Army awards $120.8M contract for 69 M1A2S tanks to General Dynamics Land Systems Inc

Contract Overview

Contract Amount: $120,849,400 ($120.8M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2012-12-21

End Date: 2014-12-31

Contract Duration: 740 days

Daily Burn Rate: $163.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KINGDOM OF SAUDI ARABIA M1A2S TANK PROGRAM, 69EA

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $120.8 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: KINGDOM OF SAUDI ARABIA M1A2S TANK PROGRAM, 69EA Key points: 1. Contract awarded to a single, established defense contractor, indicating potential for limited competition. 2. The firm fixed-price contract type suggests cost certainty for the government. 3. The contract duration of 740 days (approx. 2 years) aligns with typical defense procurement timelines for major equipment. 4. The award is for M1A2S tanks, an upgraded variant, implying a focus on modernizing existing armored fleets. 5. The geographic location of the contractor (Michigan) may have implications for regional economic impact. 6. The absence of small business set-aside flags suggests this contract is not specifically targeting smaller enterprises.

Value Assessment

Rating: fair

The contract value of $120.8 million for 69 M1A2S tanks translates to approximately $1.75 million per tank. Benchmarking this against publicly available data for similar tank procurements is challenging due to the specialized nature of the M1A2S variant and potential variations in included upgrades and support packages. However, the price appears within a plausible range for advanced armored vehicle acquisitions, though a direct comparison to commercial market rates is not applicable.

Cost Per Unit: Approximately $1.75 million per tank (M1A2S variant).

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition scenario. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or when urgent needs preclude a full and open competition. The lack of multiple bidders means the government did not benefit from competitive pricing pressures that could drive down costs.

Taxpayer Impact: For taxpayers, sole-source awards can mean a higher price than might be achieved through competitive bidding, as the contractor faces less pressure to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Army, which receives upgraded armored vehicles to enhance its combat capabilities. The services delivered include the manufacturing and delivery of 69 M1A2S tanks. The geographic impact is primarily centered around the contractor's facilities in Michigan, supporting local employment and the defense industrial base. Workforce implications include skilled manufacturing jobs in armored vehicle production and related supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if not managed tightly due to lack of competitive pressure.

Positive Signals

Award to a known, experienced contractor (General Dynamics Land Systems Inc.) reduces technical risk.
Firm fixed-price contract provides cost certainty for the government.
Focus on upgrading existing platforms (M1A2S) leverages existing infrastructure and training.

Sector Analysis

The defense industrial base for armored vehicles is a highly specialized sector dominated by a few large, experienced contractors. General Dynamics Land Systems Inc. is a key player in this market, known for its M1 Abrams tank family. This contract fits within the broader trend of defense spending focused on maintaining and modernizing armored fleets to meet evolving geopolitical threats. Comparable spending benchmarks are difficult to establish precisely due to the specific variant and customization, but major armored vehicle programs often run into hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of manufacturing advanced military hardware like tanks, it is common for prime contracts to be awarded to large, established defense corporations. While General Dynamics Land Systems Inc. may utilize small businesses in its supply chain, the prime contract itself is not directed towards them. This means direct opportunities for small businesses to secure the prime contract are limited in this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, which hold the contractor responsible for delivering the specified tanks within the agreed-upon price. Transparency is generally limited for sole-source defense contracts, with justifications often classified or restricted. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

M1 Abrams Tank Program
Foreign Military Sales (if applicable)
Armored Vehicle Manufacturing
Department of the Army Procurement

Risk Flags

Sole-source award
Potential for higher cost due to lack of competition
Limited transparency on competition justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $120.8 million to GENERAL DYNAMICS LAND SYSTEMS INC.. KINGDOM OF SAUDI ARABIA M1A2S TANK PROGRAM, 69EA

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 $120.8 million.

What is the period of performance?

Start: 2012-12-21. End: 2014-12-31.

What is the track record of General Dynamics Land Systems Inc. in delivering M1A2S tanks or similar armored vehicles?

General Dynamics Land Systems Inc. (GDLS) has a long and established track record in the design, manufacturing, and sustainment of the M1 Abrams main battle tank family, including various upgraded variants. They are the original equipment manufacturer for the M1 Abrams. GDLS has consistently delivered these complex systems to the U.S. Army and allied nations for decades. Their experience encompasses not only production but also significant upgrades and modernization programs, ensuring they possess the necessary expertise, facilities, and supply chain to fulfill contracts for advanced armored vehicles like the M1A2S. Past performance on similar large-scale tank production contracts would be a key factor in the Army's decision-making, even in a sole-source context.

How does the per-unit cost of $1.75 million for the M1A2S tank compare to other M1 Abrams variants or similar international tanks?

The per-unit cost of approximately $1.75 million for the M1A2S variant is within the expected range for advanced main battle tanks, particularly upgraded versions of established platforms like the M1 Abrams. The M1A2S is an export variant, often customized for specific customer requirements, which can influence pricing. For context, the U.S. Army's own M1A2 SEPv3 upgrades have also involved significant per-unit costs, often exceeding $1 million per tank depending on the scope of modernization. International comparisons are complex due to differing configurations, included technology (e.g., fire control systems, armor packages), and support elements. However, this figure is generally consistent with the high cost associated with acquiring and upgrading state-of-the-art armored fighting vehicles.

What are the primary risks associated with a sole-source award for military hardware like tanks?

The primary risk associated with a sole-source award for military hardware is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may pay more than it would in a fully competed scenario. Another risk is reduced innovation, as the sole provider may have less incentive to develop more cost-effective or technologically superior solutions. Furthermore, sole-source contracts can sometimes lead to complacency in performance or delivery schedules, as the contractor faces no direct threat of losing future business to competitors for this specific award. Ensuring robust contract oversight and negotiation becomes critical to mitigate these risks.

What is the significance of the M1A2S variant compared to other M1 Abrams models?

The M1A2S is an export variant of the M1 Abrams main battle tank, specifically configured for the Kingdom of Saudi Arabia. While based on the M1A2 platform, export variants often incorporate specific modifications requested by the purchasing nation, which can include differences in armor composition, communication systems, or other subsystems to meet local requirements, regulations, or cost targets. The 'S' designation typically indicates a variant tailored for Saudi Arabia. This contrasts with U.S. Army variants like the M1A2 SEP (System Enhancement Package) versions (v1, v2, v3), which are optimized for U.S. operational needs and doctrine and may include different technological advancements or integration priorities.

What are the historical spending patterns for M1 Abrams tanks and related upgrades by the Department of Defense?

Historical spending on the M1 Abrams program by the Department of Defense has been substantial over several decades, reflecting its role as the U.S. Army's primary main battle tank. Procurement of new tanks and, increasingly, modernization of existing fleets through upgrade programs (like the SEP upgrades) represent significant budget allocations. Annual spending can fluctuate based on production rates, upgrade cycles, and geopolitical demands. Total spending runs into the tens of billions of dollars over the program's life. Contracts for upgrades and new production runs, often awarded to General Dynamics Land Systems Inc., are typically large, multi-year commitments, indicating a consistent, albeit cyclical, investment in maintaining and enhancing the Abrams fleet.

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: W56HZV12R0322

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: $252,849,400

Exercised Options: $120,849,400

Current Obligation: $120,849,400

Subaward Activity

Number of Subawards: 539

Total Subaward Amount: $130,265,255

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline