DoD's $40.2M R&D contract with General Dynamics Mission Systems shows concerning value and limited competition

Contract Overview

Contract Amount: $40,255,277 ($40.3M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2014-04-01

End Date: 2019-12-31

Contract Duration: 2,100 days

Daily Burn Rate: $19.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::CL::IGF BASE YEAR

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $40.3 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: IGF::CL::IGF BASE YEAR Key points: 1. The contract's value proposition is questionable given the lack of competitive bidding and the cost-plus-fixed-fee structure. 2. Limited competition raises concerns about price discovery and potential overpayment for research and development services. 3. The contract's duration and cost-plus structure may indicate higher risk for cost overruns. 4. Performance context is limited due to the R&D nature, making direct outcome assessment difficult. 5. This contract falls within the broader Defense sector, specifically R&D for physical and engineering sciences. 6. The absence of small business involvement suggests limited opportunities for smaller firms in this specific award.

Value Assessment

Rating: questionable

Benchmarking the value of this $40.2 million contract is challenging due to its sole-source nature and R&D focus. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher costs compared to fixed-price contracts if not managed tightly. Without competitive bids, it's difficult to ascertain if the price reflects fair market value for the services rendered. The significant base award of over $19 million suggests a substantial initial investment, but the total contract value over its extended period needs closer scrutiny for efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one source is capable of meeting the agency's needs, often due to unique capabilities, proprietary technology, or urgent requirements. The lack of multiple bidders means that the government did not benefit from the price competition that typically drives down costs and encourages innovation among potential suppliers.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible pricing through competitive negotiation, potentially leading to higher costs for taxpayers. It also reduces transparency in the procurement process.

Public Impact

The primary beneficiary is the Department of Defense, which receives advanced research and development services. The contract supports the development of technologies crucial for national security and defense capabilities. Geographic impact is concentrated around the contractor's facilities, likely in Virginia, but the technological advancements have national implications. Workforce implications include highly skilled R&D personnel employed by General Dynamics Mission Systems.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Lack of competition may lead to inflated costs.
CPFF structure can incentivize spending rather than efficiency.
R&D outcomes are inherently uncertain and difficult to guarantee.
Sole-source awards reduce transparency and accountability.

Positive Signals

Contract supports critical national security R&D.
General Dynamics Mission Systems is a known entity in defense contracting.
Fixed fee component provides some cost certainty for the contractor's profit.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences (excluding biotechnology). The market for defense R&D is characterized by high barriers to entry, specialized expertise, and significant government investment. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of R&D, but overall federal R&D spending is substantial, with defense being a major component. This contract represents a specific investment in advancing technological capabilities for military applications.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there an indication of significant subcontracting opportunities for small businesses based on the provided data. The award to a large prime contractor like General Dynamics Mission Systems suggests a focus on established capabilities rather than fostering small business participation in this specific instance. This could limit the ecosystem benefits for smaller, innovative firms.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with terms and conditions. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to monitor expenditures and prevent cost overruns. Transparency is limited by the sole-source nature, but reporting requirements within the contract should provide some level of insight into progress and spending.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Systems Engineering Services
Defense Contractor Support

Risk Flags

Sole-source award
Cost-plus pricing structure
Long contract duration
R&D inherent uncertainty

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.3 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. IGF::CL::IGF BASE YEAR

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 $40.3 million.

What is the period of performance?

Start: 2014-04-01. End: 2019-12-31.

What is the track record of General Dynamics Mission Systems in delivering on similar R&D contracts for the Department of Defense?

General Dynamics Mission Systems (GDMS) has a long history of contracting with the Department of Defense, often securing large, complex awards. Their track record in R&D is generally robust, encompassing a wide range of technological development areas. However, specific performance metrics for individual contracts, especially R&D efforts where outcomes can be uncertain, are not always publicly detailed. GDMS is known for its capabilities in areas like command and control, intelligence, surveillance, reconnaissance, and cyber warfare. While they possess the technical expertise, the success of R&D is inherently tied to the feasibility of the research objectives and the effectiveness of program management, which can vary across projects. Reviewing past performance evaluations, if available, would provide a more granular understanding of their delivery success on comparable R&D initiatives.

How does the pricing structure (Cost Plus Fixed Fee) compare to other R&D contracts of similar scope and duration?

The Cost Plus Fixed Fee (CPFF) structure is common for research and development contracts where the scope of work can be uncertain or evolve significantly. It allows the contractor to recover all allowable costs incurred plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF can be more expensive for the government if costs escalate beyond initial estimates, as the government bears the risk of cost overruns. However, for highly innovative or exploratory R&D, it provides flexibility that fixed-price contracts might stifle. Benchmarking requires comparing the fixed fee percentage and the total cost of similar R&D efforts. Without specific data on the fixed fee percentage for this contract and comparable sole-source R&D contracts, a precise value-for-money assessment is difficult, but CPFF generally carries a higher cost risk for the government than competitive fixed-price awards.

What are the primary risks associated with a sole-source R&D contract of this magnitude?

The primary risks associated with a sole-source R&D contract of this magnitude include a lack of price competition, potentially leading to higher costs for the government. Without multiple bidders, there's less incentive for the contractor to optimize efficiency or offer the lowest possible price. Furthermore, the R&D nature itself carries inherent risks related to technical feasibility and achieving desired outcomes within budget and schedule. A sole-source award can also reduce transparency and accountability, as there are fewer external checks on the contractor's performance and pricing. The government relies heavily on the contractor's integrity and the effectiveness of internal oversight mechanisms. Finally, there's a risk of vendor lock-in, where the government becomes dependent on a single provider for critical capabilities.

What are the potential implications of the contract's duration (2100 days) on cost and performance?

A contract duration of 2100 days (approximately 5.75 years) for an R&D effort of this scale suggests a long-term, potentially complex development program. Such extended durations can increase the risk of cost escalation due to inflation, changes in technology, or evolving requirements. For the contractor, a longer duration provides stability and a predictable revenue stream, but it also necessitates sustained management focus and resource allocation. From a performance perspective, a lengthy timeline allows for thorough research, development, testing, and refinement. However, it also increases the challenge of maintaining momentum and ensuring that the final deliverable remains relevant to the evolving needs of the Department of Defense by the end of the contract period. Effective milestone management and regular performance reviews are crucial to mitigate risks associated with long contract durations.

How does the base year award of $19.17M compare to the total contract value of $40.26M, and what does this suggest about potential future funding?

The base year award of approximately $19.17 million represents about 47.6% of the total contract value of $40.26 million. This indicates that a substantial portion of the contract's funding was allocated to the initial phase. The remaining value suggests significant potential for follow-on work, options, or task orders to be exercised over the contract's life. In a Cost Plus Fixed Fee (CPFF) contract, this structure often implies that the initial base award covers foundational research and development activities, with subsequent funding contingent on meeting milestones, demonstrating progress, and the continued need for the developed technology. The significant remaining value highlights the government's commitment to the program's long-term development and potential for future investment in the technology being researched.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002413R5209

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 9500 INNOVATION DR, MANASSAS, VA, 20110

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $55,440,694

Exercised Options: $48,412,961

Current Obligation: $40,255,277

Actual Outlays: $7

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $5,379,269

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline