DoD awards $53.4M to General Dynamics for SSBN Development, a sole-source engineering services contract

Contract Overview

Contract Amount: $53,406,946 ($53.4M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-11-08

End Date: 2022-09-30

Contract Duration: 1,787 days

Daily Burn Rate: $29.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SSBN DEVELOPMENT

Place of Performance

Location: PITTSFIELD, BERKSHIRE County, MASSACHUSETTS, 01201

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $53.4 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: SSBN DEVELOPMENT Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract's cost-plus-incentive-fee structure aims to control costs but can lead to higher final prices. 3. Long duration of 1787 days suggests a complex, long-term project with potential for scope creep. 4. Lack of competition limits opportunities for other firms and may not reflect the best market value. 5. Engineering services are critical for defense, but the absence of competition warrants scrutiny. 6. The contract's value, while significant, needs to be benchmarked against similar complex engineering projects.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source, cost-plus-incentive-fee contract is challenging due to the unique nature of SSBN development and the lack of competitive bids. The cost-plus structure, while incentivizing performance, inherently carries a risk of cost overruns compared to fixed-price contracts. Without comparable sole-source contracts for similar highly specialized defense systems, it's difficult to definitively assess if the $53.4 million represents fair market value. However, the absence of competition suggests potential for higher pricing than if multiple vendors had vied for the work.

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. This typically occurs when only one vendor possesses the unique capabilities, technology, or security clearances required for a highly specialized project. The lack of competition means there were no other bidders to compare against, and price discovery was limited to negotiations between the agency and the single source. This approach can be necessary for national security reasons but often results in higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive pressure. Without multiple bids, there's less assurance that the negotiated price reflects the lowest possible cost for the required services.

Public Impact

The primary beneficiary is the Department of Defense, specifically its strategic weapons programs. Services delivered include critical engineering and development support for Submersible Ship Ballistic Nuclear (SSBN) platforms. The geographic impact is likely concentrated around the contractor's facilities and relevant naval bases. This contract supports highly specialized engineering roles, contributing to the retention of a skilled defense industrial workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost-plus-incentive-fee contract type can lead to higher final costs if not managed tightly.
Long contract duration increases risk of scope creep and cost overruns.
Lack of transparency inherent in sole-source procurements hinders public accountability.
Specialized nature of SSBN development means limited contractor pool, reinforcing sole-source reliance.

Positive Signals

Contract supports critical national security assets (SSBNs), ensuring strategic deterrence.
General Dynamics is a known entity with extensive experience in defense systems.
Cost-plus-incentive-fee structure can align contractor and government interests on performance.
Long duration allows for sustained focus and development on a complex, multi-year project.
Engineering services are essential for maintaining and modernizing strategic nuclear capabilities.

Sector Analysis

This contract falls within the Defense Engineering Services sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and long-term government relationships. The market size for specialized defense engineering is substantial, driven by continuous modernization needs for military platforms. Comparable spending benchmarks are difficult to establish due to the unique nature of SSBN development, but overall defense engineering services represent billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss' being false. Furthermore, the 'sb' flag is also false, suggesting no specific subcontracting goals for small businesses were mandated within this particular award. This means the primary contract value flows to a large business, and the direct impact on the small business ecosystem through this specific award is likely minimal, though the prime contractor may engage small businesses indirectly.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-incentive-fee structure necessitates close monitoring of costs and performance metrics to ensure the government receives value. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal agency review and potentially Inspector General oversight if issues arise.

Related Government Programs

Strategic Weapons Systems
Naval Nuclear Propulsion Program
Ballistic Missile Submarine Program
Defense Engineering Services
Advanced Weapons Development

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.4 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. SSBN DEVELOPMENT

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 $53.4 million.

What is the period of performance?

Start: 2017-11-08. End: 2022-09-30.

What is the track record of General Dynamics Mission Systems, Inc. with similar sole-source defense contracts?

General Dynamics Mission Systems, Inc. (GDMS) has a long history of working with the Department of Defense on complex, high-value defense systems, often through sole-source or limited-competition contracts due to the specialized nature of the work. They are a primary contractor for various naval programs, including submarine systems and command and control. While specific data on all their sole-source contracts isn't publicly itemized in this format, their extensive portfolio in areas like SSBN components, cybersecurity, and C4ISR systems indicates a pattern of being a go-to provider for critical, technologically advanced defense needs. This experience suggests they possess the requisite expertise and security clearances, which often underpins sole-source justifications. However, the lack of competition in such awards necessitates rigorous government oversight to ensure fair pricing and effective performance, regardless of the contractor's established reputation.

How does the $53.4M value compare to other SSBN development contracts or similar large-scale defense engineering projects?

Directly comparing the $53.4 million value of this specific SSBN development contract is challenging due to the highly specialized and often classified nature of such projects, as well as the sole-source award. SSBN development involves intricate systems, long lifecycles, and unique technological requirements, making direct cost comparisons difficult. However, broader defense engineering services contracts, especially those involving major platform development or modernization, can range from tens of millions to billions of dollars over their lifespan. For instance, contracts for new aircraft development, major ship construction, or advanced missile system programs often exceed this amount significantly. The $53.4 million here likely represents a specific phase or component of a larger, multi-year SSBN program. Without access to detailed breakdowns of the work performed and the specific technologies involved, benchmarking against 'market rates' is impractical. The key consideration is whether this amount is justified by the scope, complexity, and duration of the engineering services provided, especially in the absence of competition.

What are the primary risks associated with a sole-source, cost-plus-incentive-fee contract for a project like SSBN development?

The primary risks associated with a sole-source, cost-plus-incentive-fee (CPIF) contract for SSBN development are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than could be achieved through open competition. The government has less leverage to negotiate the best possible price. Secondly, the CPIF structure, while designed to incentivize performance and cost control, carries inherent risks. If the target cost is set too high or the incentive structure is not well-defined, the contractor may not be sufficiently motivated to minimize costs, potentially leading to cost overruns that are shared with the government. Furthermore, the complexity and long duration typical of SSBN development increase the risk of scope creep, where project requirements expand beyond the original agreement, further driving up costs. Effective government oversight is crucial to mitigate these risks, including rigorous cost tracking, performance monitoring, and careful management of contract modifications.

What does the contract duration of 1787 days (approx. 4.9 years) imply about the nature of the SSBN development work?

A contract duration of 1787 days, approximately 4.9 years, for SSBN development strongly suggests that this contract covers a significant and complex phase of the program, rather than a short-term task. Such extended timelines are typical for major defense acquisition programs that involve extensive research, design, prototyping, testing, and integration of highly sophisticated systems. This duration implies a need for sustained engineering effort, potentially encompassing multiple development milestones, design iterations, and the resolution of complex technical challenges. It also indicates a substantial level of commitment from both the contractor and the Department of Defense. The long duration increases the importance of robust project management, risk mitigation strategies, and clear communication channels to ensure the project stays on track and within budget, despite the inherent uncertainties of developing cutting-edge strategic assets.

How does the 'Engineering Services' (NAICS 541330) classification impact the analysis of this contract?

The classification of 'Engineering Services' under NAICS code 541330 is crucial as it defines the core nature of the work performed under this contract. This code encompasses firms that provide architectural, engineering, and related services, often involving the application of engineering principles to design, develop, and integrate complex systems. For SSBN development, this means the contract likely involves activities such as system design, technical analysis, performance modeling, integration engineering, testing support, and potentially project management oversight. This classification highlights the high level of technical expertise required and suggests that the contract value is primarily driven by intellectual capital, specialized knowledge, and the application of advanced engineering methodologies rather than the production of physical goods. It also places the contract within a sector known for its long-term relationships with government agencies, particularly in defense.

What are the potential implications of this contract for future spending on SSBN programs?

This contract, valued at $53.4 million and covering nearly five years of SSBN development, serves as an indicator of ongoing investment in the U.S. strategic nuclear deterrent. Its existence suggests that the U.S. Navy is actively engaged in maintaining, modernizing, or potentially developing new generations of its ballistic missile submarine fleet. The specific nature of the 'SSBN Development' work could relate to upgrades for existing Ohio-class submarines, the ongoing Columbia-class submarine program, or related support systems. As a sole-source award, it highlights the specialized capabilities required and the limited number of contractors capable of performing such critical work. Future spending will likely depend on the success of this development phase, the overall strategic posture of the U.S., and the lifecycle needs of the submarine force. Continued investment in this area is expected given the strategic importance of SSBNs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003018Q0005

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: $56,895,194

Exercised Options: $55,205,704

Current Obligation: $53,406,946

Actual Outlays: $2,868,597

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $380,111

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline