DoD awards $15.8M contract for armored vehicle components, with General Dynamics Land Systems as prime

Contract Overview

Contract Amount: $15,851,870 ($15.9M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2022-07-25

End Date: 2026-03-30

Contract Duration: 1,344 days

Daily Burn Rate: $11.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NSN: 6150-01-692-2108 NSN: 4130-01-530-4612 NSN: 7025-01-674-6589 NSN: 7025-01-674-7188 NSN: 7025-01-674-6588 NSN: 1220-01-619-0117 NSN: 7021-01-674-7139

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $15.9 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: NSN: 6150-01-692-2108 NSN: 4130-01-530-4612 NSN: 7025-01-674-6589 NSN: 7025-01-674-7188 NSN: 7025-01-674-6588 NSN: 1220-01-619-0117 NSN: 7021-01-674-7139 Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract value of $15.8M is spread over a period of approximately 3 years. 3. Prime contractor, General Dynamics Land Systems, has a significant presence in defense manufacturing. 4. The contract is for components related to military armored vehicles, indicating a focus on sustainment or modernization. 5. The award type is a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar framework. 6. The contract does not appear to have small business set-aside provisions. 7. The contract is firm fixed price, which shifts cost risk to the contractor.

Value Assessment

Rating: good

The contract value of $15.8M for armored vehicle components appears reasonable given the duration and the nature of defense contracting. Benchmarking against similar contracts for vehicle parts or sustainment would provide a more precise value-for-money assessment. The firm fixed price structure indicates that the government has secured a defined cost, but the ultimate value depends on the efficiency of the contractor in delivering the specified components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this method generally fosters a competitive environment, which can lead to better pricing and innovation. The open competition suggests that the Department of Defense sought the best possible solution from the market.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down prices through market forces and encourages a wider range of suppliers to participate, potentially leading to cost savings.

Public Impact

The primary beneficiaries are the U.S. Army units that utilize the armored vehicles requiring these components. The contract delivers essential components for the maintenance, repair, or potential upgrade of military armored vehicles. The geographic impact is likely concentrated around the contractor's facilities and the military bases where the vehicles are deployed or maintained. This contract supports jobs within the defense manufacturing sector, particularly at General Dynamics Land Systems and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific bidder count limits assessment of competitive intensity.
Details on specific components and their criticality are not provided, hindering a deeper risk analysis.
Potential for supply chain disruptions impacting delivery timelines or costs.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Firm fixed price contract shifts cost overrun risk to the contractor.
Prime contractor has extensive experience in defense vehicle manufacturing.

Sector Analysis

This contract falls within the broader defense industrial base, specifically focusing on the manufacturing and supply of components for military armored vehicles. The market for such specialized components is often dominated by a few large defense contractors due to high barriers to entry, including technical expertise, security clearances, and established relationships with government agencies. Spending in this sector is driven by military readiness requirements, modernization programs, and sustainment needs for existing fleets.

Small Business Impact

The contract indicates that small business participation was not a primary set-aside objective, as the 'sb' field is false. This suggests that the prime contractor, General Dynamics Land Systems, will likely be responsible for any subcontracting to small businesses. The extent of small business involvement will depend on the prime contractor's subcontracting plan and the availability of qualified small businesses for specific component needs.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA) and the relevant program executive office within the Department of Defense. Accountability measures are embedded in the firm fixed price contract terms, requiring delivery of specified components. Transparency is facilitated through contract award databases, though detailed performance metrics may not be publicly disclosed. The Inspector General's office for the Department of Defense would have jurisdiction over any potential fraud, waste, or abuse.

Related Government Programs

Armored Vehicle Manufacturing
Military Vehicle Components
Defense Logistics Support
General Dynamics Land Systems Contracts
Department of Defense Procurement

Risk Flags

Potential for supply chain disruptions impacting delivery.
Contractor's ability to meet stringent quality standards for military components.
Risk of cost overruns for the contractor under a firm fixed price agreement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.9 million to GENERAL DYNAMICS LAND SYSTEMS INC.. NSN: 6150-01-692-2108 NSN: 4130-01-530-4612 NSN: 7025-01-674-6589 NSN: 7025-01-674-7188 NSN: 7025-01-674-6588 NSN: 1220-01-619-0117 NSN: 7021-01-674-7139

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 $15.9 million.

What is the period of performance?

Start: 2022-07-25. End: 2026-03-30.

What is the historical spending pattern for similar armored vehicle components by the Department of Defense?

Analyzing historical spending for similar armored vehicle components requires access to detailed procurement databases. Generally, the Department of Defense (DoD) allocates significant funds annually towards the sustainment and modernization of its armored vehicle fleet. This includes expenditures on spare parts, repair services, and upgrades. Spending can fluctuate based on geopolitical events, readiness requirements, and the lifecycle of specific vehicle platforms. For instance, periods of increased operational tempo or the introduction of new vehicle programs often correlate with higher spending on components. Without specific data on the NSNs or contract numbers for comparable items, a precise historical comparison is challenging, but it's understood that component procurement is a continuous and substantial part of the defense budget to ensure fleet availability and combat effectiveness.

How does the prime contractor's track record influence the risk associated with this contract?

General Dynamics Land Systems (GDLS) is a well-established and experienced defense contractor with a long history of producing and supporting armored vehicles for the U.S. military and international allies. Their track record includes major programs like the Abrams Main Battle Tank and the Stryker family of vehicles. This extensive experience generally reduces the risk associated with contract performance, as GDLS possesses the technical expertise, manufacturing capabilities, and established supply chains necessary to deliver complex components. However, like any large contractor, they may have faced past performance issues or delivery challenges on specific contracts. A thorough review of their past performance ratings and any documented issues would provide a more nuanced risk assessment for this particular award.

What are the potential risks associated with the firm fixed price (FFP) contract type for this award?

The firm fixed price (FFP) contract type shifts the majority of cost risk to the contractor, General Dynamics Land Systems. While this is generally favorable for the government by establishing a ceiling on costs, it can introduce risks if the contractor underestimates the actual costs of production or encounters unforeseen issues. Potential risks include the contractor seeking to reduce quality to maintain profitability, potential delays if the contractor struggles with cost overruns, or the contractor potentially being less responsive to minor scope changes without additional compensation. However, for standardized or well-understood components, FFP is often the preferred method for cost control and predictability.

Can we assess the program effectiveness or the specific services delivered based on the provided data?

The provided data indicates the contract is for 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' and lists several National Stock Numbers (NSNs). This suggests the contract is for the supply of specific parts or sub-assemblies required for the operation, maintenance, or repair of armored vehicles. However, the data does not offer insights into the overall program effectiveness for which these components are intended. Program effectiveness would typically be measured by metrics such as vehicle readiness rates, operational availability, mission success rates, or the lifecycle cost of the armored vehicle platforms. The specific services delivered are the provision of these components, but their ultimate impact on military effectiveness is tied to the broader program they support.

What is the typical profit margin for defense contractors on firm fixed price contracts for vehicle components?

Profit margins for defense contractors on firm fixed price (FFP) contracts can vary significantly based on several factors, including the complexity of the item, the level of competition, the contractor's efficiency, and the specific terms negotiated. For standardized or high-volume components where production processes are well-established and competition is robust, profit margins might be in the range of 5-10%. However, for highly specialized, low-volume, or technologically advanced components, margins could be higher, potentially reaching 15-20% or more, to compensate for the increased risk and investment. General Dynamics Land Systems, as a large, experienced contractor, likely operates within industry norms, but the precise margin on this specific contract is not publicly disclosed.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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: $15,851,870

Exercised Options: $15,851,870

Current Obligation: $15,851,870

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $989,200

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPE7LX21D0110

IDV Type: IDC

Timeline