DoD's $71.3M Combat System Development Contract Awarded to General Dynamics Mission Systems

Contract Overview

Contract Amount: $71,257,554 ($71.3M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-10-31

End Date: 2029-08-29

Contract Duration: 3,590 days

Daily Burn Rate: $19.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: COMBAT SYSTEM DEVELOPMENT&INTEGRATION

Place of Performance

Location: PITTSFIELD, BERKSHIRE County, MASSACHUSETTS, 01201

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $71.3 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: COMBAT SYSTEM DEVELOPMENT&INTEGRATION Key points: 1. Contract awarded on a cost-plus-incentive-fee basis, suggesting potential for cost overruns if not managed carefully. 2. The contract has a long duration of 3590 days, indicating a significant, long-term commitment. 3. Awarded to a single vendor, raising questions about the extent of competition and potential price efficiencies. 4. The North American Industry Classification System (NAICS) code 334511 points to a focus on complex system manufacturing. 5. The contract's value is substantial, representing a significant investment in defense capabilities. 6. The contract is a definitive contract, implying a firm commitment from the government. 7. The contract is not set aside for small businesses, suggesting large prime contractors are expected to perform the work.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar development efforts. The cost-plus-incentive-fee structure means the final cost is not fixed and depends on performance and cost control. Given the lack of competition, it's difficult to assess if the pricing reflects market value or if there's an opportunity for better value through a more competitive process. The long duration and significant total value warrant close monitoring of cost performance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary unique capabilities, technology, or intellectual property. The lack of competition means that the government did not benefit from the price discovery and potential cost savings that a competitive bidding process could offer.

Taxpayer Impact: Taxpayers may not be receiving the best possible price for these services due to the absence of competitive pressure. The government's negotiating position is inherently weaker in a sole-source scenario.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader Department of Defense, receiving advanced combat system development. The contract supports the development and integration of critical combat systems, enhancing naval warfare capabilities. The geographic impact is primarily within the United States, where General Dynamics Mission Systems operates and develops these systems. This contract likely supports a specialized workforce of engineers, technicians, and program managers within General Dynamics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Cost-plus-incentive-fee structure requires diligent oversight to control costs.
Long contract duration (over 9 years) increases exposure to potential cost escalations and scope creep.

Positive Signals

Award to a known entity, General Dynamics Mission Systems, suggests a level of confidence in their capabilities.
The contract aims to develop and integrate advanced combat systems, crucial for national defense.
The definitive contract type provides a clear framework for the long-term engagement.

Sector Analysis

This contract falls within the defense industrial sector, specifically focusing on the development and integration of complex electronic systems for military applications. The market for such specialized defense systems is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Comparable spending benchmarks would typically involve other major defense system development contracts, often awarded through competitive processes, though sole-source awards for unique capabilities are not uncommon in this sector.

Small Business Impact

This contract does not appear to have a small business set-aside. General Dynamics Mission Systems is a large prime contractor, and while they may utilize small businesses for subcontracting, the primary award is not directed towards small business participation. The absence of a set-aside means that opportunities for small businesses are dependent on the prime contractor's subcontracting plans and the availability of specialized services they require.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the cost-plus-incentive-fee structure, which ties contractor profit to performance and cost targets. Transparency may be limited due to the sole-source nature and the sensitive defense-related aspects of the work. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations.

Related Government Programs

Naval Combat Systems
Defense Electronics Manufacturing
System Integration Services
Advanced Weapons Development

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.3 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. COMBAT SYSTEM DEVELOPMENT&INTEGRATION

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 $71.3 million.

What is the period of performance?

Start: 2019-10-31. End: 2029-08-29.

What is the historical spending pattern for combat system development and integration by the Department of the Navy with General Dynamics Mission Systems?

Analyzing historical spending patterns for combat system development and integration by the Department of the Navy with General Dynamics Mission Systems requires access to detailed contract databases. However, it is common for large defense contractors like General Dynamics to receive substantial, long-term contracts for complex systems. The current award of approximately $71.3 million over a period of nearly 10 years suggests a significant ongoing relationship. Without specific historical data, it's difficult to ascertain if this represents an increase, decrease, or consistent level of spending compared to previous periods. Factors influencing historical spending would include technological advancements, evolving threats, and budgetary allocations within the Navy's procurement priorities. Further analysis would involve examining past awards to this contractor for similar services to establish a trend.

How does the cost-plus-incentive-fee (CPIF) structure typically impact final costs compared to other contract types for similar defense development projects?

The Cost-Plus-Incentive-Fee (CPIF) contract type aims to incentivize the contractor to control costs while achieving performance targets. In a CPIF contract, the final profit is adjusted based on whether the final costs are below or above a target cost, and whether performance objectives are met. Compared to a firm-fixed-price (FFP) contract, CPIF generally allows for greater flexibility when project requirements are uncertain or likely to change, which is common in R&D and system development. However, CPIF contracts carry a higher risk of cost growth than FFP contracts if cost targets are not met or if the government's oversight is insufficient. They are typically more expensive for the government than FFP contracts when costs are well-defined, but can offer better value than pure cost-plus-fixed-fee (CPFF) contracts by sharing some of the cost risk with the contractor and incentivizing efficiency.

What are the specific performance metrics or targets associated with this contract that trigger incentive fees?

The provided data does not specify the exact performance metrics or targets that trigger incentive fees for this particular contract. In a Cost-Plus-Incentive-Fee (CPIF) contract, these metrics are typically defined in the contract's schedule and are directly related to the program's objectives. They could include factors such as meeting specific technical performance milestones (e.g., system reliability, speed, accuracy), adhering to development timelines, achieving certain levels of system integration, or demonstrating successful testing outcomes. The incentive fee structure would outline how deviations from the target cost and performance targets affect the contractor's final profit. Detailed information on these specific metrics would be found within the contract's Statement of Work (SOW) and the contract clauses detailing the incentive arrangements.

What is the typical duration for contracts of this nature (combat system development and integration) within the Department of Defense?

Contracts for combat system development and integration within the Department of Defense often have long durations due to the complexity, evolving nature of threats, and the need for extensive testing and integration. Durations can range from several years to over a decade. This specific contract's duration of 3590 days (approximately 9.8 years) is substantial but not unusual for major defense acquisition programs that involve significant research, development, testing, and evaluation phases. Shorter contracts might focus on specific upgrades or components, while longer-term contracts like this one typically encompass the full lifecycle from initial concept through to integration and initial operational capability, often with options for sustainment or further development.

What are the potential risks associated with a sole-source award for a critical defense system like this?

Sole-source awards for critical defense systems carry several potential risks. The most significant is the lack of price competition, which can lead to higher costs for taxpayers as the contractor faces less pressure to offer the most competitive pricing. There's also a risk of reduced innovation, as the absence of competing vendors may lessen the incentive for the sole-source provider to explore novel solutions or efficiencies beyond what is contractually required. Furthermore, reliance on a single supplier can create supply chain vulnerabilities and reduce the government's leverage in future negotiations or contract modifications. Dependence on a sole provider can also make it difficult to transition to alternative solutions or contractors if performance issues arise or if the contractor's capabilities become obsolete.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002418R5224

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 100 PLASTICS AVE, PITTSFIELD, MA, 01201

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

Financial Breakdown

Contract Ceiling: $386,722,110

Exercised Options: $176,239,015

Current Obligation: $71,257,554

Actual Outlays: $4,035,865

Subaward Activity

Number of Subawards: 22

Total Subaward Amount: $15,988,603

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline