DoD awards $200.5M for tank training ammunition to General Dynamics, a sole-source contract

Contract Overview

Contract Amount: $200,519,575 ($200.5M)

Contractor: General Dynamics Ordnance and Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-03-27

End Date: 2020-02-28

Contract Duration: 4,355 days

Daily Burn Rate: $46.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 120 MM TANK TRAINING AMMUNITION

Place of Performance

Location: SAINT PETERSBURG, PINELLAS County, FLORIDA, 33716

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $200.5 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. for work described as: 120 MM TANK TRAINING AMMUNITION Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Long contract duration of over 11 years suggests potential for scope creep and evolving requirements. 3. The contract's firm-fixed-price structure aims to transfer risk to the contractor, but requires careful monitoring. 4. Awarded to a single, established defense contractor, indicating a lack of broad market engagement. 5. The specific nature of tank training ammunition may limit the number of qualified suppliers. 6. Performance period spans over a decade, necessitating robust oversight to ensure continued value.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and long duration. Without competitive bids, it's difficult to ascertain if the $200.5 million represents a fair market price for 120 MM tank training ammunition. The absence of competition means there's no direct comparison to similar contracts awarded under competitive conditions. The firm-fixed-price type suggests cost certainty, but the overall value proposition hinges on the contractor's efficiency and the government's ability to manage the contract effectively over its extended period.

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. This typically occurs when only one responsible source is available or authorized by statute. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. Without multiple bidders, there is no direct price comparison or incentive for the contractor to offer the lowest possible price.

Taxpayer Impact: Taxpayers may not be receiving the best value due to the absence of a competitive bidding process. Sole-source awards can lead to higher prices than would be achieved in an open market, potentially resulting in inefficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Army units requiring tank training ammunition for operational readiness. The contract ensures the supply of critical training munitions for armored vehicle crews. Geographic impact is primarily national, supporting military training exercises across various installations. Workforce implications include sustained employment at General Dynamics' manufacturing facilities, particularly in Florida. This contract directly supports national defense readiness by providing essential training resources.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Extended contract duration (over 11 years) increases risk of cost overruns and requires sustained oversight.
Lack of transparency in the procurement process due to sole-source nature.
Potential for contractor to leverage sole-source position for less favorable terms over time.
Difficulty in benchmarking performance and cost without comparable contract data.

Positive Signals

Firm-fixed-price contract structure shifts cost risk to the contractor.
Award to an established contractor with presumed expertise in ordnance manufacturing.
Ensures a consistent supply of critical training ammunition for military readiness.
Contract duration provides long-term planning stability for both the government and the contractor.

Sector Analysis

The defense industrial base for ammunition manufacturing is a critical sector, characterized by high barriers to entry, specialized production capabilities, and significant government reliance. This contract for 120 MM tank training ammunition falls within the broader category of ordnance manufacturing. The market is often consolidated, with a few key players holding substantial contracts. Spending in this area is directly tied to military training requirements and operational tempo. Comparable spending benchmarks are difficult to establish due to the specialized nature of munitions and the prevalence of sole-source or limited competition awards.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb: false'. General Dynamics Ordnance and Tactical Systems, Inc. is a large business. There is no explicit information regarding subcontracting plans for small businesses within this data. The absence of a set-aside suggests that opportunities for small businesses to directly participate in this specific contract may be limited, though they could potentially supply components or services to the prime contractor.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm-fixed-price nature of the contract implies that cost oversight may be less intensive than for cost-reimbursement contracts, but monitoring delivery schedules, quality, and adherence to specifications remains crucial. Transparency is limited due to the sole-source award, but contract modifications and performance reports would be subject to standard government record-keeping and potential Freedom of Information Act requests.

Related Government Programs

Department of Defense Ammunition Procurement
Military Training Equipment Contracts
Ordnance Manufacturing Contracts
General Dynamics Defense Contracts
Tank and Armored Vehicle Support

Risk Flags

Sole-source award
Long contract duration
Lack of competition
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $200.5 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC.. 120 MM TANK TRAINING AMMUNITION

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $200.5 million.

What is the period of performance?

Start: 2008-03-27. End: 2020-02-28.

What is the track record of General Dynamics Ordnance and Tactical Systems, Inc. in fulfilling defense contracts, particularly for ammunition?

General Dynamics Ordnance and Tactical Systems, Inc. (GD-OTS) is a significant defense contractor with a long history of producing ordnance, including tank ammunition. They are known for their capabilities in manufacturing large-caliber munitions. While specific performance metrics for this particular contract are not detailed in the provided data, GD-OTS generally has a substantial portfolio of government contracts. Their track record involves supplying various branches of the U.S. military and allied nations. However, like any large defense contractor, they may have faced scrutiny or performance issues on specific contracts over their history. A deeper dive into contract performance databases and Inspector General reports would be necessary for a comprehensive assessment of their specific track record related to this type of ammunition.

How does the awarded price compare to market rates for similar tank training ammunition, considering it's a sole-source contract?

Directly comparing the awarded price of $200.5 million to market rates is inherently difficult because this contract was sole-sourced. Competitive bidding typically drives prices down by fostering a market where multiple suppliers vie for the contract. In a sole-source scenario, the government negotiates directly with a single provider, and the price is influenced by factors such as the contractor's cost structure, profit margins, and negotiation leverage, rather than direct market competition. Without publicly available data on other recent sole-source or competitively awarded contracts for identical or highly similar 120 MM training ammunition, establishing a precise market benchmark is not feasible. The absence of competition means the government may not have achieved the lowest possible price.

What are the primary risks associated with a sole-source award for a critical defense supply like tank training ammunition?

The primary risks associated with a sole-source award include potential overpricing due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. Taxpayers may bear a higher cost than necessary. Furthermore, reliance on a single supplier can create vulnerabilities in the supply chain; if the sole source experiences production issues, quality control problems, or financial instability, the military's training readiness could be significantly impacted. The government also has less leverage in negotiating terms and conditions over the life of the contract compared to a competitive scenario.

Given the contract's duration (2008-2020), what are the implications for program effectiveness and potential obsolescence of the ammunition?

The extended duration of this contract, spanning over 11 years from award to completion, presents several implications for program effectiveness and potential obsolescence. On the positive side, it ensures a stable and continuous supply of ammunition for training purposes throughout that period, supporting consistent military readiness. However, such a long timeframe increases the risk that the ammunition's technology or specifications could become outdated, especially if military requirements or threat landscapes evolve significantly. Managing obsolescence requires proactive government oversight, including regular reviews of the ammunition's relevance and potential upgrades or replacements. The effectiveness is also tied to the contractor's ability to maintain production quality and efficiency over such an extended period, which necessitates robust contract management.

How does this contract fit into the broader context of U.S. defense spending on training and ammunition?

This contract for $200.5 million represents a specific allocation within the Department of Defense's substantial budget for training and sustainment. Ammunition, particularly for major platforms like tanks, is a recurring and significant expenditure necessary for maintaining troop proficiency and operational readiness. Defense spending on training ammunition is influenced by factors such as deployment tempo, geopolitical threats, and the modernization of military equipment. While $200.5 million is a considerable sum, it must be viewed in the context of the overall DoD budget, which often runs into hundreds of billions of dollars annually. This contract contributes to the sustainment of armored force capabilities, a critical component of U.S. military power.

What oversight mechanisms are in place to ensure the quality and timely delivery of this ammunition, especially given the sole-source nature?

The Defense Contract Management Agency (DCMA) is the primary entity responsible for overseeing this contract. DCMA's role includes monitoring contractor performance, ensuring compliance with contract terms and specifications, and verifying quality control processes. For a sole-source contract, robust oversight is even more critical to compensate for the lack of competitive pressure. This would involve regular inspections of manufacturing processes, testing of the ammunition to ensure it meets stringent military standards, and tracking delivery schedules to prevent disruptions. The firm-fixed-price nature means DCMA would focus on ensuring the contractor meets all contractual obligations regarding quantity, quality, and delivery timelines, rather than scrutinizing costs in detail, though they would still monitor for potential contractor inefficiencies that could impact performance.

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: W52P1J07R0131

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 11399 16TH CT N STE 200, SAINT PETERSBURG, FL, 33716

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $200,519,575

Exercised Options: $200,519,575

Current Obligation: $200,519,575

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline