DoD's $46.7M R&D contract with General Dynamics Mission Systems faces scrutiny over limited competition and value

Contract Overview

Contract Amount: $46,673,420 ($46.7M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-11-15

End Date: 2026-11-14

Contract Duration: 2,556 days

Daily Burn Rate: $18.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: HARDWARE SYSTEMS, ENGINEERING SERVICES

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $46.7 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: HARDWARE SYSTEMS, ENGINEERING SERVICES Key points: 1. Contract awarded via a sole-source justification, raising concerns about price discovery and potential overpayment. 2. Significant duration of over 7 years suggests a long-term need for these specialized engineering services. 3. The contract's cost-plus-fixed-fee structure can incentivize cost overruns if not closely monitored. 4. Research and Development focus indicates investment in future capabilities, but requires rigorous performance evaluation. 5. Lack of small business participation noted, potentially limiting broader economic impact. 6. The contract falls under a broad R&D NAICS code, making direct cost comparisons challenging.

Value Assessment

Rating: questionable

The contract's value is difficult to benchmark due to its sole-source nature and specialized R&D focus. Without competitive bids, it's challenging to ascertain if the fixed fee adequately reflects market rates for similar engineering services. The cost-plus structure, while common in R&D, necessitates robust oversight to ensure costs remain reasonable and aligned with project milestones. Further analysis of the contractor's historical performance and pricing on similar sole-source awards would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This approach is typically reserved for situations where only one responsible source can provide the required services. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. It also raises questions about whether alternative solutions or contractors were adequately explored.

Taxpayer Impact: Taxpayers may be exposed to higher costs due to the absence of competitive pressure. Without multiple bids, there is a reduced incentive for the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of Defense and potentially the warfighter, who will receive advanced hardware systems and engineering support. Services delivered include research and development in physical, engineering, and life sciences, contributing to technological advancement. The geographic impact is primarily within Virginia, where the contractor is located, potentially supporting local jobs. Workforce implications include specialized engineering and technical roles within General Dynamics Mission Systems.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure requires diligent cost monitoring.
Lack of small business involvement.

Positive Signals

Contract supports critical R&D for national defense.
Long contract duration suggests sustained capability development.
General Dynamics is an established defense contractor.

Sector Analysis

This contract falls within the broader Research and Development sector, specifically NAICS code 541715, which covers R&D in physical, engineering, and life sciences. This is a critical area for defense modernization, involving significant investment in innovation. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of the work and the sole-source award. However, the Department of Defense is a major investor in R&D, with numerous contracts awarded across various scientific and engineering disciplines.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses. The award to a large, established prime contractor like General Dynamics Mission Systems suggests a focus on prime capability rather than broad small business engagement. This could limit the direct economic benefits to the small business ecosystem in this specific contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the contract's performance metrics and milestones, particularly given the R&D nature. Transparency may be limited due to the sole-source award, but contract modifications and performance reports should be accessible through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Research and Development Spending
General Dynamics Mission Systems Contracts
Navy Advanced Technology Development
Hardware Systems Engineering
Cost Plus Fixed Fee Contracts

Risk Flags

Sole Source Justification
Cost Plus Fixed Fee Structure
Long Contract Duration
Lack of Small Business Set-Aside

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.7 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. HARDWARE SYSTEMS, ENGINEERING SERVICES

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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $46.7 million.

What is the period of performance?

Start: 2019-11-15. End: 2026-11-14.

What is General Dynamics Mission Systems' track record with sole-source R&D contracts for the Department of Defense?

General Dynamics Mission Systems (GDMS) has a history of receiving sole-source contracts from the Department of Defense, particularly for specialized systems and R&D initiatives where they possess unique capabilities or are deemed the only responsible source. Analyzing their past performance on similar sole-source awards would involve reviewing contract histories for on-time delivery, adherence to budget (within the cost-plus framework), and successful achievement of technical milestones. GDMS's extensive experience in defense contracting suggests a capacity to manage complex R&D projects, but the absence of competition on sole-source awards necessitates careful scrutiny of pricing and value delivered to ensure taxpayer funds are used efficiently. Publicly available contract data can provide insights into the volume and value of such awards, but detailed performance metrics are often proprietary.

How does the $46.7 million value compare to similar R&D contracts in the physical and engineering sciences sector?

Benchmarking the $46.7 million value of this contract against similar R&D efforts in the physical, engineering, and life sciences (NAICS 541715) is challenging due to several factors. Firstly, the sole-source nature means there's no direct competitive pricing data. Secondly, R&D projects vary immensely in scope, complexity, and duration. A $46.7 million contract over seven years for advanced hardware systems development might represent fair value if it involves cutting-edge technology and highly specialized expertise. However, without competitive bids or detailed project scope comparisons, it's difficult to definitively state if it's a market-rate price. The Department of Defense awards numerous R&D contracts, ranging from millions to billions, making this contract moderately sized within the broader defense R&D portfolio. A more precise comparison would require access to detailed statements of work and cost breakdowns for comparable competed contracts.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee R&D contract of this magnitude?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) R&D contract are twofold. First, the sole-source award eliminates competitive pressure, potentially leading to higher costs than if the contract were competed. The government relies heavily on the contractor's proposed costs and the contractor's own cost controls. Second, the CPFF structure, while allowing flexibility for R&D where costs can be unpredictable, carries inherent risks of cost escalation. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. If not rigorously monitored, this structure can incentivize spending, as the contractor's fee remains fixed regardless of the actual costs incurred. Effective oversight, detailed cost tracking, and strong program management are crucial to mitigate these risks and ensure the contract delivers value within its allocated budget.

How does the contract's duration (over 7 years) impact its overall value and risk assessment?

The contract's substantial duration of over 7 years (2556 days) significantly impacts its value and risk assessment. A longer duration allows for the development and maturation of complex technologies, which is often necessary in R&D. This extended period can provide stability for the contractor and facilitate deeper integration of systems. However, it also increases the risk of cost overruns due to potential changes in requirements, inflation, or unforeseen technical challenges over such an extended timeline. For taxpayers, a long-term commitment requires sustained oversight to ensure the project remains aligned with evolving defense needs and technological advancements. It also means that the initial cost estimates and fixed fee are locked in for a considerable period, potentially limiting flexibility if market conditions or project scope change dramatically.

What are the implications of the contract not being competed for small business participation?

The implications of this contract not being competed for small business participation are significant. Sole-source awards, especially to large prime contractors like General Dynamics Mission Systems, often bypass opportunities for small businesses to compete for prime contracts. While large primes may have subcontracting plans, the absence of a competitive prime solicitation reduces the direct avenues for small businesses to engage. This contract, awarded under a broad R&D category, might require highly specialized capabilities that larger firms are better positioned to provide. However, it also means that potential innovation and economic benefits that could have been channeled through smaller, agile businesses are likely concentrated within the prime contractor, potentially limiting the broader impact on the small business defense industrial base.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and 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: N0002419R5213

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 9500 INNOVATION DR, MANASSAS, VA, 20110

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

Financial Breakdown

Contract Ceiling: $56,337,700

Exercised Options: $55,680,700

Current Obligation: $46,673,420

Actual Outlays: $4,415,866

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $6,641,212

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline