Department of Defense awarded $27.6M for M2 Machine Guns, with limited competition

Contract Overview

Contract Amount: $27,627,225 ($27.6M)

Contractor: General Dynamics-Ots, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-10-23

End Date: 2008-07-31

Contract Duration: 647 days

Daily Burn Rate: $42.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: M2 MACHINE GUNS

Place of Performance

Location: SACO, YORK County, MAINE, 04072

State: Maine Government Spending

Plain-Language Summary

Department of Defense obligated $27.6 million to GENERAL DYNAMICS-OTS, INC. for work described as: M2 MACHINE GUNS Key points: 1. Contract awarded to a single supplier suggests potential for higher pricing. 2. Limited competition may indicate a lack of market dynamism for this specific defense article. 3. The contract duration of 647 days (approx. 21 months) is moderate. 4. Firm Fixed Price contract type shifts risk to the contractor. 5. The award was made by the Department of the Army, a major DoD component. 6. The product falls under Small Arms, Ordnance, and Ordnance Accessories Manufacturing.

Value Assessment

Rating: fair

Benchmarking the value for this specific contract is challenging without detailed cost breakdowns or comparisons to similar recent awards for M2 Machine Guns. The total award amount of $27.6 million for 1 unit (likely a placeholder or misinterpretation of 'no': 1, as this is a significant sum for a single item) suggests a high per-unit cost if interpreted literally. However, it's more probable that 'no': 1 refers to the number of contract actions, and the $27.6M represents the total value of the awarded contract for multiple units. Without further data on the quantity of M2 Machine Guns procured, a precise value-for-money assessment is difficult. The firm fixed price nature of the contract is generally favorable for the government in controlling costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, GENERAL DYNAMICS-OTS, INC., was considered. This typically occurs when a unique capability or proprietary technology is required, or when market research indicates only one responsible source can fulfill the requirement. The lack of competition means the government did not benefit from a bidding process that could drive down prices through multiple offers. This approach necessitates strong justification to ensure fair and reasonable pricing.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government lacks the leverage of competitive bidding to secure the best possible price.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will be equipped with M2 Machine Guns. The contract delivers essential ordnance for infantry and vehicle-mounted weapon systems. The geographic impact is primarily within the Department of Defense's operational theaters. Workforce implications include sustaining manufacturing jobs at GENERAL DYNAMICS-OTS, INC. and potentially its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in sole-source justification requires careful review to ensure necessity.
Dependence on a single supplier for critical ordnance could pose supply chain risks if that supplier faces disruptions.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Award to an established defense contractor suggests a degree of reliability in production.
Procurement of M2 Machine Guns addresses a critical operational need for the Army.

Sector Analysis

The defense manufacturing sector, specifically small arms and ordnance, is characterized by specialized production capabilities and often long-standing relationships between government agencies and prime contractors. This contract for M2 Machine Guns fits within the broader category of defense procurement, which represents a significant portion of federal spending. Market size for such specialized ordnance is driven by military readiness requirements and modernization programs. Comparable spending benchmarks would involve analyzing other contracts for similar weapon systems or ammunition within the Department of Defense.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). General Dynamics is a large defense contractor. There is no explicit information on subcontracting plans for small businesses within this award. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem from this particular contract is unclear, though large prime contractors often utilize small businesses in their supply chains.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the contract terms, particularly the Firm Fixed Price structure. Transparency is limited due to the sole-source nature of the award. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Department of Defense Small Arms Procurement
Ordnance and Armaments Manufacturing
Army Combat Vehicle Systems
Infantry Support Weapons

Risk Flags

Sole-source award
Potential for non-competitive pricing
Lack of small business subcontracting visibility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.6 million to GENERAL DYNAMICS-OTS, INC.. M2 MACHINE GUNS

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 $27.6 million.

What is the period of performance?

Start: 2006-10-23. End: 2008-07-31.

What is the historical spending pattern for M2 Machine Guns by the Department of the Army?

Analyzing historical spending on M2 Machine Guns by the Department of the Army requires access to comprehensive contract databases over multiple fiscal years. Typically, such procurements occur periodically based on unit needs, attrition, and modernization efforts. Spending can fluctuate significantly year-to-year depending on budget allocations, major operational deployments, and the lifecycle of existing weapon systems. Without specific historical data for this contract vehicle or similar ones, it's difficult to establish a precise trend. However, the M2 Browning machine gun is a long-standing weapon system, suggesting consistent, albeit potentially lumpy, demand from the Army over decades. Recent conflicts and ongoing force modernization efforts likely influence current procurement levels.

What is the typical unit cost for an M2 Machine Gun, and how does this contract compare?

Determining the precise unit cost for an M2 Machine Gun under this contract is challenging without knowing the quantity procured, as the total award is $27.6 million. Historical data suggests that the unit cost for an M2A1 machine gun (an upgraded variant) can range from approximately $7,000 to $15,000 or more, depending on the specific configuration, included accessories, and the terms of the contract. If this contract procured several thousand units, the per-unit cost might fall within this range. However, if the 'no': 1 signifies a single contract action for a large quantity, a direct per-unit calculation from the total award would be misleading. A thorough comparison requires knowing the exact number of units delivered under this specific $27.6 million award.

What are the risks associated with a sole-source award for critical defense equipment like the M2 Machine Gun?

Sole-source awards for critical defense equipment present several risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the price discovery mechanism inherent in a competitive bidding process. This can result in less value for taxpayer money. Secondly, it can foster complacency in the awarded contractor, potentially reducing incentives for innovation or efficiency improvements. Thirdly, it creates a dependency on a single supplier, which can be a significant supply chain vulnerability. If the sole-source contractor experiences production issues, financial instability, or faces geopolitical disruptions, the availability of critical equipment could be jeopardized, impacting military readiness.

What is the track record of GENERAL DYNAMICS-OTS, INC. in delivering defense ordnance contracts?

GENERAL DYNAMICS-OTS, INC. (General Dynamics Ordnance and Tactical Systems) has a long and established track record in delivering a wide range of defense ordnance and weapon systems to the U.S. military and allied nations. They are known for producing various machine guns, mortars, artillery systems, and related ammunition. Their history includes numerous contracts with the Department of Defense, often involving complex manufacturing and stringent quality requirements. While specific performance metrics for every contract are not publicly detailed, their continued role as a prime contractor for major defense programs suggests a generally reliable performance history in meeting production schedules and quality standards for critical military hardware.

How does the Firm Fixed Price (FFP) contract type benefit the government in this scenario?

The Firm Fixed Price (FFP) contract type is generally advantageous for the government, especially in scenarios involving well-defined requirements like the production of standard ordnance such as the M2 Machine Gun. Under an FFP contract, the contractor agrees to a set price for the work, regardless of their actual costs. This means that any cost overruns incurred by GENERAL DYNAMICS-OTS, INC. would be absorbed by the contractor, not the government. Conversely, if the contractor manages costs effectively and completes the work for less than the agreed price, they retain the savings. This structure provides the government with maximum cost certainty and predictability, simplifying budgeting and financial management for the procurement.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W52H0906R0487

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 128 LAKESIDE AVE, BURLINGTON, VT, 00

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $27,627,225

Exercised Options: $27,627,225

Current Obligation: $27,627,225

Timeline