Over $1.1 billion awarded for Abrams Tank technical support, with limited competition and a long contract duration

Contract Overview

Contract Amount: $1,122,756,811 ($1.1B)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2006-12-20

End Date: 2013-06-30

Contract Duration: 2,384 days

Daily Burn Rate: $471.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SYSTEM TEWCHNICAL SUPPORT (STS)/SYSTEM SUSTAINMENT TECHNICAL SUPPORT FOR THE ABRAMS TANK PROGRAM

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $1.12 billion to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: SYSTEM TEWCHNICAL SUPPORT (STS)/SYSTEM SUSTAINMENT TECHNICAL SUPPORT FOR THE ABRAMS TANK PROGRAM Key points: 1. The contract's value suggests significant ongoing investment in the Abrams tank fleet's sustainment. 2. Limited competition raises questions about potential price efficiencies and the breadth of available technical expertise. 3. The extended duration of the contract (over 6 years) indicates a long-term need for these services. 4. The cost-plus-fixed-fee contract type may incentivize cost overruns if not closely monitored. 5. This contract represents a substantial portion of the Army's spending on armored vehicle sustainment. 6. The sole contractor's deep involvement suggests a critical role in maintaining the operational readiness of a key defense asset.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable sustainment contracts for similar armored vehicles. The cost-plus-fixed-fee structure, while common for complex engineering services, can lead to higher costs if not managed diligently. The total award amount of over $1.1 billion over approximately six years suggests a significant investment per year, but a direct per-unit cost comparison for technical support is not readily available from the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one vendor, General Dynamics Land Systems Inc., was considered capable of providing the required system technical support for the Abrams tank program. This lack of competition means that the government did not explore alternative solutions or pricing from other potential providers, which could limit opportunities for cost savings and innovation.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits the government's ability to leverage the broader market for the best value.

Public Impact

The primary beneficiaries are the U.S. Army units operating and maintaining the Abrams main battle tank. The services delivered ensure the continued operational readiness and effectiveness of a critical armored fighting vehicle. The geographic impact is likely nationwide, supporting Army installations and maintenance depots, with potential global implications for deployed forces. Workforce implications include the employment of engineers, technicians, and support staff at General Dynamics Land Systems and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost-plus-fixed-fee contract type may not provide strong incentives for cost efficiency.
Long contract duration could reduce flexibility to adapt to changing technological needs or market conditions.
Lack of transparency in performance metrics makes it difficult to assess value for money.
Potential for contractor lock-in due to specialized knowledge of the Abrams system.

Positive Signals

General Dynamics Land Systems is a recognized expert in Abrams tank technology, ensuring specialized knowledge.
A long-term contract provides stability and predictability for sustainment efforts.
The sole-source nature ensures continuity of support for a critical defense system.
The fixed fee component provides some level of cost certainty for a portion of the contract.
The contract supports the readiness of a key U.S. military asset.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense systems. The market for military vehicle sustainment is often dominated by a few large prime contractors with deep historical ties and specialized knowledge of the platforms they support. Spending in this area is driven by defense budgets and the operational tempo of the armed forces. Comparable spending benchmarks would typically involve other major platform sustainment contracts within the Department of Defense.

Small Business Impact

The provided data indicates that small business participation (sb) was false and there was no small business set-aside (ss). This suggests that the prime contract was not specifically targeted towards small businesses, and opportunities for small business subcontractors are not explicitly detailed in this summary. The large value and specialized nature of the work may limit direct subcontracting opportunities for smaller firms unless they possess highly specialized capabilities.

Oversight & Accountability

Oversight for this contract would primarily reside within the Department of the Army, likely managed by program executive offices and contracting command offices responsible for ground vehicle systems. Accountability measures would be embedded in the contract's terms and conditions, including performance standards and reporting requirements. Transparency may be limited due to the sole-source nature and the sensitive defense context, though contract awards and basic details are typically publicly available.

Related Government Programs

Abrams Tank Modernization Programs
Army Ground Vehicle Maintenance and Repair
Defense Logistics Agency Support Contracts
Combat Vehicle Systems Engineering
Department of Defense Sustainment Contracts

Risk Flags

Sole-source award
Long contract duration
Cost-plus contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.12 billion to GENERAL DYNAMICS LAND SYSTEMS INC.. SYSTEM TEWCHNICAL SUPPORT (STS)/SYSTEM SUSTAINMENT TECHNICAL SUPPORT FOR THE ABRAMS TANK PROGRAM

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 $1.12 billion.

What is the period of performance?

Start: 2006-12-20. End: 2013-06-30.

What is the historical spending trend for Abrams Tank technical support provided by General Dynamics Land Systems?

Analyzing historical spending requires access to a broader dataset of past contracts. However, the current contract's duration (2006-2013) and substantial value ($1.12 billion) suggest a consistent and significant investment in Abrams tank sustainment over an extended period. Without prior contract data, it's difficult to ascertain if this represents an increase, decrease, or stable level of spending. Future analysis could involve tracking subsequent contracts for Abrams technical support to identify trends in annual obligations and total contract values.

How does the annual cost of this contract compare to the average cost of maintaining other major armored vehicles in the U.S. military inventory?

A direct comparison of annual costs is challenging without specific cost breakdowns and comparable data for other vehicle types. The annual value of this contract, approximately $187 million ($1.12 billion / 6 years), reflects the complexity and scale of supporting the Abrams platform. Factors influencing this cost include the number of vehicles in the fleet, their operational tempo, the sophistication of their systems, and the required level of technical expertise. Benchmarking against vehicles like the Bradley Fighting Vehicle or future platforms would require detailed analysis of their respective sustainment contracts and operational profiles.

What are the specific performance metrics used to evaluate General Dynamics Land Systems' effectiveness in providing technical support for the Abrams tank?

The provided data does not specify the performance metrics. However, typical metrics for such contracts often include response times for technical assistance, availability of spare parts, successful resolution rates for reported issues, adherence to maintenance schedules, and overall system reliability improvements. The effectiveness of the Cost Plus Fixed Fee (CPFF) structure also depends on the government's ability to monitor contractor performance against defined objectives and milestones, ensuring that the fixed fee is earned through satisfactory delivery of services.

What is the potential impact of this sole-source contract on innovation in Abrams tank sustainment technologies?

Sole-source contracts can sometimes stifle innovation by reducing the competitive pressure that often drives companies to develop new and more efficient solutions. In this case, General Dynamics Land Systems, as the sole provider, may have less incentive to invest in breakthrough sustainment technologies compared to a scenario with multiple competing firms. However, the incumbent contractor may still innovate to maintain its position and potentially secure future contracts, especially if performance and cost-efficiency are strongly emphasized by the government during contract oversight and future solicitations.

What is the contractor's track record with the Abrams tank program prior to and during this contract period?

General Dynamics Land Systems Inc. has a long-standing and primary role in the design, development, and production of the Abrams main battle tank. Their track record is intrinsically linked to the platform's evolution and sustainment. Prior to this specific contract (2006-2013), they would have been involved in earlier sustainment efforts and upgrades. During this period, their performance would be evaluated based on meeting the contract's technical and delivery requirements, contributing to the operational readiness of the Abrams fleet, and managing costs within the CPFF framework.

Are there any known risks associated with the long duration and sole-source nature of this contract?

Yes, there are several potential risks. The long duration (over 6 years) can lead to contractor complacency, technological obsolescence if not managed proactively, and reduced flexibility for the government to adapt to evolving threats or requirements. The sole-source nature eliminates competitive pressure, potentially leading to higher prices, reduced innovation, and a lack of market-driven efficiencies. It also creates a dependency on a single supplier, which can be a vulnerability if the contractor faces financial difficulties or strategic shifts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV06R0377

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 38500 MOUND RD, STERLING HEIGHTS, MI, 48310

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,122,756,811

Exercised Options: $1,122,756,811

Current Obligation: $1,122,756,811

Actual Outlays: $134

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline