DoD awards $93.9M for navigation systems, with limited competition and cost-plus contract type

Contract Overview

Contract Amount: $93,871,184 ($93.9M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-09-14

End Date: 2017-12-31

Contract Duration: 3,030 days

Daily Burn Rate: $31.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: MPP BASIC CONTRACT, BASE YEAR PRODUCTION LINE ITEMS ONLY.

Place of Performance

Location: PITTSFIELD, BERKSHIRE County, MASSACHUSETTS, 01201

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $93.9 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: MPP BASIC CONTRACT, BASE YEAR PRODUCTION LINE ITEMS ONLY. Key points: 1. Contract awarded on a cost-plus incentive fee basis, which can incentivize cost control but also carries inherent risk. 2. Limited competition suggests potential for higher prices and reduced innovation compared to a fully open market. 3. The contract duration of over 8 years (3030 days) indicates a long-term need for these systems. 4. The contractor, General Dynamics Mission Systems, Inc., has a significant presence in the defense sector. 5. The North American Industry Classification System (NAICS) code 334511 points to specialized manufacturing within the defense industry. 6. The contract's base year value is substantial, requiring careful monitoring of cost overruns.

Value Assessment

Rating: fair

The contract's cost-plus incentive fee structure requires close oversight to ensure value for money. Without specific benchmark data for comparable navigation systems, it is difficult to definitively assess pricing. However, the lack of robust competition often leads to less favorable pricing for the government. The total award value of $93.9 million for the base year production line items suggests a significant investment in these critical systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed on an open and full basis, indicating a limited competition scenario. The specific details of why it was not fully competed are not provided, but this often occurs when a specific capability or technology is required from a particular vendor. The limited number of bidders or the sole-source nature of the procurement can impact the government's ability to secure the best possible pricing and terms.

Taxpayer Impact: Limited competition can result in taxpayers paying a premium for goods and services, as the government may have fewer options to negotiate favorable terms.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical navigation systems for its operations. These systems are essential for military aircraft, vessels, and potentially ground vehicles, supporting national security objectives. The contract supports advanced manufacturing capabilities within the defense industrial base. Employment within General Dynamics Mission Systems and its supply chain is likely sustained or increased by this award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus contract types can lead to cost overruns if not managed diligently.
Limited competition may result in higher unit costs and less incentive for the contractor to innovate.
The long contract duration necessitates ongoing monitoring for performance and potential scope creep.

Positive Signals

General Dynamics Mission Systems is an established defense contractor with a track record in complex systems.
The contract specifies an incentive fee, which can align contractor and government interests towards cost efficiency.
The systems procured are critical for defense operations, indicating a high priority and strategic importance.

Sector Analysis

The defense electronics manufacturing sector is characterized by high R&D investment, stringent quality requirements, and long product lifecycles. Companies like General Dynamics Mission Systems operate within a market driven by government procurement. Spending in this sub-sector is often tied to modernization efforts and national security priorities. Comparable spending benchmarks would typically involve other large-scale defense system procurements, often in the hundreds of millions or billions of dollars.

Small Business Impact

The provided data indicates that small business participation (sb: false) and set-asides (ss: false) were not factors in this specific contract award. This suggests that the procurement was not structured to prioritize small businesses, and the prime contractor is not obligated to subcontract with them under this award. Consequently, there is no direct positive impact on the small business ecosystem from this particular contract, and potential subcontracting opportunities for small businesses would depend on the prime contractor's internal sourcing decisions.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. Accountability measures are embedded within the cost-plus incentive fee structure, which aims to reward efficient performance. Transparency is generally maintained through contract reporting mechanisms, though specific details of cost breakdowns and performance metrics may be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Navigation Systems
Military Avionics
Guidance Systems Manufacturing
Naval Systems Procurement
Aerospace Electronics

Risk Flags

Limited Competition
Cost-Plus Contract Type
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $93.9 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. MPP BASIC CONTRACT, BASE YEAR PRODUCTION LINE ITEMS ONLY.

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 $93.9 million.

What is the period of performance?

Start: 2009-09-14. End: 2017-12-31.

What is the historical spending trend for similar navigation systems by the Department of Defense?

Analyzing historical spending trends for similar navigation systems by the Department of Defense requires access to comprehensive contract databases and specific product classifications. Without granular data on the exact type of navigation systems procured, it's challenging to provide precise historical figures. However, the defense sector consistently invests heavily in navigation and guidance technologies due to their critical role in military operations. Spending in this area can fluctuate based on technological advancements, geopolitical events, and specific platform modernization programs. Generally, procurements for advanced navigation systems can range from tens to hundreds of millions of dollars over several years, often awarded through competitive or sole-source contracts depending on the system's uniqueness and maturity.

How does the cost-plus incentive fee (CPIF) structure compare to other contract types in terms of value for money for the government?

The Cost-Plus Incentive Fee (CPIF) contract type aims to provide a balance between flexibility and cost control. In a CPIF contract, the final profit is adjusted based on whether the final costs are below or above a target cost, with a pre-defined sharing formula. This structure incentivizes the contractor to manage costs effectively to achieve a higher fee. Compared to a firm-fixed-price contract, CPIF offers more flexibility when project scope is uncertain or involves significant research and development, potentially leading to better value by accommodating unforeseen technical challenges. However, compared to fixed-price incentive fee (FPIF) contracts, CPIF still places more cost risk on the government if costs significantly exceed targets. The value for money hinges on the government's ability to set realistic target costs and profit margins, and robust oversight to ensure the contractor is genuinely striving for efficiency.

What are the potential risks associated with a 'not competed' contract award for advanced navigation systems?

Awarding a contract on a 'not competed' basis, often referred to as sole-source or limited competition, carries several potential risks. Primarily, it can lead to higher prices for the government due to the lack of competitive pressure to offer the best value. This can result in taxpayers paying a premium. Secondly, it may stifle innovation, as the incumbent contractor may have less incentive to develop more cost-effective or technologically superior solutions if they are guaranteed the contract. There's also a risk of complacency or reduced performance quality if the contractor perceives less accountability compared to a competitive environment. Furthermore, it can create barriers to entry for other capable companies, potentially weakening the overall defense industrial base in the long run.

What is the typical performance period for contracts of this nature (navigation systems) within the Department of Defense?

The typical performance period for contracts related to advanced navigation systems within the Department of Defense can vary significantly based on the complexity of the system, its lifecycle stage (development vs. sustainment), and the overall program strategy. Contracts can range from a few years for specific component upgrades or initial development phases to over a decade for full-system sustainment and production. The provided contract has a duration of 3030 days, which translates to approximately 8.3 years, indicating a long-term commitment for production and potentially sustainment. This extended period is common for major defense systems where integration, testing, and deployment take considerable time, and where long-term support is crucial for operational readiness.

How does the NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing) relate to the overall defense spending landscape?

The NAICS code 334511 represents a specialized segment within the broader manufacturing sector, focusing on high-technology systems critical for defense applications. Companies operating under this code are involved in producing sophisticated equipment essential for military operations, including radar, sonar, GPS, inertial navigation systems, and flight control instruments. Spending within this category is a subset of the larger Department of Defense budget allocated to procurement and research, development, testing, and evaluation (RDT&E). It reflects the ongoing need for advanced situational awareness, precision targeting, and operational effectiveness in air, sea, and land domains. The size of spending under this NAICS code can be an indicator of modernization efforts and the technological sophistication of the U.S. military.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002409R6206

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 12450 FAIR LAKES CIR STE 800, FAIRFAX, VA, 22033

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

Financial Breakdown

Contract Ceiling: $200,044,001

Exercised Options: $172,642,681

Current Obligation: $93,871,184

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline