DoD awards $19.4M to General Dynamics for armored vehicle manufacturing, a sole-source contract

Contract Overview

Contract Amount: $19,425,778 ($19.4M)

Contractor: General Dynamics Land Systems, Inc

Awarding Agency: Department of Defense

Start Date: 2005-09-29

End Date: 2008-12-31

Contract Duration: 1,189 days

Daily Burn Rate: $16.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Place of Performance

Location: WOODBRIDGE, PRINCE WILLIAM County, VIRGINIA, 22191

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $19.4 million to GENERAL DYNAMICS LAND SYSTEMS, INC for work described as: Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract's cost-plus-award-fee structure incentivizes performance but can lead to higher final costs. 3. Long contract duration of over 3 years suggests a significant, ongoing need for these specialized services. 4. The award falls under the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' NAICS code, indicating a niche but critical defense sector. 5. Lack of competition limits opportunities for other manufacturers to enter the market and potentially offer cost savings. 6. The contract was awarded by the Department of Defense, a major consumer of armored vehicle systems.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and cost-plus-award-fee structure. Without competitive bids, it's difficult to ascertain if the $19.4 million represents a fair market price. The cost-plus-award-fee (CPAF) pricing model means the final cost could exceed initial estimates, depending on contractor performance. Comparing this to similar sole-source armored vehicle contracts would be necessary for a more robust value assessment, but such data is often proprietary or not publicly available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, General Dynamics Land Systems, Inc., was solicited. This typically occurs when a specific capability is required that only one entity possesses, or in situations where competition is deemed not practicable. The lack of multiple bidders means there was no direct price competition, which can sometimes lead to higher costs for the government compared to fully competed contracts.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive bidding. The government's negotiating position is weakened without alternative offers to consider.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical armored vehicle components, and General Dynamics Land Systems, Inc., through revenue generation. Services delivered include the manufacturing and supply of military armored vehicles, tanks, and their associated components. The geographic impact is likely concentrated where General Dynamics operates its manufacturing facilities, primarily in Virginia based on the 'ST' code. Workforce implications include job creation and retention within the defense manufacturing sector, particularly for skilled labor involved in vehicle production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus-award-fee structure can lead to cost overruns if not carefully managed.
Lack of transparency in sole-source negotiations makes independent value assessment difficult.
Long contract duration may indicate a lack of innovation or alternative solutions being explored.
Dependence on a single supplier for critical defense components poses a supply chain risk.

Positive Signals

Contract supports critical defense needs for armored vehicles.
General Dynamics is an established contractor with experience in this domain.
Award-fee component incentivizes contractor performance and quality.
Contract duration suggests a stable, long-term requirement for these assets.

Sector Analysis

The defense manufacturing sector, particularly for armored vehicles, is highly specialized and dominated by a few large contractors. General Dynamics Land Systems is a key player in this market. Spending in this area is driven by national security requirements and geopolitical factors. Comparable spending benchmarks are difficult to establish publicly due to the sensitive nature of defense contracts and the unique specifications of military hardware. This contract fits within the broader category of defense procurement for ground combat systems.

Small Business Impact

This contract does not appear to have a small business set-aside component ('SB' is false). Given the nature of armored vehicle manufacturing, it is unlikely that small businesses would be primary contractors. However, General Dynamics may engage small businesses as subcontractors for specialized parts or services, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem is likely indirect, through potential subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, as well as the Defense Contract Management Agency (DCMA). The cost-plus-award-fee structure necessitates close monitoring of costs and performance to ensure the government receives value. Transparency is limited due to the sole-source nature and the proprietary aspects of defense manufacturing. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Ground Combat Vehicle Program
Armored Multi-Purpose Vehicle (AMPV)
Stryker Family of Vehicles
M1 Abrams Tank Modernization

Risk Flags

Sole-source award
Cost-plus-award-fee pricing
Lack of competitive bidding
Potential for cost overruns
Dependence on single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.4 million to GENERAL DYNAMICS LAND SYSTEMS, INC. See the official description on USAspending.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $19.4 million.

What is the period of performance?

Start: 2005-09-29. End: 2008-12-31.

What is the historical spending pattern for General Dynamics Land Systems, Inc. with the Department of Defense for armored vehicles?

Analyzing historical spending requires access to comprehensive contract databases beyond the provided snippet. However, General Dynamics Land Systems is a well-established prime contractor for the U.S. Army, consistently receiving significant funding for programs like the Abrams Main Battle Tank and the Stryker Family of Vehicles. Their contract awards often run into hundreds of millions or even billions of dollars over several years, reflecting their critical role in supplying major armored platforms. This $19.4 million contract appears to be a specific, potentially smaller, component or sustainment effort within their broader portfolio, rather than a flagship program award. A deeper dive into historical data would reveal trends in contract types (e.g., FFP, CPIF, CPAF), competition levels, and specific vehicle platforms procured over time.

How does the cost-plus-award-fee (CPAF) structure compare to other contract types in terms of potential cost to the government?

Cost-plus-award-fee (CPAF) contracts are designed to incentivize contractor performance by allowing the contractor to recover allowable costs plus a fee that is composed of a base fee and an award amount. The award amount is earned based on meeting or exceeding specific performance objectives. Compared to Firm-Fixed-Price (FFP) contracts, CPAF generally carries higher risk for the government, as the final price is not fixed and can increase based on performance. However, it offers more flexibility than FFP for complex projects where cost and scope are uncertain. It is often preferred over Cost-Plus-Incentive-Fee (CPIF) when performance objectives are more subjective or difficult to quantify precisely, though CPIF can offer stronger cost control incentives. The primary advantage of CPAF is its ability to drive desired performance, but it requires robust government oversight to manage costs effectively and ensure the award fee is justified.

What are the specific performance objectives tied to the award fee in this contract?

The provided data snippet does not specify the performance objectives associated with the award fee for this particular contract. In a Cost-Plus-Award-Fee (CPAF) contract, these objectives are typically detailed in the contract's Performance Work Statement (PWS) or Statement of Objectives (SOO). They often relate to factors such as delivery schedule adherence, quality of manufactured goods, technical performance metrics, cost control efforts, and responsiveness to government requests. The government's Contracting Officer's Representative (COR) is usually responsible for evaluating the contractor's performance against these criteria to determine the amount of award fee earned. Without the specific PWS or evaluation criteria, it's impossible to detail the exact objectives for this $19.4 million award.

What are the risks associated with a sole-source award for critical defense components like armored vehicles?

Sole-source awards for critical defense components present several risks. Firstly, the lack of competition can lead to higher prices for the government, as there is no market pressure to drive down costs. Secondly, it can stifle innovation, as the incumbent contractor may have less incentive to invest in new technologies or more efficient processes if they are guaranteed the contract. Thirdly, it creates a dependency on a single supplier, making the supply chain vulnerable to disruptions caused by the contractor's financial instability, production issues, or geopolitical events affecting their operations. Finally, it can limit the government's flexibility to adapt to changing requirements or to switch to alternative solutions if they become available. This dependence is particularly concerning for essential military hardware.

How does the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' NAICS code influence the competitive landscape?

The North American Industry Classification System (NAICS) code 336992, 'Military Armored Vehicle, Tank, and Tank Component Manufacturing,' defines a highly specialized segment of the manufacturing industry. This code typically encompasses a limited number of large, established defense contractors with the extensive engineering, manufacturing capabilities, security clearances, and capital investment required. The competitive landscape within this NAICS code is therefore inherently concentrated. It is characterized by high barriers to entry for new firms, long lead times for production, and significant government oversight. Consequently, contracts awarded under this code are frequently sole-source or awarded through limited competition, as only a few companies possess the necessary qualifications and infrastructure to fulfill these complex defense requirements.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 991 ANNAPOLIS WAY, WOODBRIDGE, VA, 22191

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline