DoD's $609M Expeditionary Fighting Vehicle contract awarded to General Dynamics Land Systems, Inc. without competition

Contract Overview

Contract Amount: $609,464,793 ($609.5M)

Contractor: General Dynamics Land Systems, Inc

Awarding Agency: Department of Defense

Start Date: 2008-07-31

End Date: 2013-09-30

Contract Duration: 1,887 days

Daily Burn Rate: $323.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: CONTINUED SYSTEM DEVELOPMENT AND DEMONSTRATION (SDD-2) FOR EXPEDITIONARY FIGHTING VEHICLE TAS::17 1804::TAS

Place of Performance

Location: WOODBRIDGE, PRINCE WILLIAM County, VIRGINIA, 22191

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $609.5 million to GENERAL DYNAMICS LAND SYSTEMS, INC for work described as: CONTINUED SYSTEM DEVELOPMENT AND DEMONSTRATION (SDD-2) FOR EXPEDITIONARY FIGHTING VEHICLE TAS::17 1804::TAS Key points: 1. The contract's value of over $600 million represents a significant investment in military vehicle modernization. 2. Awarded without competition, this contract raises questions about potential price discovery and market efficiency. 3. The Cost Plus Incentive Fee (CPIF) pricing structure suggests performance-based incentives, but requires careful monitoring. 4. The duration of the contract (nearly 5 years) indicates a long-term development and demonstration effort. 5. The absence of small business participation raises concerns about broader economic impact and subcontracting opportunities. 6. The contract falls within the Defense sector, specifically focusing on armored vehicle manufacturing.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific defense application. The Cost Plus Incentive Fee (CPIF) structure implies that the final cost could vary based on performance metrics. Without comparable sole-source contracts for similar systems, it's difficult to definitively assess if the $609 million represents optimal value for money. However, the lack of competition inherently limits the government's ability to secure the lowest possible price through market forces.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, General Dynamics Land Systems, Inc., was solicited. This approach is typically used when a unique capability is required, or when only one source is capable of meeting the requirement. The lack of a competitive bidding process means that the government did not benefit from the price reductions and innovation that can arise from multiple companies vying for the contract.

Taxpayer Impact: Taxpayers may have paid a premium for this system due to the absence of competitive pressure. The government missed an opportunity to leverage market dynamics to achieve a more cost-effective outcome.

Public Impact

The primary beneficiaries are the U.S. Marine Corps, who will receive the Expeditionary Fighting Vehicles. The contract delivers advanced capabilities for amphibious assault and ground combat operations. The geographic impact is primarily national, supporting defense readiness, with potential for localized economic benefits in areas where General Dynamics operates. The contract supports a specialized workforce in defense manufacturing, including engineers, technicians, and production staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
CPIF contract type requires robust oversight to ensure contractor performance aligns with cost incentives.
Lack of small business involvement may limit broader economic benefits and subcontracting opportunities.
Long contract duration increases exposure to potential cost overruns and schedule delays.

Positive Signals

Award to a known defense contractor suggests established expertise in complex vehicle manufacturing.
CPIF structure incentivizes contractor performance, potentially leading to a more capable end product.
Focus on Expeditionary Fighting Vehicle development addresses a critical modernization need for the Marine Corps.

Sector Analysis

The defense industrial base for armored vehicle manufacturing is highly specialized, with a limited number of prime contractors capable of producing complex systems like the Expeditionary Fighting Vehicle. This contract represents a significant portion of spending within this niche sector. Comparable spending benchmarks are difficult to establish due to the unique nature of the EFV and the sole-source award. The market is characterized by high barriers to entry, extensive R&D requirements, and long production cycles.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting to small businesses. The sole-source nature of the award further limits opportunities for small business participation. This could mean that the economic benefits of this large contract are concentrated among larger corporations, potentially bypassing the small business ecosystem that plays a vital role in defense supply chains.

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 (CPIF) structure necessitates close monitoring of cost, schedule, and performance metrics to ensure the government receives the best value. Transparency regarding the justification for the sole-source award and ongoing performance reports would be key accountability measures. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

Amphibious Assault Vehicles
Marine Corps Ground Vehicle Modernization Programs
Advanced Armored Vehicle Development
Defense Contract Awards for Major Weapon Systems

Risk Flags

Sole-source award
Cost Plus Incentive Fee structure
Lack of small business participation
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $609.5 million to GENERAL DYNAMICS LAND SYSTEMS, INC. CONTINUED SYSTEM DEVELOPMENT AND DEMONSTRATION (SDD-2) FOR EXPEDITIONARY FIGHTING VEHICLE TAS::17 1804::TAS

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 $609.5 million.

What is the period of performance?

Start: 2008-07-31. End: 2013-09-30.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source is available to meet the government's needs, often due to unique capabilities, proprietary technology, or urgent requirements where competition is not feasible. For a system as complex as the Expeditionary Fighting Vehicle, the justification might stem from General Dynamics Land Systems, Inc. possessing unique intellectual property, specialized manufacturing facilities, or having been the sole developer of the preceding technology. A thorough review of the contract file and associated documentation would be necessary to ascertain the precise rationale.

How does the Cost Plus Incentive Fee (CPIF) structure typically function, and what are the risks and benefits for the government?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs and receives an incentive fee based on meeting or exceeding certain performance objectives. The target cost, target profit, and the sharing ratio for cost variances are established upfront. If the final cost is below the target cost, both the government and the contractor share in the savings. If the final cost exceeds the target cost, both share in the overrun, up to a ceiling. The benefit for the government is that it encourages the contractor to control costs and meet performance goals. The risk lies in the potential for cost overruns if performance targets are difficult to achieve or if the initial cost estimates are inaccurate. Robust government oversight is crucial to ensure the incentive structure effectively drives desired outcomes without leading to excessive costs.

What is the historical spending pattern for the Expeditionary Fighting Vehicle program prior to this contract award?

The provided data indicates this contract, awarded on July 31, 2008, with an end date of September 30, 2013, and a value of $609,464,793.41, is for 'CONTINUED SYSTEM DEVELOPMENT AND DEMONSTRATION (SDD 2)'. This suggests that prior development phases or contracts likely existed for the Expeditionary Fighting Vehicle (EFV) program. Without access to historical contract databases or program documentation, it's impossible to detail the exact spending patterns before this specific award. However, the 'SDD 2' designation implies significant prior investment in research, development, and potentially earlier demonstration phases, likely awarded to the same or related entities involved in the EFV's evolution.

What are the key performance metrics or objectives tied to the incentive fee in this CPIF contract?

The specific key performance metrics or objectives tied to the incentive fee for this particular Cost Plus Incentive Fee (CPIF) contract are not detailed in the provided data. In general, for defense system development contracts like this, performance metrics often relate to achieving specific technical capabilities, meeting stringent reliability and maintainability standards, demonstrating operational effectiveness under various conditions, adhering to critical program milestones, and potentially achieving certain survivability or mobility targets. The 'System Development and Demonstration' phase suggests that metrics would focus on proving the system's design and functionality meet the demanding requirements of the U.S. Marine Corps for amphibious and ground operations.

What is the track record of General Dynamics Land Systems, Inc. in delivering large-scale defense vehicle contracts?

General Dynamics Land Systems, Inc. (GDLS) has a long and extensive track record of delivering large-scale defense vehicle contracts, particularly in the realm of armored fighting vehicles. They are well-known for producing the Abrams Main Battle Tank and the Stryker family of vehicles, both of which have seen extensive production runs and deployments. GDLS has consistently been a major player in the U.S. and international defense markets for ground combat systems. Their experience encompasses complex design, engineering, manufacturing, and lifecycle support for demanding military applications, making them a primary contractor for programs like the Expeditionary Fighting Vehicle.

How does the $609 million contract value compare to other major defense vehicle development programs?

A contract value of $609 million for a System Development and Demonstration (SDD) phase of a major defense platform like the Expeditionary Fighting Vehicle is substantial, but not unusual within the context of large-scale military hardware programs. For comparison, the development phases of other major platforms, such as new fighter jets, submarines, or complex missile systems, often run into the billions of dollars. However, compared to the production contracts for existing, widely fielded vehicles, $609 million represents a significant investment focused on proving out a new, advanced capability. The cost reflects the complexity, technological innovation, and rigorous testing required for a system intended for demanding amphibious and ground combat roles.

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

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 991 ANNAPOLIS WAY, WOODBRIDGE, VA, 22191

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

Financial Breakdown

Contract Ceiling: $609,464,793

Exercised Options: $609,464,793

Current Obligation: $609,464,793

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline