Army Spends $112.6M on 46 Abrams Tanks from General Dynamics, Lacking Competition

Contract Overview

Contract Amount: $112,561,105 ($112.6M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2012-04-19

End Date: 2014-12-31

Contract Duration: 986 days

Daily Burn Rate: $114.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACQUISITION OF 46 ABRAMS M1A2 SEP (SYSTEM ENHANCEMENT PACKAGE) V2 TANKS

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $112.6 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: ACQUISITION OF 46 ABRAMS M1A2 SEP (SYSTEM ENHANCEMENT PACKAGE) V2 TANKS Key points: 1. High cost for advanced military hardware, with significant investment in modernization. 2. Sole-source award to General Dynamics raises concerns about price discovery and potential overspending. 3. Risk of technological obsolescence in rapidly evolving defense landscape. 4. Sector focus on defense manufacturing, a critical but often high-cost area for government spending.

Value Assessment

Rating: questionable

The contract value of $112.6 million for 46 tanks averages to approximately $2.45 million per tank. Benchmarking against similar advanced armored vehicle procurements is difficult without more detailed specifications, but this price point warrants scrutiny, especially given the lack of competitive bidding.

Cost Per Unit: $2,446,980.55

Competition Analysis

Competition Level: sole-source

This contract was awarded sole-source, meaning there was no competition. This significantly limits the government's ability to ensure the best possible price and value, as the vendor faces no pressure to offer competitive terms.

Taxpayer Impact: The lack of competition in this sole-source award means taxpayers may have paid a premium for these tanks, as there was no market pressure to drive down costs.

Public Impact

Enhances Army's armored combat capabilities with upgraded Abrams tanks. Supports domestic defense manufacturing jobs and technological development. Represents a significant investment in national security infrastructure. Potential for long-term sustainment and upgrade costs beyond initial procurement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
High per-unit cost requires justification.
Potential for cost overruns in complex defense contracts.
Long-term sustainment costs not detailed.

Positive Signals

Acquisition of critical, modern military hardware.
Supports advanced defense manufacturing capabilities.
Firm fixed-price contract provides cost certainty for this specific acquisition.

Sector Analysis

This procurement falls within the Defense sector, specifically military armored vehicle manufacturing. Spending in this area is driven by national security needs and technological advancements, often involving high unit costs and complex supply chains. Benchmarks are difficult without specific system comparisons.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as it went to General Dynamics Land Systems Inc. There is no information provided on subcontracting opportunities for small businesses within this award.

Oversight & Accountability

The sole-source nature of this award suggests limited competitive oversight. Further review would be needed to assess the justification for not competing the requirement and the adequacy of price negotiation.

Related Government Programs

Military Armored Vehicle, Tank, and Tank Component Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition may lead to inflated prices.
High per-unit cost requires rigorous justification.
Potential for cost overruns in complex defense programs.
Long-term sustainment and upgrade costs are significant unknowns.
Dependence on a single contractor for critical defense assets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $112.6 million to GENERAL DYNAMICS LAND SYSTEMS INC.. ACQUISITION OF 46 ABRAMS M1A2 SEP (SYSTEM ENHANCEMENT PACKAGE) V2 TANKS

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 $112.6 million.

What is the period of performance?

Start: 2012-04-19. End: 2014-12-31.

What was the justification for awarding this contract sole-source, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without specific documentation, it's unclear why General Dynamics was the only option. Exploring competitive strategies, even for specialized defense systems, is crucial for ensuring taxpayer value and preventing potential price gouging.

How does the per-unit cost of these Abrams M1A2 SEPv2 tanks compare to similar advanced armored vehicle procurements, considering the lack of competition?

The average per-unit cost of approximately $2.45 million is substantial. While direct comparisons are challenging due to varying configurations and upgrade levels, the absence of competition means this figure cannot be validated against market alternatives. A thorough cost analysis and benchmarking against publicly available data for comparable systems would be necessary to assess value.

What are the projected long-term sustainment and upgrade costs associated with these 46 tanks, and how will they be managed?

The initial contract value covers the acquisition of the tanks, but the total lifecycle cost is likely much higher. Information on sustainment, maintenance, spare parts, and future upgrades is critical for understanding the true taxpayer burden. Effective long-term planning and budgeting are essential to manage these ongoing expenses efficiently.

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: W56HZV12R0221

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: $112,561,105

Exercised Options: $112,561,105

Current Obligation: $112,561,105

Subaward Activity

Number of Subawards: 1200

Total Subaward Amount: $243,828,986

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline