DoD awards $22.4M for obsolescence material to General Dynamics, raising questions on long-term value
Contract Overview
Contract Amount: $22,390,890 ($22.4M)
Contractor: General Dynamics Land Systems Inc.
Awarding Agency: Department of Defense
Start Date: 2012-01-27
End Date: 2019-10-17
Contract Duration: 2,820 days
Daily Burn Rate: $7.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: SERVICE OF OBSOLESCENCE MATERIAL
Place of Performance
Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310
State: Michigan Government Spending
Plain-Language Summary
Department of Defense obligated $22.4 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: SERVICE OF OBSOLESCENCE MATERIAL Key points: 1. Significant contract value for specialized military hardware. 2. Sole incumbent supplier, General Dynamics, dominates the market. 3. Potential for cost overruns due to 'cost plus fixed fee' structure. 4. Sector focus on defense manufacturing, critical for military readiness.
Value Assessment
Rating: questionable
The $22.4 million contract awarded to General Dynamics Land Systems Inc. for obsolescence material is substantial. Without specific per-unit cost data or benchmarks for similar obsolescence mitigation efforts, it's difficult to definitively assess its value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the long duration and specialized nature of the requirement may have limited the number of actual bidders.
Taxpayer Impact: Taxpayer funds are being used to ensure the continued operational readiness of military vehicles by addressing material obsolescence.
Public Impact
Ensures continued operational capability of critical military armored vehicles. Supports the defense industrial base and jobs within the sector. Addresses long-term sustainment challenges in military equipment.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee contract type can incentivize higher costs.
- Long contract duration (2012-2019) may lead to scope creep or evolving needs.
- Sole incumbent supplier may limit future competitive opportunities.
- Lack of specific per-unit cost data makes value assessment difficult.
Positive Signals
- Full and open competition was utilized.
- Addresses critical obsolescence issues for military hardware.
- Supports national defense objectives.
Sector Analysis
This contract falls within the Defense sector, specifically focusing on manufacturing and sustainment of military armored vehicles. Spending in this area is driven by national security needs and the lifecycle management of aging equipment.
Small Business Impact
There is no indication that small businesses were involved as prime contractors or significant subcontractors on this particular award. The prime contractor, General Dynamics, is a large defense corporation.
Oversight & Accountability
The contract was awarded by the Department of the Army, a component of the Department of Defense. Standard oversight mechanisms for defense contracts would apply, but specific details on oversight intensity are not provided.
Related Government Programs
- Military Armored Vehicle, Tank, and Tank Component Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Cost Plus Fixed Fee contract type.
- Long contract duration.
- Potential for limited competition in future procurements.
- Lack of detailed cost breakdown for value assessment.
Tags
military-armored-vehicle-tank-and-tank-c, department-of-defense, mi, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $22.4 million to GENERAL DYNAMICS LAND SYSTEMS INC.. SERVICE OF OBSOLESCENCE MATERIAL
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 $22.4 million.
What is the period of performance?
Start: 2012-01-27. End: 2019-10-17.
What was the specific obsolescence risk mitigated by this contract, and what was the projected cost avoidance?
The contract aimed to address the obsolescence of materials crucial for the maintenance and operation of military armored vehicles. Without detailed project documentation, the specific risks mitigated and the projected cost avoidance are not publicly available. This information would be vital for a comprehensive value assessment beyond the contract's total value.
How did the 'cost plus fixed fee' structure impact the final cost compared to alternative contract types?
The 'cost plus fixed fee' (CPFF) structure allows the contractor to recover all allowable costs plus a predetermined fixed fee. While it facilitates work on uncertain projects, it can incentivize higher costs as the contractor is reimbursed for expenses. The final cost might have been higher than under a firm-fixed-price contract, but CPFF is often used when cost estimation is difficult.
What is the long-term strategy for managing material obsolescence in these vehicles beyond this contract?
This contract addressed obsolescence issues between 2012 and 2019. The long-term strategy for managing material obsolescence in military armored vehicles would involve continuous monitoring, proactive redesign, alternative sourcing, and potentially modernization programs. The effectiveness of this specific contract is tied to its contribution to that broader, ongoing sustainment effort.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: W56HZV11R0232
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
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: $23,523,856
Exercised Options: $22,390,890
Current Obligation: $22,390,890
Actual Outlays: $-7,157
Subaward Activity
Number of Subawards: 113
Total Subaward Amount: $153,008,773
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2012-01-27
Current End Date: 2019-10-17
Potential End Date: 2019-10-17 12:10:00
Last Modified: 2024-08-15
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