DoD's $39.4M hardware procurement for wireless communications saw no competition, raising value concerns

Contract Overview

Contract Amount: $39,415,864 ($39.4M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-02-12

End Date: 2022-03-12

Contract Duration: 1,124 days

Daily Burn Rate: $35.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROCUREMENT OF HARDWARE ITEMS.

Place of Performance

Location: SCOTTSDALE, MARICOPA County, ARIZONA, 85257

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $39.4 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: PROCUREMENT OF HARDWARE ITEMS. Key points: 1. The contract's lack of competition suggests potential overpayment and limited market exploration. 2. A single award without competition limits the government's ability to secure the best possible pricing. 3. The fixed-price contract type shifts some risk to the contractor, but value is still a concern. 4. Performance duration of nearly three years warrants scrutiny for ongoing needs and potential obsolescence. 5. The procurement falls within the wireless communications equipment manufacturing sector, a dynamic and evolving field. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms in this sector.

Value Assessment

Rating: questionable

Without competitive bids, it is difficult to benchmark the value for money on this $39.4 million contract. The fixed-price nature provides some cost certainty, but the absence of competition means the government may not have achieved the most favorable pricing. Comparing this to similar procurements for comparable hardware would be necessary to assess if the price paid was reasonable in the market. The lack of transparency in pricing due to no competition is a significant drawback.

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 indicates that the Department of the Navy likely determined that only one source was capable of meeting the requirement, or that circumstances precluded a competitive process. The lack of competition means there was no price discovery through market forces, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium for this hardware due to the absence of competitive bidding. The government missed an opportunity to leverage market competition to drive down prices and ensure the best value.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential hardware for its operations. The contract supports the acquisition of wireless communications equipment, crucial for military command and control. The geographic impact is primarily within the Department of Defense's operational theaters, though the hardware itself is manufactured in Arizona. The contract supports jobs within the manufacturing sector, specifically in the production of advanced communications equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about price reasonableness and potential for overpayment.
Sole-source award limits transparency and opportunities for market-driven cost savings.
Procurement of hardware in a rapidly evolving technology sector could lead to obsolescence issues if not managed carefully.
The extended performance period (nearly three years) requires diligent oversight to ensure continued relevance and performance.

Positive Signals

Fixed-price contract type provides cost certainty for the government once awarded.
The award was made to General Dynamics Mission Systems, Inc., a known entity in defense contracting.
The contract specifies delivery of hardware, a tangible asset with clear deliverables.

Sector Analysis

This contract falls under the 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing' sector. This is a critical and rapidly evolving industry, essential for modern defense capabilities. The market is characterized by significant technological advancements and high barriers to entry due to R&D costs and specialized manufacturing. Comparable spending benchmarks would typically involve other large-scale procurements of specialized communication systems by defense agencies.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like General Dynamics Mission Systems, Inc. suggests that opportunities for small businesses would likely be through subcontracts, if any, awarded by the prime. The lack of a specific small business set-aside means direct opportunities for small businesses to compete for this prime contract were absent.

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 terms of the firm fixed-price contract, including delivery schedules and specifications. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Communications Equipment Procurements
Wireless Communications Infrastructure Contracts
Defense Manufacturing Sector Spending
Sole-Source Defense Contracts
Naval Technology Acquisitions

Risk Flags

Lack of Competition
Potential for Overpricing
Risk of Technological Obsolescence
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.4 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. PROCUREMENT OF HARDWARE ITEMS.

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 $39.4 million.

What is the period of performance?

Start: 2019-02-12. End: 2022-03-12.

What is the track record of General Dynamics Mission Systems, Inc. in fulfilling similar Department of Defense contracts?

General Dynamics Mission Systems, Inc. (GDMS) has a substantial track record with the Department of Defense, often securing large and complex contracts related to command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) systems. They are a major defense contractor known for producing a wide range of electronic systems, including secure communication devices, networking solutions, and mission computing. Their history includes numerous awards for hardware, software, and integrated systems across various military branches. While this specific contract was sole-sourced, GDMS's broader portfolio indicates experience in delivering advanced technological solutions. However, a detailed review of past performance on similar sole-source awards would be necessary to fully assess their reliability and pricing practices in such contexts.

How does the $39.4 million value of this contract compare to similar procurements for wireless communication hardware?

Benchmarking the $39.4 million value of this contract against similar procurements is challenging without more specific details on the exact hardware procured and its technical specifications. However, given the sole-source nature, it is difficult to ascertain if this represents a competitive market price. Large-scale procurements of specialized military-grade wireless communication equipment can range significantly in cost depending on factors like encryption capabilities, ruggedization, bandwidth, and integration requirements. If this contract was for standard commercial off-the-shelf (COTS) equipment, the price might be considered high without competition. Conversely, if it involves highly specialized, proprietary, or custom-developed systems, the cost could be more aligned with market rates for such niche products. A detailed comparison would require access to data on other sole-source or competed contracts for functionally equivalent systems.

What are the primary risks associated with a sole-source procurement of this magnitude?

The primary risks associated with a sole-source procurement of this magnitude, such as the $39.4 million hardware contract, include potential overpricing due to the lack of competitive pressure, reduced innovation from the absence of market alternatives, and a higher risk of vendor lock-in. Without competition, the government has less leverage to negotiate favorable terms and pricing. There's also a risk that the chosen vendor may not be the most capable or efficient provider if a proper market analysis wasn't conducted. Furthermore, sole-source awards can sometimes face greater public scrutiny regarding fairness and justification. The extended performance period (nearly three years) also introduces risks related to technological obsolescence and the contractor's sustained performance and financial stability.

What does the 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing' classification (NAICS 334220) imply about this contract?

The NAICS code 334220, 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing,' indicates that the procured hardware is related to the production of equipment used for transmitting and receiving radio and television broadcast signals, as well as other wireless communication devices. This sector is characterized by rapid technological advancements, including the development of 5G, satellite communications, and advanced networking solutions. For a defense contract, this likely means the hardware is intended for secure, reliable, and potentially high-bandwidth communication systems critical for military operations. The classification suggests the government is acquiring specialized equipment that may incorporate advanced features beyond standard commercial offerings, potentially justifying a higher cost but also increasing the risk of obsolescence if not managed proactively.

Given the contract duration of 1124 days (approx. 3 years), what are the implications for technological obsolescence?

A contract duration of approximately three years for wireless communications hardware carries a significant risk of technological obsolescence. The pace of innovation in wireless technology is extremely rapid. By the time the contract concludes, the procured hardware might be outdated compared to newer, more capable, or more efficient technologies available on the market. This could impact the long-term effectiveness and interoperability of the systems. To mitigate this, the government should have implemented robust technical refresh clauses, performance monitoring, and potentially phased deliveries allowing for upgrades. Without such measures, the Department of Defense might find itself operating with legacy equipment sooner than anticipated, potentially requiring further investment to maintain operational parity.

What is the significance of the contract type being 'FIRM FIXED PRICE' in this context?

The 'FIRM FIXED PRICE' (FFP) contract type is significant because it establishes a ceiling price that the contractor must not exceed, and the government is obligated to pay the negotiated price regardless of the contractor's actual costs. For the government, this provides cost certainty and shifts the risk of cost overruns to the contractor. This is generally favorable for procurements where the scope of work is well-defined and the risks are manageable. In the context of this sole-source hardware procurement, the FFP type aims to provide budget predictability. However, the benefit of cost certainty is somewhat diminished by the lack of competition, as the initial fixed price might not have been as aggressively negotiated as it could have been in a competitive environment. The contractor bears the risk of increased costs, but the government bears the risk of paying a potentially inflated price if the initial negotiation was not optimal.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003917R0147

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 8201 E MCDOWELL ROAD, SCOTTSDALE, AZ, 85257

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

Financial Breakdown

Contract Ceiling: $39,415,864

Exercised Options: $39,415,864

Current Obligation: $39,415,864

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $549,558

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0003918D0002

IDV Type: IDC

Timeline