DoD's $31.2M TACS contract to General Dynamics Mission Systems lacked competition, raising value concerns
Contract Overview
Contract Amount: $31,205,532 ($31.2M)
Contractor: General Dynamics Mission Systems, Inc.
Awarding Agency: Department of Defense
Start Date: 2011-06-14
End Date: 2020-04-30
Contract Duration: 3,243 days
Daily Burn Rate: $9.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Other
Official Description: TACTICAL AIRSPACE CONTROL SYSTEM PERFORMANCE BASED LOGISTIC SUPPORT
Place of Performance
Location: HUNTSVILLE, MADISON County, ALABAMA, 35805
State: Alabama Government Spending
Plain-Language Summary
Department of Defense obligated $31.2 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: TACTICAL AIRSPACE CONTROL SYSTEM PERFORMANCE BASED LOGISTIC SUPPORT Key points: 1. The contract's cost-plus-incentive-fee structure may incentivize higher spending. 2. Lack of competition suggests potential for inflated pricing and reduced value. 3. The contract duration of over 8 years presents long-term financial exposure. 4. Performance-based logistics support is critical for operational readiness. 5. The contract's value is significant within the broader air transportation support sector. 6. Geographic concentration in Alabama warrants attention for regional economic impact.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to the lack of comparable sole-source awards for similar services. The cost-plus-incentive-fee (CPIF) pricing structure, while intended to align contractor and government interests, can lead to cost overruns if not carefully managed. Without competitive bidding, it's difficult to ascertain if the government secured the best possible price for the services rendered over its extended duration. The total obligated amount of over $31 million over nearly nine years suggests a substantial investment where competitive pricing would typically yield greater cost savings.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. This approach limits the government's ability to explore alternative solutions or leverage market competition to drive down costs. The absence of multiple bidders means that the pricing and terms were negotiated directly with General Dynamics Mission Systems, potentially foregoing the benefits of a more competitive procurement process. The rationale for a sole-source award, if documented, would be crucial to understanding why competition was not pursued.
Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding. This can lead to less efficient use of public funds.
Public Impact
The Department of the Army benefits from continuous performance-based logistics support for its Tactical Airspace Control System. This contract ensures the operational readiness and effectiveness of critical airspace management capabilities. The services delivered are essential for military aviation operations and command and control. The contract's primary geographic impact is in Alabama, where the contractor is located. Workforce implications include employment opportunities within General Dynamics Mission Systems and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher costs for taxpayers.
- The sole-source nature of the award limits transparency and potential for cost savings.
- The extended contract duration of over 8 years represents a significant long-term financial commitment.
- Cost-plus-incentive-fee contracts can sometimes lead to cost overruns if not managed stringently.
Positive Signals
- Performance-based logistics support aims to ensure system availability and reduce downtime.
- General Dynamics Mission Systems is an established defense contractor with relevant experience.
- The contract supports critical military airspace management functions, contributing to national security.
Sector Analysis
The defense sector, particularly within IT and support services, sees significant spending on complex systems like airspace control. Contracts for performance-based logistics are crucial for maintaining the readiness of specialized military equipment. While specific market size data for TACS logistics is not readily available, the broader market for defense logistics and support services is substantial, often characterized by long-term relationships and specialized capabilities. This contract fits within the category of essential support services that ensure the operational effectiveness of military assets.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by the 'sb' field being false. Furthermore, the 'ss' field is also false, suggesting no specific small business subcontracting goals were mandated. This means that opportunities for small businesses to participate in this contract, either as prime contractors or subcontractors, may have been limited. The absence of set-asides or specific subcontracting plans could reduce the direct economic benefit to the small business ecosystem associated with this particular award.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are usually embedded within the contract's performance work statement and the CPIF structure, which links contractor payment to performance outcomes. Transparency might be 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
- Air Traffic Control Systems
- Defense Logistics Support
- Tactical Communications Systems
- Aerospace Support Services
- Department of Defense IT Services
Risk Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
Tags
defense, department-of-defense, department-of-the-army, definitive-contract, not-competed, sole-source, cost-plus-incentive-fee, performance-based-logistics, air-transportation-support, alabama, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $31.2 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. TACTICAL AIRSPACE CONTROL SYSTEM PERFORMANCE BASED LOGISTIC SUPPORT
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 Army).
What is the total obligated amount?
The obligated amount is $31.2 million.
What is the period of performance?
Start: 2011-06-14. End: 2020-04-30.
What is the specific justification for the sole-source award of this contract?
The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For a contract of this magnitude and duration, a detailed justification, often including market research and a determination of the lack of adequate competition, would be required by federal acquisition regulations. Without this documentation, it is difficult to assess the necessity of bypassing the competitive bidding process.
How does the performance-based logistics (PBL) structure impact the cost-effectiveness of this contract?
Performance-based logistics (PBL) aims to improve system readiness and reduce total ownership costs by focusing on outcomes rather than specific tasks. In this contract, the CPIF (Cost Plus Incentive Fee) structure is combined with PBL. While PBL can lead to cost savings through optimized performance and reduced sustainment efforts, the CPIF element introduces a risk. The incentive fee is tied to achieving specific performance metrics, but the base cost is still reimbursed. If the initial cost estimates are high or if performance targets are not aggressively set, the overall cost-effectiveness might be compromised compared to a fixed-price contract, especially in a non-competitive environment.
What are the potential risks associated with a Cost Plus Incentive Fee (CPIF) contract of this duration?
A CPIF contract, especially one spanning over eight years, carries inherent risks. The government agrees to pay the contractor's allowable costs plus a predetermined fee, which is then adjusted based on performance against targets. The primary risk is that the contractor may have less incentive to control costs rigorously if the fee structure is not sufficiently weighted towards cost reduction. Over an extended period, scope creep, changes in requirements, and evolving market conditions can lead to cost increases that are passed on to the government. Effective oversight and robust performance metrics are crucial to mitigate these risks and ensure value for money.
What is the historical spending trend for the Tactical Airspace Control System (TACS) performance-based logistics support?
The provided data represents a single contract award for TACS performance-based logistics support from June 2011 to April 2020, totaling approximately $31.2 million. This data point does not allow for an analysis of historical spending trends. To understand trends, one would need to examine prior contracts for TACS support, including their value, duration, and procurement methods, as well as any subsequent contracts awarded after April 2020. Without this broader historical context, it's impossible to determine if spending on this service has increased, decreased, or remained stable over time.
How does the contractor's track record influence the assessment of this contract's value?
General Dynamics Mission Systems, Inc. is a large and established defense contractor with a significant history of performance on various government contracts. Their experience in complex systems integration and logistics support suggests a capability to perform the required services. However, a contractor's track record alone does not guarantee the value of a specific contract, especially when awarded sole-source. While their experience might reduce performance risk, it does not inherently ensure competitive pricing or optimal value for money. A thorough assessment would require reviewing their past performance specifically on similar contracts, including any past issues with cost overruns or schedule delays.
What are the implications of the contract being awarded in Alabama for regional economic impact?
The contract being awarded to General Dynamics Mission Systems, Inc., located in Alabama (ST: AL, SN: ALABAMA), suggests a direct economic impact on the state. This includes potential job creation, increased business activity for local suppliers and support services, and tax revenue. The duration of the contract (over 8 years) implies a sustained economic contribution. However, the extent of this impact depends on the number of local employees, the sourcing of materials and services within the state, and the overall size of the contract relative to the state's economy. Without more granular data on subcontracting and local employment, the precise regional economic benefit remains an estimate.
Industry Classification
NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation
Product/Service Code: COMM/DETECT/COHERENT RADIATION
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q10R0112
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: General Dynamics Corp (UEI: 001381284)
Address: 6000 TECHNOLOGY DR NW, HUNTSVILLE, AL, 35805
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: $33,616,554
Exercised Options: $33,616,554
Current Obligation: $31,205,532
Subaward Activity
Number of Subawards: 37
Total Subaward Amount: $5,287,549
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2011-06-14
Current End Date: 2020-04-30
Potential End Date: 2020-04-30 12:04:00
Last Modified: 2021-01-27
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