! !N! ! !20040506!20050117!125190467!125190467!001381284!N!GENERAL DYNAMICS ADVANCED INFO!100 FERGUSON DR !MOUNTAIN VIEW !CA!94043!49880!013!06!MOUNT VIEW !CONT… Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over 4 years suggests a long-term need for these components. 3. The contract type (Cost Plus Incentive Fee) can incentivize cost overruns if not closely monitored. 4. Lack of small business participation noted, potentially missing opportunities for smaller innovative firms. 5. The broad Product Service Code (PSC) 'MISC ELECTRICAL & ELECTRONIC COMPONENTS' lacks specificity, making detailed performance analysis difficult. 6. Geographic concentration in California for the contractor warrants attention for supply chain resilience.

Value Assessment

Rating: questionable

The award of $14.6 million for miscellaneous electrical and electronic components lacks clear benchmarking data for a definitive value assessment. Given the sole-source nature of the award, it is difficult to compare pricing against competitive market rates. The Cost Plus Incentive Fee (CPIF) contract type, while offering flexibility, also carries inherent risks of cost escalation if not managed with rigorous oversight. Without competitive bids, it's challenging to ascertain if the government secured the best possible value for these components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, General Dynamics Advanced Information, was solicited. This significantly limits the opportunity for price discovery and competition, which typically drives down costs for the government. The absence of multiple bidders suggests potential barriers to entry for other qualified suppliers or a specific justification for not pursuing a broader competition.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through a competitive bidding process. This can lead to higher overall expenditure for the same goods or services.

Public Impact

The primary beneficiary is the Department of Defense, specifically requiring specialized electronic components for its operations. The contract delivers essential miscellaneous electrical and electronic components, crucial for maintaining and upgrading defense systems. The geographic impact is concentrated around the contractor's location in Mountain View, California, and potentially extends to the end-users of the defense equipment. Workforce implications are primarily within General Dynamics, supporting roles in manufacturing, engineering, and logistics for these components.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost Plus Incentive Fee contract type carries a risk of cost overruns if not meticulously managed.
Lack of transparency in the justification for sole-source procurement.
Broad PSC code makes it difficult to assess the specific nature and value of components procured.
No indication of small business subcontracting goals or achievements.

Positive Signals

Award to a known entity, General Dynamics, suggests a level of established capability.
Contract duration of over 4 years indicates a sustained need and potential for stable supply.
The contract specifies an incentive fee structure, which can align contractor and government interests towards performance goals.

Sector Analysis

This contract falls within the broader 'Defense Industrial Base' sector, specifically concerning the procurement of electronic components. The market for such components is vast and highly specialized, with numerous suppliers ranging from large corporations to niche manufacturers. Benchmarking spending in this area is challenging due to the wide variety of components and their specific applications. However, the Department of Defense is a significant consumer of electronic parts, often requiring components that meet stringent military specifications, which can command premium pricing.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting to small businesses. The award to a large prime contractor like General Dynamics suggests that opportunities for small businesses may be limited unless they are direct suppliers to the prime. Further investigation into subcontracting plans would be necessary to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The Cost Plus Incentive Fee structure necessitates close monitoring of costs and performance metrics to ensure accountability. Transparency regarding the justification for the sole-source award and detailed reporting on cost expenditures would be key indicators of effective oversight.

Related Government Programs

Department of Defense Procurement
Electronic Components Procurement
Sole-Source Contracts
Cost Plus Incentive Fee Contracts
General Dynamics Contracts

Risk Flags

Sole-source award
Lack of competition
Cost Plus Incentive Fee contract type
Broad Product Service Code (PSC)
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.6 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. 200408!000184!5700!GJ65 !WR-ALC/LXKA ISR MGNT DIR !FA852704C0170 !A!N! !N! ! !20040506!20050117!125190467!125190467!001381284!N!GENERAL DYNAMICS ADVANCED INFO!100 FERGUSON DR !MOUNTAIN VIEW !CA!94043!49880!013!06!MOUNT VIEW !CONTRA COSTA !CALIFORNIA!+000001046895!N!N!000001046895!5999!MISC ELECTRICAL & ELECTRONIC COMPONENTS !C9E!ALL OTHER SUPPLIES AND EQUIPMENT !000 !* !541330!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS MISSION SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $14.6 million.

What is the period of performance?

Start: 2004-05-06. End: 2008-09-30.

What specific types of 'MISC ELECTRICAL & ELECTRONIC COMPONENTS' were procured under this contract, and what were their intended applications within DoD systems?

The provided data identifies the Product Service Code (PSC) as '5999 - MISC ELECTRICAL & ELECTRONIC COMPONENTS.' This broad category encompasses a wide array of items, from resistors and capacitors to more complex sub-assemblies, that do not fit into more specific PSCs. Without further details or access to the contract's statement of work, the precise nature and intended applications of these components remain unspecified. This lack of specificity makes it difficult to assess the criticality of the components or to benchmark their value effectively. Typically, such broad classifications are used when the exact nature of the items may vary or is not precisely defined at the time of award, or for items that are difficult to categorize elsewhere. For a contract of this value, one would expect more granular detail to ensure appropriate oversight and understanding of the procurement's purpose.

What was the justification for awarding this contract on a sole-source basis instead of pursuing full and open competition?

The provided data indicates the contract was awarded under 'CT - NOT COMPETED,' which typically signifies a sole-source or limited competition scenario. The specific justification for this sole-source award is not detailed in the provided data. Common reasons for sole-source awards include situations where only one responsible source can provide the required supplies or services, urgent and compelling needs that preclude competition, or when a specific technology or capability is only available from a single vendor. Without the official justification document (often a Justification and Approval - J&A), it is impossible to determine the precise rationale. This lack of transparency regarding the justification raises concerns about whether competition was genuinely precluded or if alternative sourcing options were adequately explored, potentially impacting the government's ability to secure the best value.

How does the Cost Plus Incentive Fee (CPIF) structure of this contract potentially impact cost control and contractor performance?

The Cost Plus Incentive Fee (CPIF) contract type aims to incentivize the contractor to control costs while meeting performance targets. Under a CPIF, the final negotiated fee is adjusted based on the relationship between the final actual costs and the target costs, and the contractor's performance relative to target performance objectives. If the contractor performs better than the target (e.g., lower costs, higher quality), they receive a higher fee, up to a ceiling. Conversely, if performance is below target, the fee is reduced, down to a floor. While this structure can align contractor and government interests, it requires robust government oversight to establish realistic target costs and performance metrics. Without effective monitoring, the 'incentive' aspect could be undermined, potentially leading to cost overruns if targets are not challenging or if performance is poorly assessed. The government must carefully define the incentive criteria and monitor progress closely to ensure value.

What is the historical spending pattern for 'MISC ELECTRICAL & ELECTRONIC COMPONENTS' by the Department of Defense, and how does this $14.6M award compare?

Historical spending data for the broad '5999 - MISC ELECTRICAL & ELECTRONIC COMPONENTS' PSC by the Department of Defense is extensive, reflecting the continuous need for a wide variety of electronic parts across numerous platforms and systems. While this specific $14.6 million award represents a significant sum for a single contract, it must be viewed within the context of the DoD's overall annual expenditure on electronic components, which can reach billions of dollars. Analyzing this award in isolation is challenging without comparative data on similar sole-source awards for comparable components or competitive awards within the same PSC. However, the value suggests a substantial requirement, potentially for a critical system upgrade or sustainment effort. Understanding the frequency and value of past awards under this PSC, especially sole-source ones, would provide better context for assessing whether this particular contract represents an outlier or a typical expenditure.

What is the track record of General Dynamics Advanced Information in delivering similar electronic components or services to the federal government?

General Dynamics Advanced Information, now part of General Dynamics Mission Systems, has a long-standing track record of providing complex technology solutions and services to the U.S. federal government, particularly the Department of Defense. Their portfolio includes a wide range of defense electronics, communication systems, and IT services. While this specific contract focuses on 'MISC ELECTRICAL & ELECTRONIC COMPONENTS,' the company's broader experience suggests a capability to manage complex procurements and deliver sophisticated products. Assessing their specific performance on contracts involving electronic components would require examining past contract awards, performance reviews (like Contractor Performance Assessment Reporting System - CPARS), and any past issues or successes related to similar procurements. Given their size and scope, they are generally considered a capable contractor, but performance can vary significantly across individual contracts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Contractor Details

Parent Company: General Dynamics Corp

Address: 2688 ORCHARD PKWY, SAN JOSE, CA, 95134

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline