DoD awards $701M for engineering design, development, and production to General Dynamics Mission Systems

Contract Overview

Contract Amount: $70,147,668 ($70.1M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-01-12

End Date: 2028-09-30

Contract Duration: 1,723 days

Daily Burn Rate: $40.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: ENGINEERING DESIGN DEVELOPMENT AND PRODUCTION

Place of Performance

Location: CHARLEROI, WASHINGTON County, PENNSYLVANIA, 15022

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $70.1 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: ENGINEERING DESIGN DEVELOPMENT AND PRODUCTION Key points: 1. Contract awarded for critical engineering, design, development, and production services. 2. Significant investment in advanced system capabilities for the Department of the Navy. 3. Sole-source award raises questions about competition and potential cost efficiencies. 4. Long-term contract duration suggests a need for sustained support and development. 5. Focus on Search, Detection, Navigation, Guidance, and related systems. 6. Contract type (Cost Plus Incentive Fee) aims to balance cost control with performance incentives.

Value Assessment

Rating: fair

The contract value of $701.5 million over approximately 4.5 years represents a substantial investment. Benchmarking this specific engineering design, development, and production contract is challenging without detailed scope and deliverable comparisons. However, the Cost Plus Incentive Fee (CPIF) structure suggests an expectation of performance-based cost management, which can be effective if incentives are well-aligned. The absence of competitive bidding limits the ability to assess optimal pricing against market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that the Department of the Navy identified General Dynamics Mission Systems as the only responsible source capable of meeting the requirement. This approach bypasses the standard competitive bidding process, which typically involves multiple proposals and evaluations. While sole-source awards are sometimes necessary for specialized capabilities or urgent needs, they reduce the opportunity for price discovery through market competition.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as the government does not benefit from the downward pressure that multiple bidders exert on pricing.

Public Impact

Benefits the Department of the Navy by providing essential engineering and production capabilities for critical systems. Supports the development and sustainment of advanced search, detection, navigation, and guidance systems. Impacts the defense industrial base, particularly in specialized engineering and manufacturing sectors. Likely involves a skilled workforce in engineering, design, and production roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
CPIF contract type requires careful monitoring of incentive structures to ensure alignment with government goals.
Long contract duration increases exposure to potential cost overruns or scope creep if not managed diligently.

Positive Signals

Award to an established contractor with a track record in defense systems.
CPIF structure incentivizes performance, potentially leading to better outcomes.
Contract duration allows for sustained development and integration of complex systems.

Sector Analysis

This contract falls within the broader defense electronics and systems manufacturing sector. The North American Industry Classification System (NAICS) code 334511 covers Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. This is a highly specialized segment of the defense industrial base, often characterized by high barriers to entry due to technological complexity and security requirements. Spending in this area is critical for maintaining technological superiority in defense capabilities.

Small Business Impact

The contract indicates that small business participation was not a primary set-aside consideration, as the 'sb' field is false. While General Dynamics Mission Systems is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on the prime contractor's strategy and the specific needs of the engineering and production tasks. Further analysis of subcontracting plans would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy contracting and program management offices. The Cost Plus Incentive Fee structure necessitates close monitoring of performance metrics and cost expenditures to ensure that incentives are driving desired outcomes and that costs remain within acceptable bounds. Inspector General involvement would typically occur in cases of suspected fraud, waste, or abuse, or through specific audits requested by the agency.

Related Government Programs

Naval Sea Systems Command (NAVSEA) contracts
Defense Advanced Research Projects Agency (DARPA) projects
Tactical Systems Development Contracts
Advanced Navigation and Guidance Systems Procurement

Risk Flags

Sole-source award
Cost Plus Incentive Fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.1 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. ENGINEERING DESIGN DEVELOPMENT AND PRODUCTION

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 $70.1 million.

What is the period of performance?

Start: 2024-01-12. End: 2028-09-30.

What is General Dynamics Mission Systems' track record with similar sole-source, cost-plus incentive fee contracts for the Department of the Navy?

General Dynamics Mission Systems (GDMS) has a significant history of contracting with the Department of Defense, including the Navy, often in sole-source or limited-competition scenarios for complex systems. Their experience spans various platforms and technologies, including C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems, which often involve design, development, and production. Analyzing past CPIF contracts awarded to GDMS would reveal their performance in managing costs and meeting performance targets under similar incentive structures. Historical data suggests GDMS is a capable contractor, but the effectiveness of CPIF relies heavily on the specific metrics and targets set within each contract, which are not detailed here. A review of past performance evaluations and contract close-outs for comparable GDMS contracts would provide deeper insight into their ability to deliver value under this specific award type.

How does the estimated value of this contract compare to similar engineering design, development, and production contracts within the defense sector?

The $701.5 million contract value for engineering design, development, and production is substantial, placing it in the upper tier for such specialized services within the defense sector. Benchmarking requires comparing it against contracts with similar scope, complexity, and duration. Contracts for developing and producing advanced sensor systems, communication suites, or integrated combat systems for naval platforms can easily reach hundreds of millions of dollars. For instance, contracts for developing next-generation sonar systems or advanced radar arrays often fall within this range. The sole-source nature of this award means direct price comparison with competitive bids is impossible, but the value is consistent with the high R&D and manufacturing costs associated with cutting-edge defense technology. The duration of nearly five years also contributes to the overall contract value.

What are the primary risks associated with a sole-source, Cost Plus Incentive Fee (CPIF) contract of this magnitude?

The primary risks associated with this sole-source CPIF contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to reduced cost consciousness and potentially higher prices than might be achieved through a competitive process. The government relies heavily on the contractor's integrity and the effectiveness of the negotiated incentive structure. Secondly, the CPIF structure, while designed to incentivize performance and cost control, carries inherent risks. If the incentive targets are poorly defined, too easily achievable, or not sufficiently aligned with the government's ultimate goals, the contractor may receive maximum fee without achieving optimal cost savings or performance breakthroughs. There's also the risk of cost overruns if the base cost estimates are inaccurate or if unforeseen technical challenges arise, which could escalate the total contract price, even with incentives.

What specific systems or technologies are likely being developed or produced under this contract, given the NAICS code and agency?

Given the NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing) and the awarding agency being the Department of the Navy, this contract likely pertains to advanced systems critical for naval operations. This could include next-generation radar systems for surface ships or submarines, advanced sonar arrays for underwater detection, sophisticated navigation and guidance systems for aircraft or missiles, electronic warfare systems, or integrated command and control systems that rely heavily on sensor data. The 'ENGINEERING DESIGN DEVELOPMENT AND PRODUCTION' description suggests a comprehensive effort, from initial concept and design through to the manufacturing and delivery of operational hardware and software. The focus is on systems that enable situational awareness, target acquisition, and precise operation at sea and in the air.

How has federal spending in the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector evolved over the past five years?

Federal spending within the NAICS code 334511 sector has generally seen consistent, significant investment, driven by ongoing modernization efforts across military branches, particularly the Navy and Air Force. Over the past five years, there has been a sustained demand for advanced sensor technologies, electronic warfare capabilities, and integrated navigation systems to maintain technological superiority. While specific figures fluctuate annually based on budget allocations and program priorities, the overall trend indicates robust government procurement in this area. Factors influencing spending include geopolitical tensions, the need to counter evolving threats, and the lifecycle replacement or upgrade of existing platforms and systems. The Department of Defense remains the primary customer, with significant portions allocated to research, development, testing, and evaluation (RDT&E) as well as procurement of end items.

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: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002422R6104

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $208,785,281

Exercised Options: $109,679,148

Current Obligation: $70,147,668

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $8,129,258

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline