Department of the Army awards $92.5M contract for 42 M1A2S tanks to General Dynamics Land Systems Inc

Contract Overview

Contract Amount: $92,473,971 ($92.5M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2014-12-19

End Date: 2016-08-31

Contract Duration: 621 days

Daily Burn Rate: $148.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMS - 42 M1A2S TANKS IN SUPPORT OF THE KINGDOM OF SAUDI ARABIA.

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $92.5 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: FMS - 42 M1A2S TANKS IN SUPPORT OF THE KINGDOM OF SAUDI ARABIA. Key points: 1. Contract awarded for 42 M1A2S tanks, indicating a significant acquisition for armored vehicle capabilities. 2. The contract value of $92.5 million suggests a substantial investment in military hardware. 3. Awarded to General Dynamics Land Systems Inc., a known entity in armored vehicle manufacturing. 4. The contract duration of 621 days points to a moderately paced production and delivery schedule. 5. This acquisition aligns with broader defense strategies for supporting allied nations. 6. The firm fixed-price contract type aims to provide cost certainty for the government.

Value Assessment

Rating: good

The contract value of approximately $92.5 million for 42 M1A2S tanks translates to roughly $2.2 million per tank. This figure appears to be within the expected range for advanced main battle tanks, considering the complexity and technology involved. Benchmarking against similar government procurements for Abrams variants would provide a more precise value-for-money assessment, but initial indications suggest a reasonable price point for the capabilities delivered.

Cost Per Unit: Approximately $2.2 million per tank.

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or when urgent needs preclude a competitive process. The lack of competition means that the government did not benefit from potential price reductions or innovative solutions that might have emerged from a bidding process.

Taxpayer Impact: The absence of competition for this significant defense contract means taxpayers may not have received the best possible price, as there was no incentive for multiple bidders to offer lower costs.

Public Impact

The Kingdom of Saudi Arabia is the direct beneficiary of these advanced military assets. The contract facilitates the delivery of 42 M1A2S Abrams tanks, enhancing the recipient's armored warfare capabilities. The geographic impact is primarily focused on the Middle East, supporting regional security initiatives. The production of these tanks supports jobs within the defense manufacturing sector, specifically at General Dynamics Land Systems Inc. facilities in Michigan.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can limit innovation and alternative solutions.
Dependence on a single contractor for critical defense equipment can pose supply chain risks.

Positive Signals

Award to an established contractor with proven expertise in tank manufacturing.
Firm fixed-price contract provides cost predictability.
Acquisition of advanced military hardware to support allied defense capabilities.

Sector Analysis

The defense sector, particularly the manufacturing of armored vehicles, is characterized by high barriers to entry due to specialized technology, significant capital investment, and stringent regulatory requirements. General Dynamics Land Systems Inc. is a major player in this market. This contract for M1A2S tanks fits within the broader landscape of global military hardware sales and foreign military financing, where established platforms are often procured by allied nations to maintain interoperability and enhance defense postures.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, General Dynamics Land Systems Inc., is a large defense manufacturer. While large prime contractors often engage small businesses as subcontractors, the specific subcontracting plan or performance for this contract is not detailed here. The absence of a direct set-aside means opportunities for small businesses are likely indirect, through the prime contractor's supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting command and potentially the Department of Defense's Inspector General. Transparency is generally maintained through contract award databases like FPDS. Accountability measures are inherent in the firm fixed-price structure, which places the cost risk on the contractor. However, the sole-source nature of the award limits the typical oversight mechanisms associated with competitive bidding.

Related Government Programs

Foreign Military Sales (FMS)
Armored Vehicle Procurement
Main Battle Tank Acquisition
Defense Industrial Base

Risk Flags

Sole-source award
Lack of competition
Potential for higher cost

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $92.5 million to GENERAL DYNAMICS LAND SYSTEMS INC.. FMS - 42 M1A2S TANKS IN SUPPORT OF THE KINGDOM OF SAUDI ARABIA.

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 $92.5 million.

What is the period of performance?

Start: 2014-12-19. End: 2016-08-31.

What is the track record of General Dynamics Land Systems Inc. in delivering M1 Abrams variants?

General Dynamics Land Systems Inc. (GDLS) has a long and established track record as the prime contractor for the M1 Abrams main battle tank family. They have been responsible for the design, development, production, and sustainment of various Abrams configurations for the U.S. Army and numerous international partners for decades. Their experience spans upgrades, modernization programs, and new production runs, including variants like the M1A2 SEPv2 and SEPv3. GDLS has consistently demonstrated the capability to produce complex armored vehicles meeting stringent military specifications. Their historical performance indicates a high degree of reliability and technical expertise in manufacturing these sophisticated weapon systems, making them a trusted supplier for such critical defense assets.

How does the per-unit cost of these M1A2S tanks compare to other recent M1 Abrams procurements?

The per-unit cost for these 42 M1A2S tanks is approximately $2.2 million ($92.5M / 42 units). Comparing this to other M1 Abrams procurements requires careful consideration of the specific variant, configuration, and economic conditions at the time of award. For instance, recent U.S. Army procurements of M1A2 SEPv3 tanks have often been in a similar or slightly higher per-unit cost range, sometimes exceeding $3 million depending on the scope of upgrades and associated support packages. Foreign military sales can also vary significantly based on specific customer requirements, quantities, and negotiated terms. Without direct comparison data for the exact M1A2S variant procured under similar market conditions, it's challenging to definitively state if this price is exceptionally high or low, but it appears to be within the expected range for advanced Abrams tanks.

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

The primary risks associated with a sole-source award for military hardware like the M1A2S tanks include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or offer cost-saving efficiencies, and a potential lack of transparency in the pricing structure. Taxpayers may end up paying more than they would in a competitive environment. Furthermore, sole-source contracts can create a dependency on a single supplier, which can pose risks to long-term supply chain stability and potentially limit future acquisition options if the contractor faces production issues or decides to exit the market. It also bypasses the opportunity to discover potentially more capable or cost-effective solutions from other manufacturers.

What is the expected program effectiveness given the contract details?

The program's effectiveness is expected to be high in terms of delivering the specified military capability, as the M1A2S Abrams tank is a proven and advanced platform. The contract is for a definitive, firm fixed-price award, which provides clarity on cost and scope. The award to General Dynamics Land Systems Inc., a specialist in this area, further suggests a high likelihood of successful production and delivery. The primary objective is to equip the Kingdom of Saudi Arabia with modern armored vehicles, thereby enhancing their defense capabilities and contributing to regional security. The effectiveness will be measured by the timely delivery of 42 operational tanks that meet all technical specifications and are ready for deployment by the end user.

How does this contract fit into historical spending patterns for military armored vehicles?

This contract for $92.5 million represents a significant, but not unprecedented, expenditure within the broader context of historical military armored vehicle spending. The U.S. Department of Defense, and allied nations, regularly procure substantial quantities of main battle tanks and related armored vehicles. Annual global defense spending on armored vehicles runs into billions of dollars, encompassing new production, upgrades, and sustainment. This specific award, while substantial for a single contract, is a component of ongoing modernization and foreign military sales efforts. It aligns with historical patterns of major defense acquisitions aimed at equipping both U.S. forces and key allies with advanced ground combat systems.

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

Solicitation ID: W56HZV14R0326

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: $92,473,971

Exercised Options: $92,473,971

Current Obligation: $92,473,971

Subaward Activity

Number of Subawards: 605

Total Subaward Amount: $280,703,249

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline