DoD's $22.8M engineering services contract for Hydra-70 production awarded to General Dynamics-OTS, Inc

Contract Overview

Contract Amount: $22,845,721 ($22.8M)

Contractor: General Dynamics-Ots, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-12-13

End Date: 2015-12-13

Contract Duration: 1,826 days

Daily Burn Rate: $12.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES TO SUPPORT THE HYDRA-70 PRODUCTION PROGRAM

Place of Performance

Location: BURLINGTON, CHITTENDEN County, VERMONT, 05401

State: Vermont Government Spending

Plain-Language Summary

Department of Defense obligated $22.8 million to GENERAL DYNAMICS-OTS, INC. for work described as: ENGINEERING SERVICES TO SUPPORT THE HYDRA-70 PRODUCTION PROGRAM Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and lack of competitive pressure. 2. The contract duration of 5 years suggests a long-term need for these specialized engineering services. 3. The ammunition manufacturing sector is critical for defense readiness, making reliable engineering support essential. 4. The use of a Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely monitored. 5. Lack of competition may limit opportunities for other firms to contribute to this important defense program. 6. The contract's value, while significant, needs to be benchmarked against similar engineering support contracts in the defense sector.

Value Assessment

Rating: questionable

Benchmarking the value of this $22.8 million contract is challenging without detailed cost breakdowns and comparisons to similar engineering services for defense production programs. The CPFF structure, while allowing for flexibility, can lead to higher costs if the contractor does not manage expenses efficiently. Without competitive bids, it's difficult to ascertain if the fixed fee accurately reflects the market rate for the services provided. Further analysis of the contractor's performance and cost management on this and similar contracts would be necessary for a more definitive value assessment.

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 among multiple vendors. This typically occurs when only one vendor possesses the unique capabilities, technology, or security clearances required for the service. The lack of competition means that price discovery through market forces was absent, potentially leading to higher costs for the government compared to a competitive procurement. It also limits opportunities for other qualified businesses to participate in this defense contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government did not benefit from the cost-saving pressures that typically arise when multiple companies vie for a contract.

Public Impact

The primary beneficiaries are the Department of Defense and the personnel involved in the Hydra-70 production program, ensuring the continued availability of this critical munition. The services delivered are specialized engineering support crucial for the manufacturing and improvement of the Hydra-70 rocket system. The geographic impact is primarily within the United States, supporting domestic defense manufacturing capabilities. Workforce implications include the employment of skilled engineers and technical staff at General Dynamics-OTS, Inc. and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not rigorously managed.
Lack of transparency in the sole-source justification requires scrutiny.
Limited visibility into alternative solutions or innovations from other potential bidders.

Positive Signals

Ensures continuity of essential engineering services for a critical defense program.
Leverages specialized expertise of a known contractor with a track record in defense manufacturing.
Supports the production of vital munitions for national security.

Sector Analysis

This contract falls within the defense manufacturing and engineering services sector, specifically supporting ammunition production. The market for defense engineering services is often characterized by specialized expertise, high barriers to entry due to security requirements, and significant government spending. Comparable spending benchmarks would involve analyzing other engineering support contracts for major defense platforms or weapon systems, which can range from millions to billions of dollars depending on complexity and duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the 'ss' field is also false, suggesting no specific small business subcontracting goals were mandated within this contract's structure. This means that opportunities for small businesses to participate as prime contractors or significant subcontractors may be limited unless General Dynamics-OTS, Inc. voluntarily includes them in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would be tied to the performance metrics outlined in the contract and the contractor's adherence to the Cost Plus Fixed Fee terms. Transparency is limited due to the sole-source nature of the award, but contract modifications and performance reports would be subject to internal DoD review and potentially audits by the Government Accountability Office (GAO) or the DoD Inspector General.

Related Government Programs

Hydra-70 Rocket System Production
Defense Ammunition Manufacturing
Aerospace and Defense Engineering Services
Cost Plus Fixed Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.8 million to GENERAL DYNAMICS-OTS, INC.. ENGINEERING SERVICES TO SUPPORT THE HYDRA-70 PRODUCTION PROGRAM

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS-OTS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $22.8 million.

What is the period of performance?

Start: 2010-12-13. End: 2015-12-13.

What is the specific nature of the engineering services provided under this contract for the Hydra-70 production program?

The contract specifies 'ENGINEERING SERVICES TO SUPPORT THE HYDRA-70 PRODUCTION PROGRAM.' While the exact details are not provided in the summary data, these services likely encompass a range of activities critical to the manufacturing process. This could include design support, process improvement, quality assurance engineering, testing and validation, technical documentation, and potentially research and development for upgrades or modifications to the Hydra-70 rocket system. The goal is to ensure efficient, high-quality, and continuous production of this essential munition for the Department of the Army.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. For a specialized defense program like the Hydra-70, this could be due to General Dynamics-OTS, Inc. possessing unique proprietary technology, extensive manufacturing knowledge specific to this system, existing production infrastructure, or critical security clearances that other potential bidders lack. The government would have had to formally document the justification for this sole-source determination, citing reasons such as urgency, lack of competition, or the need for compatibility with existing systems, to comply with federal acquisition regulations.

How does the Cost Plus Fixed Fee (CPFF) contract type potentially impact the overall cost and risk for the government?

The CPFF contract type involves the government reimbursing the contractor for all allowable costs plus a predetermined fixed fee representing profit. This structure shifts some cost risk to the government, as the final cost is not fixed upfront. While the fixed fee provides the contractor with an incentive to control costs (as the fee doesn't increase with higher costs), it can also lead to cost overruns if the initial cost estimates are inaccurate or if the contractor's efficiency is low. Effective government oversight is crucial to monitor costs, ensure allowability, and manage the contractor's performance to mitigate potential cost increases.

What is the historical spending pattern for engineering services related to the Hydra-70 program?

The provided data only covers this specific definitive contract awarded from December 2010 to December 2015 for $22.8 million. To understand historical spending patterns, one would need to access broader contract databases (like FPDS or USASpending) to identify any prior or subsequent contracts for engineering services related to the Hydra-70 program, potentially awarded to the same or different contractors. Analyzing these patterns would reveal trends in contract values, durations, types, and competition levels over time, providing context for the current contract's significance and cost.

What are the potential risks associated with a sole-source award for critical defense manufacturing support?

The primary risks of a sole-source award include a lack of competitive pricing, potentially leading to higher costs for the government. It can also reduce innovation, as there is less pressure on the contractor to develop more efficient or cost-effective solutions. Furthermore, it creates vendor lock-in, making it difficult and potentially more expensive to switch providers in the future. For critical defense manufacturing, a sole-source award also concentrates risk with a single supplier, potentially impacting program continuity if that supplier faces financial, operational, or security challenges.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q10R0081

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 128 LAKESIDE AVE, BURLINGTON, VT, 05401

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: $22,845,721

Exercised Options: $22,845,721

Current Obligation: $22,845,721

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $1,072,653

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline