DoD's $360M contract for armored vehicles awarded to General Dynamics Land Systems shows limited competition

Contract Overview

Contract Amount: $360,116,841 ($360.1M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2006-01-31

End Date: 2011-01-21

Contract Duration: 1,816 days

Daily Burn Rate: $198.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200608!002778!2100!W56HZV!TACOM - WARREN !W56HZV06C0255 !A!N! !N! ! !20060131!20080630!131266926!131266926!001381284!N!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACOMB !MICHIGAN !+000128302167!N!N!000000000000!2320!TRUCKS AND TRUCK TRACTORS, WHEELED !A4A!COMBAT VEHICLES !000 !NOT DISCERNABLE !336992!E! !1! ! ! ! ! !99990909!B! ! !A! !D!Y!J!1!001!N!1A!A!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $360.1 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: 200608!002778!2100!W56HZV!TACOM - WARREN !W56HZV06C0255 !A!N! !N! ! !20060131!20080630!131266926!131266926!001381284!N!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACO… Key points: 1. Contract awarded on a sole-source basis, raising concerns about price discovery and potential overpayment. 2. Significant contract value suggests a substantial investment in military hardware, impacting defense readiness. 3. The duration of the contract (over 4 years) indicates a long-term commitment to specific vehicle platforms. 4. Awarded to a single large business, with no indication of small business participation or set-asides. 5. The contract falls under the 'Trucks and Truck Tractors, Wheeled' category, suggesting a focus on tactical mobility.

Value Assessment

Rating: questionable

The total award amount of $360,116,840.60 for armored vehicles is substantial. Without comparable sole-source contracts for similar vehicles, it is difficult to benchmark the value definitively. However, the lack of competition inherently limits the government's ability to secure the best possible price, raising questions about whether taxpayers received optimal value for this significant expenditure. Further analysis would require detailed cost breakdowns and comparisons to industry benchmarks for armored vehicle production.

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 indicates that the Department of the Army identified General Dynamics Land Systems as the only responsible source capable of fulfilling the requirement. The lack of competition means there were no other bidders to drive down prices through a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards limit taxpayer value by removing the downward price pressure that competition provides. This can result in higher overall spending for essential defense equipment.

Public Impact

The primary beneficiaries are the U.S. Army, receiving critical armored vehicle platforms for combat operations. Services delivered include the manufacturing and delivery of military armored vehicles, enhancing troop protection and mobility. The geographic impact is primarily centered around General Dynamics Land Systems' facilities in Michigan, contributing to local employment and economic activity. Workforce implications include jobs for engineers, manufacturing personnel, and support staff at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of small business participation means missed opportunities to support smaller defense contractors.
Long contract duration could lead to cost overruns if not managed effectively.
Reliance on a single contractor for critical defense assets poses a supply chain risk.

Positive Signals

Award to a known entity, General Dynamics Land Systems, suggests a potentially reliable supplier for specialized military hardware.
The contract addresses a clear need for armored vehicles, contributing to national defense capabilities.
Firm Fixed Price contract type provides cost certainty for the government, assuming no significant change orders.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of combat vehicles. The market for armored vehicles is highly specialized, often dominated by a few large defense contractors with the necessary expertise and facilities. General Dynamics Land Systems is a major player in this segment. Spending in this area is driven by military modernization efforts and the need to replace aging fleets with advanced platforms.

Small Business Impact

This contract was not competed and there is no indication of any small business set-aside or subcontracting requirements. This means that opportunities for small businesses to participate in this significant defense contract were likely limited. The focus on a large, sole-source award to a prime contractor may bypass the broader small business defense industrial base.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures would include contract performance monitoring, delivery schedules, and quality assurance. Transparency is limited due to the sole-source nature of the award, with detailed cost breakdowns and justifications often not publicly disclosed for national security reasons. Inspector General oversight would apply to potential fraud, waste, or abuse.

Related Government Programs

Military Armored Vehicle Manufacturing
Tactical Wheeled Vehicles
Defense Procurement
Combat Vehicle Modernization

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $360.1 million to GENERAL DYNAMICS LAND SYSTEMS INC.. 200608!002778!2100!W56HZV!TACOM - WARREN !W56HZV06C0255 !A!N! !N! ! !20060131!20080630!131266926!131266926!001381284!N!GENERAL DYNAMICS LAND SYSTEMS !38500 MOUND RD !STERLING HEIGH !MI!48310!76460!099!26!STERLING HEIGHTS !MACOMB !MICHIGAN !+000128302167!N!N!000000000000!2320!TRUCKS AND TRUCK TRACTORS, WHEELED !A4A!COMBAT VEHICLES !000 !NOT DISCERNABLE !336992!E! !1! ! ! ! ! !999

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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $360.1 million.

What is the period of performance?

Start: 2006-01-31. End: 2011-01-21.

What is the track record of General Dynamics Land Systems in delivering similar armored vehicles under government contracts?

General Dynamics Land Systems (GDLS) has a long and established history of producing armored vehicles for the U.S. military and international allies. They are known for major platforms such as the Abrams Main Battle Tank and the Stryker family of wheeled combat vehicles. GDLS has consistently been a primary contractor for these types of systems, often securing large, multi-year contracts. Their track record includes both successes in delivering advanced capabilities and facing scrutiny over program costs, production timelines, and vehicle performance in various operational environments. Past performance data, often detailed in contract award justifications and performance reviews, would provide a more granular view of their reliability and adherence to specifications for specific vehicle types.

How does the per-unit cost of these armored vehicles compare to similar contracts or market rates?

Determining the precise per-unit cost for these armored vehicles is challenging without access to detailed contract line item information and specific vehicle configurations. As this was a sole-source award, direct comparison to competitively bid contracts for identical or highly similar vehicles is difficult. However, armored vehicles are inherently complex and expensive pieces of military equipment, with costs often running into millions of dollars per unit depending on the level of protection, armament, and technology integrated. Industry benchmarks and reports from defense analysis groups often highlight significant cost variations based on production volume, technological sophistication, and the specific platform. The lack of competition in this award suggests that a thorough cost analysis by the government was crucial to ensure reasonableness, but the absence of competing offers inherently limits the ability to establish a definitive market rate.

What are the primary risks associated with this sole-source contract for the Department of Defense?

The primary risks associated with this sole-source contract are centered around cost and strategic dependency. Without competition, there is an elevated risk of paying a premium for the vehicles, as the government lacks the leverage of competing bids to drive down prices. This could lead to inefficient use of taxpayer funds. Furthermore, relying on a single contractor for critical armored vehicle platforms creates a strategic dependency. Any production delays, quality issues, or financial instability on the part of General Dynamics Land Systems could significantly impact the Army's readiness and modernization plans. There's also a risk that innovation might be stifled compared to a more competitive environment where contractors vie to offer superior or more cost-effective solutions.

What is the historical spending pattern for armored vehicles by the Department of the Army, and how does this contract fit in?

The Department of the Army has consistently allocated substantial funding towards the procurement and sustainment of armored vehicles throughout its history, reflecting the critical role these platforms play in ground warfare. Historical spending patterns show significant investments in main battle tanks, infantry fighting vehicles, and various types of armored personnel carriers and tactical vehicles. This $360 million contract for wheeled armored vehicles fits within the broader category of tactical mobility and combat support platforms. It represents a specific investment in a particular type of vehicle, likely to fulfill a defined operational requirement or replace an aging fleet. Analyzing historical spending data for similar vehicle classes would reveal whether this contract amount is typical, higher, or lower than previous procurements, considering factors like inflation, technological advancements, and evolving military doctrine.

What are the potential implications of this contract on the broader defense industrial base, particularly regarding competition and innovation?

This sole-source contract, awarded to a major defense contractor like General Dynamics Land Systems, has mixed implications for the broader defense industrial base. On one hand, it ensures the continued production of critical military hardware by an established entity, supporting jobs and specialized manufacturing capabilities. However, the lack of competition can stifle innovation by reducing the incentive for alternative providers to develop competing technologies or more cost-effective solutions. It can also reinforce market concentration, making it harder for newer or smaller companies to enter the armored vehicle sector. While this specific award might be justified by unique requirements, a pattern of sole-source awards can lead to a less dynamic and potentially less innovative industrial base over the long term.

Industry Classification

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

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV05R0695

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 38500 MOUND RD, STERLING HEIGHTS, MI, 10

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline