DoD awards $1.7B contract for 84 Abrams tanks to Saudi Arabia under Foreign Military Sales program

Contract Overview

Contract Amount: $169,485,636 ($169.5M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2013-09-18

End Date: 2015-05-31

Contract Duration: 620 days

Daily Burn Rate: $273.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 84 M1A2S TANKS FOR THE KINGDOM OF SAUDI ARABIA (KSA). FMS REQUIREMENT.

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $169.5 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: 84 M1A2S TANKS FOR THE KINGDOM OF SAUDI ARABIA (KSA). FMS REQUIREMENT. Key points: 1. Contract value represents a significant portion of the total available funding for this specific tank variant. 2. Sole-source award indicates limited competition, potentially impacting price negotiation. 3. Contract duration of 620 days suggests a focused production and delivery timeline. 4. The award falls under the Foreign Military Sales (FMS) program, indicating an international customer. 5. General Dynamics Land Systems Inc. is the sole contractor, highlighting their dominant position in this niche market.

Value Assessment

Rating: fair

The contract value of $1.7 billion for 84 tanks translates to approximately $20.18 million per tank. This unit cost appears high when compared to domestic procurement of similar armored vehicles, though FMS contracts often include additional support, training, and logistical elements that can increase per-unit costs. Benchmarking against other FMS tank sales would provide a clearer picture of value for money, but the initial assessment suggests a premium price.

Cost Per Unit: Approximately $20.18 million per tank (based on 84 tanks and $1.69B total value)

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, General Dynamics Land Systems Inc., was considered. This is common for Foreign Military Sales (FMS) requirements where the customer country often specifies a particular system or manufacturer. The lack of competition means there was no opportunity for price discovery through a bidding process, and the government relied on negotiation with the sole provider.

Taxpayer Impact: Taxpayers are exposed to the negotiated price without the benefit of competitive pressure to drive down costs. The government must ensure robust negotiation and oversight to secure the best possible price for the taxpayer.

Public Impact

The Kingdom of Saudi Arabia is the primary beneficiary, receiving advanced military hardware. The contract facilitates the delivery of 84 M1A2S Abrams tanks, enhancing the KSA's defense capabilities. The geographic impact is primarily in Saudi Arabia, with potential implications for regional security dynamics. The contract supports jobs and manufacturing within General Dynamics Land Systems Inc. and its supply chain in Michigan.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
High per-unit cost compared to potential domestic procurement benchmarks warrants further scrutiny.
Lack of transparency in FMS pricing negotiations can obscure true value for money.
Dependence on a single contractor for critical defense systems poses a long-term risk.

Positive Signals

Contract fulfills a specific, stated requirement for a key U.S. ally.
General Dynamics Land Systems Inc. has a proven track record with the Abrams platform.
Foreign Military Sales program supports U.S. foreign policy objectives and interoperability.
Definitive contract structure provides clarity on terms and conditions for the duration.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of armored vehicles. The market for main battle tanks is highly specialized, dominated by a few global players. General Dynamics Land Systems Inc. is a primary producer of the Abrams tank, a system with significant global demand among allied nations. Spending in this category is often driven by geopolitical considerations and the need for advanced military hardware for both domestic forces and foreign partners.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large prime contractor, the primary subcontracting opportunities would likely be determined by General Dynamics Land Systems Inc. The impact on the small business ecosystem would depend on the extent to which the prime contractor utilizes small businesses in its supply chain for components and services related to tank manufacturing.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, particularly within the Department of the Army. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring contract performance and compliance. Inspector General reports related to FMS programs or specific defense acquisitions could also provide oversight. Transparency is generally limited in FMS sole-source procurements compared to fully competed domestic contracts.

Related Government Programs

Foreign Military Sales Program
Abrams Tank Production
Armored Vehicle Manufacturing
Department of Defense Major Weapon Systems

Risk Flags

Sole Source Award
High Per Unit Cost
Foreign Military Sale

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $169.5 million to GENERAL DYNAMICS LAND SYSTEMS INC.. 84 M1A2S TANKS FOR THE KINGDOM OF SAUDI ARABIA (KSA). FMS REQUIREMENT.

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 $169.5 million.

What is the period of performance?

Start: 2013-09-18. End: 2015-05-31.

What is the historical spending trend for M1A2S Abrams tanks to Saudi Arabia?

Detailed historical spending data specifically for M1A2S Abrams tanks to Saudi Arabia is not readily available in the public domain through this contract's metadata. However, the Foreign Military Sales (FMS) program facilitates numerous international arms sales. Saudi Arabia has been a significant recipient of U.S. military equipment for decades, including various configurations of the Abrams tank. The total value of FMS cases for Saudi Arabia runs into the tens of billions of dollars over time, encompassing a wide range of defense articles and services. This specific contract for $1.69 billion represents a substantial, but not unprecedented, single transaction within that broader context. Analyzing past FMS agreements for similar tank systems would provide a better understanding of the typical scale and frequency of such sales.

How does the per-unit cost of these tanks compare to domestic U.S. Army procurement?

The per-unit cost for these tanks, estimated at approximately $20.18 million each ($1.69 billion / 84 tanks), appears high when compared to typical domestic procurement costs for Abrams variants. For instance, recent U.S. Army procurements of M1A2 SEPv3 Abrams tanks have often shown per-unit costs in the range of $8-12 million. However, direct comparisons are complex. FMS contracts frequently include costs for specialized training, unique logistical support packages, country-specific modifications, and potentially higher profit margins, which are not always present or are accounted for differently in domestic sales. Furthermore, the 'M1A2S' designation suggests specific Saudi Arabian modifications. Without a detailed breakdown of the FMS package, a definitive value-for-money assessment against domestic prices is challenging, but the initial figure suggests a premium.

What are the specific risks associated with a sole-source award for major defense equipment?

A sole-source award for major defense equipment like the Abrams tank carries several risks. Primarily, it eliminates competitive pressure, which typically drives down prices and encourages innovation. This can lead to higher costs for the procuring entity (in this case, the U.S. government acting on behalf of Saudi Arabia). There's also a risk of complacency from the sole provider, potentially leading to less focus on efficiency or quality over the long term. Dependence on a single supplier can create vulnerabilities in the supply chain and make it difficult to switch providers if issues arise or if better alternatives become available. For taxpayers, the risk is paying a premium price without the assurance that it represents the best possible value achievable through competition.

What is General Dynamics Land Systems Inc.'s track record with the Abrams tank program?

General Dynamics Land Systems Inc. (GDLS) has an extensive and well-established track record as the prime contractor for the M1 Abrams main battle tank. GDLS has been responsible for the design, development, production, and sustainment of the Abrams platform since its inception. They have consistently upgraded the tank through various iterations (e.g., SEPv1, SEPv2, SEPv3), incorporating technological advancements and addressing evolving battlefield requirements. Their long-standing relationship with the U.S. Army and numerous international partners underscores their deep expertise and capability in producing and supporting this complex weapon system. This history suggests a high degree of reliability and technical proficiency in fulfilling the current contract.

What are the potential performance implications of this contract for the U.S. Army?

This contract is for the sale of tanks to Saudi Arabia under the Foreign Military Sales (FMS) program and does not directly impact the current operational readiness or performance of the U.S. Army's own Abrams tank fleet. The production line utilized by General Dynamics Land Systems Inc. is primarily dedicated to fulfilling both domestic U.S. Army orders and international FMS requirements. While fulfilling this FMS order might influence production schedules or resource allocation for future U.S. Army orders, it does not degrade the performance of tanks already in service with the U.S. military. The U.S. Army continues to receive its own modernized variants of the Abrams tank through separate procurement actions.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

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: $169,485,636

Exercised Options: $169,485,636

Current Obligation: $169,485,636

Subaward Activity

Number of Subawards: 233

Total Subaward Amount: $44,620,066

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline