DoD's $135.8M Egress Kits contract awarded to General Dynamics shows fair value with 1 bid

Contract Overview

Contract Amount: $135,852,687 ($135.9M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2014-03-10

End Date: 2019-10-31

Contract Duration: 2,061 days

Daily Burn Rate: $65.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: EGRESS KITS (USMC)

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $135.9 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: EGRESS KITS (USMC) Key points: 1. The contract's value appears reasonable given the limited competition and the nature of specialized military equipment. 2. A single bid suggests potential market concentration or barriers to entry for competitors. 3. The firm fixed-price structure shifts cost risk to the contractor, a positive indicator for the government. 4. Performance duration of over 5 years indicates a long-term need for these critical safety components. 5. This contract falls within the broader category of military vehicle component manufacturing, a key defense sector.

Value Assessment

Rating: good

The contract value of $135.8 million over approximately 5 years for egress kits is difficult to benchmark precisely without more granular data on the specific components and quantities. However, given that it was a sole-source award after initial competition, the price is presumed to be fair and reasonable. The firm fixed-price contract type is advantageous for the government, locking in costs and transferring risk to the contractor. Compared to similar specialized military hardware procurements, the per-unit cost would need detailed analysis, but the overall value seems aligned with the complexity and criticality of the equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was initially awarded under full and open competition, but ultimately resulted in a sole-source award to General Dynamics Land Systems Inc. The record indicates only one bid was received. This limited competition raises questions about the effectiveness of the initial solicitation or potential barriers to entry for other manufacturers. A single bidder scenario typically leads to less price negotiation leverage for the government and may not reflect the most competitive market price.

Taxpayer Impact: A sole-source award means taxpayers may not have benefited from the cost savings that could arise from a more competitive bidding process. The government had to accept the price offered by the single bidder.

Public Impact

Service members operating armored vehicles benefit from enhanced safety through these egress kits. The kits are essential for rapid and safe exit from vehicles in combat or emergency situations. The primary geographic impact is on military installations and operational theaters where USMC vehicles are deployed. This contract supports specialized manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (sole-source) may have resulted in a higher price than if multiple bids were received.
Lack of transparency in the sole-source justification could obscure potential cost efficiencies missed.
Long contract duration without clear performance checkpoints could mask potential inefficiencies over time.

Positive Signals

Firm fixed-price contract type protects the government from cost overruns.
Award to a known defense contractor suggests a level of established capability and reliability.
The product is critical for soldier safety, indicating a high priority and essential need.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of components for military armored vehicles. The market for such specialized equipment is often characterized by a limited number of highly capable contractors due to stringent technical requirements and security clearances. Comparable spending benchmarks are difficult to establish publicly due to the proprietary nature of defense contracting and the unique specifications of military hardware. However, the overall defense spending on vehicle modernization and component upgrades represents a significant portion of the defense budget.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a large prime contractor like General Dynamics often means that the bulk of the work is performed internally or with other large subcontractors. This contract does not appear to have a direct positive impact on the small business defense ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting command and potentially the Department of Defense's Inspector General. Accountability measures are inherent in the firm fixed-price contract, requiring the contractor to deliver specified goods. Transparency is limited due to the sole-source nature and the classified or sensitive aspects of military equipment. Regular contract performance reviews and audits would be standard oversight mechanisms.

Related Government Programs

Military Vehicle Modernization Programs
Armored Vehicle Component Procurement
Naval Sea Systems Command Contracts
Defense Logistics Agency Support Contracts
Tactical Vehicle Systems

Risk Flags

Sole-source award after competition
Potential for higher costs due to limited competition
Long contract duration requires ongoing monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $135.9 million to GENERAL DYNAMICS LAND SYSTEMS INC.. EGRESS KITS (USMC)

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 Navy).

What is the total obligated amount?

The obligated amount is $135.9 million.

What is the period of performance?

Start: 2014-03-10. End: 2019-10-31.

What is the specific function and technical specification of these 'EGRESS KITS'?

EGRESS KITS, in the context of military armored vehicles, are safety systems designed to facilitate rapid and safe evacuation of personnel from a vehicle under duress, such as after a mine blast, IED attack, or fire. These kits typically include components like explosive bolts for hatches, specialized cutting tools, emergency breathing apparatus, and potentially fire suppression elements. The specific technical specifications are classified or proprietary but would detail the force required to activate, the speed of egress, environmental protection provided, and compatibility with various armored vehicle platforms used by the USMC, such as the MRAP (Mine-Resistant Ambush Protected) family of vehicles.

Why did only one bid result from the 'full and open competition' initial solicitation?

The reason for only one bid resulting from the initial 'full and open competition' solicitation for the EGRESS KITS contract is not explicitly detailed in the provided data. However, common factors contributing to such outcomes in defense contracting include: highly specialized technical requirements that only a few companies possess the capability to meet; stringent security clearance or facility requirements; significant pre-existing research and development investment by a single entity; or potentially, a poorly defined solicitation that inadvertently limited the perceived scope or feasibility for other potential bidders. It could also indicate that the market for this specific niche product is inherently concentrated.

How does the firm fixed-price (FFP) contract type benefit the government in this scenario?

The Firm Fixed-Price (FFP) contract type is highly beneficial for the government in this scenario because it shifts the majority of the cost risk to the contractor, General Dynamics Land Systems Inc. Under an FFP agreement, the price is set and not subject to adjustment based on the contractor's cost experience. This means that if General Dynamics incurs higher-than-expected costs to produce the egress kits, their profit margin will decrease, but the government's expenditure remains capped at the agreed-upon price. This provides budget certainty and predictability, which is crucial for managing large defense procurements and avoids potential cost overruns that could occur with cost-reimbursement contracts.

What is the historical spending trend for similar egress kits or related safety systems by the USMC?

Historical spending trends for similar egress kits or related safety systems by the USMC are not directly available in the provided data snippet. However, the USMC has historically invested significantly in survivability and force protection technologies, particularly following the extensive use of armored vehicles in Iraq and Afghanistan. This includes substantial spending on Mine-Resistant Ambush Protected (MRAP) vehicles and their associated safety and egress systems. The $135.8 million awarded to General Dynamics for these kits represents a significant, albeit specific, investment within this broader category of force protection equipment over the contract's duration.

What are the potential risks associated with a sole-source award for critical military components?

The primary risks associated with a sole-source award for critical military components like egress kits include: inflated pricing due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, potential for supply chain vulnerabilities if the sole source faces production issues, and a lack of alternative options in case of contractor default or performance failure. Taxpayers may bear a higher cost than in a competitive environment. Furthermore, it can stifle the development of a broader industrial base capable of producing such essential items, creating long-term strategic dependencies.

How does the performance period of 2061 days (approx. 5.6 years) impact the assessment of value for money?

The performance period of 2061 days (approximately 5.6 years) for the EGRESS KITS contract has several implications for assessing value for money. A longer duration suggests a sustained need for the product, potentially indicating its effectiveness and integration into standard operating procedures. From a value perspective, it allows for potential economies of scale if production is continuous, and it spreads the fixed costs associated with contract management and setup over a longer period. However, it also necessitates careful monitoring to ensure the price remains competitive throughout the period and that the technology does not become obsolete. The firm fixed-price nature helps mitigate cost escalation risk over this extended timeframe.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: M6785413R5501

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $151,855,770

Exercised Options: $135,852,687

Current Obligation: $135,852,687

Subaward Activity

Number of Subawards: 187

Total Subaward Amount: $242,461,598

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline