DoD awards $5.4M contract for administrative services to General Dynamics, raising questions about competition

Contract Overview

Contract Amount: $5,437,283 ($5.4M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2023-02-10

End Date: 2028-02-09

Contract Duration: 1,825 days

Daily Burn Rate: $3.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: LABOR

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $5.4 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: LABOR Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. The contract duration of five years suggests a long-term need for these administrative services. 3. General Dynamics Information Technology, Inc. is a large, established contractor with significant federal experience. 4. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 5. The administrative services sector is broad, making direct comparisons challenging without more specific service details. 6. The lack of competition raises concerns about whether the government secured the best possible value. 7. The contract's value is modest in the context of overall Department of Defense spending.

Value Assessment

Rating: questionable

The contract value of $5.4 million over five years averages approximately $1.08 million annually. Without a competitive bidding process, it is difficult to benchmark this against market rates or similar contracts. The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility, can lead to higher costs if the contractor's expenses are not rigorously scrutinized. The absence of competition means there's no direct comparison to assess if this pricing represents good value for the administrative services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, indicating a sole-source procurement. This means the Department of the Navy did not solicit bids from multiple vendors. Reasons for sole-source awards can include unique capabilities, urgent needs, or lack of market research. However, this approach bypasses the competitive process, which typically drives down prices and encourages innovation.

Taxpayer Impact: Taxpayers may not be receiving the most cost-effective solution due to the absence of competitive pressure. The government's ability to negotiate favorable terms is diminished when only one vendor is considered.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive essential office administrative support. Services delivered include general office administrative support, crucial for the daily functioning of naval operations. The geographic impact is likely concentrated around the Navy facilities where these administrative services are performed, primarily in Virginia. Workforce implications include the employment of individuals by General Dynamics to fulfill these administrative roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Limited transparency into the justification for sole-source award.
Potential for contractor to underperform without competitive pressure.

Positive Signals

General Dynamics is an established contractor with a proven track record in federal IT and services.
The contract addresses a clear need for administrative support within the Department of the Navy.
The fixed fee component of the CPFF contract provides some level of cost predictability.

Sector Analysis

This contract falls within the broader professional, scientific, and technical services sector, specifically focusing on administrative support. The federal government is a significant consumer of such services, with spending often driven by agency operational needs. While specific benchmarks for 'Office Administrative Services' (NAICS 561110) are difficult to isolate due to the varied nature of these services, the overall federal spending on administrative support is substantial. This contract represents a small portion of the Department of Defense's overall budget.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). General Dynamics Information Technology, Inc. is a large business. There is no information provided regarding subcontracting plans for small businesses. This sole-source award to a large prime contractor means that opportunities for small businesses to participate in this specific contract are likely limited unless subcontracting is mandated or voluntarily pursued by the prime.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates diligent oversight to ensure costs are reasonable and allocable to the contract. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected. Transparency is limited due to the sole-source nature, with the justification for the award usually being the primary document for public scrutiny.

Related Government Programs

General Government Administrative Support Services
Professional and Management Support Services
Department of Defense IT and Administrative Contracts
Federal Office Support Contracts

Risk Flags

Non-competitive award
Cost-reimbursable contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.4 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. LABOR

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $5.4 million.

What is the period of performance?

Start: 2023-02-10. End: 2028-02-09.

What is the specific justification for awarding this contract on a sole-source basis to General Dynamics Information Technology, Inc.?

The provided data indicates the contract was 'NOT COMPETED'. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations (FAR). These can include situations where only one responsible source can provide the required services, an urgent and compelling need exists that cannot be met by other sources, or the acquisition is for a specialized service where competition is impractical or not cost-effective. Without access to the specific justification document (e.g., a Justification for Other Than Full and Open Competition - JOFOC), the precise reason remains unknown. However, the nature of administrative services often allows for multiple potential providers, making a sole-source award less common unless specific technical or security requirements are involved, or if it's a follow-on to a previous sole-source contract where the initial justification is still valid.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of risk and value for administrative services?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This type is often used when the scope of work is not precisely defined or involves research and development. For administrative services, where the scope might be relatively stable, CPFF can be less advantageous than Firm-Fixed-Price (FFP) contracts. FFP contracts offer the greatest price certainty for the government, as the contractor assumes the risk of cost overruns. With CPFF, the government bears the risk of cost increases, which can lead to higher overall spending if not managed tightly. While CPFF provides flexibility, it requires robust government oversight to control costs and ensure value, making it potentially less cost-effective than FFP for predictable administrative tasks.

What is the historical spending pattern for similar administrative services contracts within the Department of the Navy or Department of Defense?

Analyzing historical spending for 'Office Administrative Services' (NAICS 561110) within the Department of the Navy or the broader Department of Defense requires access to comprehensive federal procurement databases. General Dynamics Information Technology, Inc. (GDIT) is a frequent recipient of federal contracts across various agencies and service types. Historically, large defense contractors like GDIT have secured numerous contracts for IT, professional, and administrative support services, often in the hundreds of millions or billions of dollars annually across all their awards. Without specific data on prior contracts for this exact service category and agency, it's difficult to establish a precise spending pattern. However, the trend generally shows significant and consistent government reliance on large contractors for these types of support functions, often through competitive vehicles, but also through sole-source or limited competition awards when specific circumstances apply.

What are the potential implications of a five-year contract duration for administrative services?

A five-year contract duration (1825 days) for administrative services suggests a long-term, stable requirement within the Department of the Navy. This extended period allows the contractor, General Dynamics Information Technology, Inc., to plan resources, invest in personnel, and potentially develop specialized knowledge related to the Navy's operations. For the government, it offers continuity of essential services without the frequent need for re-procurement, which can be administratively burdensome and costly. However, a long duration also means less flexibility to adapt to changing needs or technological advancements. It also locks the government into a specific provider and pricing structure for an extended period, which could be disadvantageous if market conditions or requirements evolve significantly, especially given the non-competitive nature of this award.

How does the size and experience of General Dynamics Information Technology, Inc. influence the assessment of this contract?

General Dynamics Information Technology, Inc. (GDIT) is a major federal contractor with extensive experience across numerous agencies and service domains, including IT, defense, and administrative support. Their size and established presence suggest they possess the resources, infrastructure, and expertise to reliably deliver complex services. This experience can be a positive signal regarding the contractor's ability to meet the requirements. However, for a sole-source award, their established position also means they face less pressure to innovate or offer competitive pricing compared to a situation with multiple bidders. While their track record is generally strong, the lack of competition means the government is relying heavily on GDIT's self-governance and the government's internal oversight mechanisms to ensure fair pricing and optimal performance, rather than market forces.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Office Administrative Services › Office Administrative Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001923R0100

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 3150 FAIRVIEW PARK DR STE 100, FALLS CHURCH, VA, 22042

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

Financial Breakdown

Contract Ceiling: $8,700,417

Exercised Options: $8,700,417

Current Obligation: $5,437,283

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline