DoD's $30M Contract for Electronic Components Lacks Competition, Raises Cost Concerns
Contract Overview
Contract Amount: $30,079,200 ($30.1M)
Contractor: General Dynamics Land Systems Inc.
Awarding Agency: Department of Defense
Start Date: 2018-06-27
End Date: 2021-11-01
Contract Duration: 1,223 days
Daily Burn Rate: $24.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: ABV ELECTRONIC COMPO NSN: 5998-01-465-7017 MFR PART NUMBER: 12388840-3 QTY: 332
Place of Performance
Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310
State: Michigan Government Spending
Plain-Language Summary
Department of Defense obligated $30.1 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: ABV ELECTRONIC COMPO NSN: 5998-01-465-7017 MFR PART NUMBER: 12388840-3 QTY: 332 Key points: 1. Significant spending on electronic components by the Defense Logistics Agency. 2. Sole-source award to General Dynamics Land Systems Inc. limits price discovery. 3. Potential for inflated costs due to lack of competitive bidding. 4. Sector context: Other Electronic Component Manufacturing, a critical but often concentrated industry.
Value Assessment
Rating: questionable
The contract's total value of $30,079,200 for 332 units suggests a high per-unit cost. Without competitive benchmarking, it's difficult to assess if this price is reasonable compared to market rates for similar electronic components.
Cost Per Unit: $90,599.99
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly hinders price discovery and competition, potentially leading to higher costs for taxpayers.
Taxpayer Impact: The lack of competition likely results in a higher price than could have been achieved through a competitive process, impacting taxpayer value.
Public Impact
Taxpayers may be overpaying for essential electronic components due to the absence of competitive bidding. The reliance on a single supplier could create supply chain vulnerabilities for critical defense systems. Lack of transparency in pricing makes it difficult for the public to assess the fairness of the expenditure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- High per-unit cost
- Lack of competition
- No small business participation
Positive Signals
- Definitive contract awarded
- Firm fixed price contract type
Sector Analysis
This contract falls within the 'Other Electronic Component Manufacturing' sector, which is vital for defense systems. Spending benchmarks in this sector can vary widely based on component complexity and market dynamics, but competitive pricing is generally expected.
Small Business Impact
The data indicates that small businesses did not participate in this contract, as it was awarded to a large corporation and marked as not set-aside for small businesses. This misses an opportunity to support smaller enterprises within the defense supply chain.
Oversight & Accountability
The sole-source nature of this award warrants further scrutiny by oversight bodies to ensure the price paid was fair and reasonable and that competitive alternatives were not overlooked.
Related Government Programs
- Other Electronic Component Manufacturing
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- High per-unit cost raises concerns about value for money.
- No small business participation noted.
- Potential for supply chain vulnerability due to single supplier.
- Lack of transparency in pricing justification.
Tags
other-electronic-component-manufacturing, department-of-defense, mi, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $30.1 million to GENERAL DYNAMICS LAND SYSTEMS INC.. ABV ELECTRONIC COMPO NSN: 5998-01-465-7017 MFR PART NUMBER: 12388840-3 QTY: 332
Who is the contractor on this award?
The obligated recipient is GENERAL DYNAMICS LAND SYSTEMS INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $30.1 million.
What is the period of performance?
Start: 2018-06-27. End: 2021-11-01.
What justification was provided for the sole-source award, and were alternative competitive strategies considered?
The provided data does not include the justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source can provide the required supplies or services. However, without this documentation, it's impossible to assess if the agency adequately explored competitive options or if the justification is valid, potentially impacting the overall value for taxpayers.
How does the per-unit cost of $90,599.99 compare to similar electronic components procured competitively?
Benchmarking this per-unit cost against competitively procured similar electronic components is crucial for assessing value. Given the sole-source nature, it's highly probable that this price is inflated. A thorough market analysis comparing this price to industry standards and prices paid by other agencies for comparable items would be necessary to determine the extent of potential overpayment.
What are the long-term implications of relying on a single supplier for these critical electronic components?
Long-term reliance on a single supplier, especially for critical components, poses significant risks. These include potential supply chain disruptions, price escalations over time as the supplier faces less market pressure, and reduced innovation. The Department of Defense should actively seek opportunities to foster competition or develop alternative sources to mitigate these risks.
Industry Classification
NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing
Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: SPRDL117R0482
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: General Dynamics Corp (UEI: 001381284)
Address: 38500 MOUND RD, STERLING HEIGHTS, MI, 48310
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: $30,079,200
Exercised Options: $30,079,200
Current Obligation: $30,079,200
Subaward Activity
Number of Subawards: 121
Total Subaward Amount: $73,042,126
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-06-27
Current End Date: 2021-11-01
Potential End Date: 2021-11-01 12:11:00
Last Modified: 2021-03-22
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