General Dynamics Land Systems awarded $144M for armored vehicle manufacturing, facing limited competition

Contract Overview

Contract Amount: $143,972,959 ($144.0M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2011-08-08

End Date: 2015-06-30

Contract Duration: 1,422 days

Daily Burn Rate: $101.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMS

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $144.0 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: FMS Key points: 1. Contract value of $144M for armored vehicle manufacturing represents a significant investment in defense readiness. 2. Limited competition for this contract may impact price discovery and potentially lead to higher costs. 3. The firm fixed-price contract type shifts cost risk to the contractor, but the lack of competition is a concern. 4. This contract falls under the broad category of military armored vehicle manufacturing, a specialized sector. 5. The duration of the contract (over 3 years) suggests a substantial and ongoing need for these components.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the armored vehicles or components procured. However, the $144M award over approximately three years suggests a substantial per-unit cost, typical for complex military hardware. The lack of competitive bidding raises concerns about whether the government secured the best possible price. Without comparable contract data or detailed cost breakdowns, a definitive value-for-money assessment is difficult, but the limited competition is a red flag.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that only one source was considered or available. This typically occurs when a specific technology, unique capability, or urgent need restricts the pool of potential contractors. The limited competition means that the government did not benefit from a broad market solicitation, potentially missing out on more competitive pricing and innovative solutions from other qualified firms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of robust competition. The lack of bidding opportunities limits the government's leverage to negotiate lower prices and ensures that only one company's pricing structure was considered.

Public Impact

The primary beneficiaries are the U.S. Army, receiving critical armored vehicle components for operational readiness. Services delivered include the manufacturing and supply of specialized military armored vehicles and their components. The geographic impact is primarily centered around the contractor's operations in Michigan, with potential downstream effects on its supply chain. Workforce implications include job creation and retention within the defense manufacturing sector, particularly in Michigan.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Limited transparency in the procurement process due to sole-source nature.
Potential for contractor lock-in, reducing future flexibility and negotiation power.

Positive Signals

Ensures supply of critical defense equipment to the U.S. Army.
Firm fixed-price contract shifts cost overrun risk to the contractor.
Contractor (General Dynamics Land Systems) is a known entity in defense manufacturing.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of military armored vehicles and their components. This is a highly specialized and capital-intensive industry dominated by a few large defense contractors. The market size is substantial, driven by government defense spending, but barriers to entry are high due to technological complexity, security requirements, and long development cycles. This contract represents a portion of the Department of Defense's ongoing investment in maintaining and modernizing its armored fleet.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). General Dynamics Land Systems, as a large prime contractor, may engage small businesses as subcontractors. However, the lack of competition at the prime contract level limits the direct opportunities for small businesses to compete for this specific award. The subcontracting plan, if any, would determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the U.S. Army Contracting Command. Accountability measures are inherent in the contract terms, particularly the firm fixed-price structure. Transparency is limited due to the non-competitive award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Armored Vehicle Procurement
Defense Manufacturing
Military Vehicle Components
Department of the Army Contracts
General Dynamics Contracts

Risk Flags

Non-competitive award
Potential for cost overruns (despite FFP, due to negotiation)
Lack of transparency in pricing
Limited market research evident

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $144.0 million to GENERAL DYNAMICS LAND SYSTEMS INC.. FMS

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 $144.0 million.

What is the period of performance?

Start: 2011-08-08. End: 2015-06-30.

What specific types of armored vehicles or components are being procured under this contract?

The provided data indicates the contract is for 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' (nd: 'Military Armored Vehicle, Tank, and Tank Component Manufacturing'). However, it does not specify the exact models or types of vehicles (e.g., Abrams tanks, Stryker vehicles) or the precise components being manufactured. This level of detail is crucial for a thorough analysis of the contract's scope, technical requirements, and potential for competition. Without this information, it is difficult to benchmark pricing or assess the criticality of the specific items being supplied.

How does the $144M award compare to historical spending on similar armored vehicle programs?

Comparing the $144M award requires context on the specific items procured and the contract duration. If this award covers a multi-year production run of a major platform like a tank, it might represent a reasonable investment. However, if it's for components or a smaller number of vehicles, it could indicate a high per-unit cost. Historical data for similar programs, such as the production of Abrams tank upgrades or other armored personnel carriers, would be needed for a meaningful comparison. The 'NOT AVAILABLE FOR COMPETITION' status also complicates direct historical comparisons, as competitive bids often drive down prices.

What are the specific risks associated with a 'NOT AVAILABLE FOR COMPETITION' award for military hardware?

The primary risk of a 'NOT AVAILABLE FOR COMPETITION' award is the potential for inflated pricing due to the lack of market pressure. Without competing bids, the government may not achieve the best possible value. Other risks include reduced innovation, as contractors may have less incentive to propose cost-saving measures or advanced technologies when they are the sole provider. There's also a risk of contractor complacency or 'contractor lock-in,' where the government becomes overly reliant on a single supplier, limiting future flexibility and negotiation leverage. Ensuring adequate oversight and justification for the sole-source award is critical to mitigate these risks.

What is General Dynamics Land Systems' track record in fulfilling similar defense manufacturing contracts?

General Dynamics Land Systems (GDLS) is a major and established defense contractor with a long history of producing armored vehicles for the U.S. military and international allies. They are the prime contractor for the M1 Abrams main battle tank and the Stryker family of vehicles, among others. Their track record generally includes successful delivery of complex military hardware, though like many large defense programs, they have also faced scrutiny regarding cost, schedule, and performance on specific contracts. GDLS possesses the specialized facilities, expertise, and security clearances necessary for this type of manufacturing.

What are the implications of the 'FIRM FIXED PRICE' contract type in this non-competitive scenario?

A Firm Fixed Price (FFP) contract type is generally favorable to the government as it places the risk of cost overruns on the contractor. This means that General Dynamics Land Systems is obligated to deliver the specified armored vehicles or components for the agreed-upon price, regardless of their actual costs. In a competitive scenario, FFP encourages efficiency. However, in a non-competitive award, while the price risk is on the contractor, the initial price negotiation is critical. If the baseline price was not rigorously negotiated due to the lack of competition, the FFP structure might still result in a higher-than-market cost for the government, albeit one the contractor is bound to.

How does the contract's duration (1422 days) impact the overall assessment of its value and risk?

The contract duration of 1422 days (approximately 3.9 years) indicates a significant, long-term requirement for the armored vehicles or components. This extended period allows for production ramp-up, potential engineering changes, and sustained delivery schedules. For the government, it provides supply chain stability for critical defense assets. For the contractor, it offers revenue predictability. However, a longer duration also increases the potential exposure to cost fluctuations (though mitigated by FFP) and the risk of technological obsolescence if the underlying requirements change significantly over the contract's life. The extended timeline underscores the importance of the initial price negotiation and ongoing oversight.

Industry Classification

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

Product/Service Code: HARDWARE AND ABRASIVES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV11R0286

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, 48310

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

Financial Breakdown

Contract Ceiling: $291,972,959

Exercised Options: $143,972,959

Current Obligation: $143,972,959

Subaward Activity

Number of Subawards: 1038

Total Subaward Amount: $271,859,658

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline