DoD's $273M contract for Moroccan armored vehicles awarded to General Dynamics, facing limited competition

Contract Overview

Contract Amount: $273,462,557 ($273.5M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2015-09-29

End Date: 2018-08-20

Contract Duration: 1,056 days

Daily Burn Rate: $259.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MOROCCO 150 PROGRAM.

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $273.5 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: MOROCCO 150 PROGRAM. Key points: 1. Value for money is difficult to assess due to limited competition and lack of detailed cost breakdowns. 2. Competition dynamics show a sole-source award, raising concerns about potential overpricing and reduced innovation. 3. Risk indicators include reliance on a single contractor and potential for cost overruns without competitive pressure. 4. Performance context is tied to military hardware, suggesting long lead times and complex supply chains. 5. Sector positioning places this contract within the defense manufacturing industry, specifically armored vehicle production.

Value Assessment

Rating: questionable

The contract's value is difficult to benchmark against similar procurements due to the sole-source nature and limited public data. The firm-fixed-price structure aims to control costs, but without competitive bidding, the initial pricing may not reflect true market value. The total award of $273 million for 150 units suggests a per-unit cost of approximately $1.82 million, which requires further analysis against comparable international sales or domestic production costs for similar armored vehicles.

Cost Per Unit: Approximately $1.82 million per unit (based on total award and quantity).

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically justified when only one vendor possesses the necessary capabilities, technology, or when urgent national security needs preclude a lengthy competition. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for these vehicles, as there was no market pressure to drive down prices. This also limits opportunities for other capable manufacturers to enter the market or offer more cost-effective solutions.

Public Impact

The primary beneficiaries are the Moroccan armed forces, receiving advanced armored vehicles to enhance their defense capabilities. The services delivered include the manufacturing and delivery of 150 military armored vehicles. The geographic impact is primarily in Morocco, with potential implications for regional security and stability. Workforce implications are within the defense manufacturing sector, supporting jobs at General Dynamics and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for contractor lock-in, making future procurements more expensive.
Limited visibility into the specific technological advancements or unique capabilities justifying the sole-source award.

Positive Signals

Firm-fixed-price contract provides cost certainty once awarded.
Award to a known defense contractor with established production capabilities.
Contract supports foreign military sales, potentially strengthening diplomatic ties.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on armored vehicle production. The global market for military vehicles is substantial, driven by geopolitical factors and modernization efforts by armed forces worldwide. General Dynamics Land Systems is a major player in this market. Benchmarking this contract's value is challenging without more detailed cost data, but it represents a significant investment in specialized military hardware.

Small Business Impact

There is no indication that this contract included small business set-asides or subcontracting requirements. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless they are part of General Dynamics' established supply chain. Further investigation would be needed to determine if any subcontracting opportunities were directed towards small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which caps the government's liability. Transparency is limited due to the sole-source nature and the classification often associated with foreign military sales, though Inspector General reviews could be initiated if specific concerns arise regarding fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales (FMS)
Armored Vehicle Procurement
Defense Manufacturing Contracts
Department of the Army Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Limited transparency in justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $273.5 million to GENERAL DYNAMICS LAND SYSTEMS INC.. MOROCCO 150 PROGRAM.

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 $273.5 million.

What is the period of performance?

Start: 2015-09-29. End: 2018-08-20.

What specific capabilities or technologies did General Dynamics possess that justified a sole-source award for the MOROCCO 150 PROGRAM?

The justification for a sole-source award typically rests on unique capabilities, proprietary technology, or a lack of viable alternatives in the market. For the MOROCCO 150 PROGRAM, it's possible that General Dynamics' specific Abrams tank variants or related systems were deemed essential by the Department of Defense for meeting Morocco's requirements, and no other manufacturer could provide a comparable solution within the required timeframe or specifications. Without access to the official justification documentation (e.g., a Justification and Approval document), the precise reasons remain speculative. However, such awards often cite factors like interoperability with existing systems, specialized upgrades, or urgent operational needs that preclude a lengthy competitive process.

How does the per-unit cost of approximately $1.82 million compare to other international sales of similar armored vehicles?

The per-unit cost of approximately $1.82 million for these armored vehicles is substantial and requires careful comparison. International sales of advanced main battle tanks and armored vehicles can vary significantly based on configuration, technology, quantity, and the specific customer's negotiation power. For instance, sales of Abrams tanks to other allies have historically ranged widely. Without knowing the exact variant and specifications of the vehicles provided to Morocco, a direct comparison is difficult. However, this figure appears to be within the upper range for such systems, underscoring the importance of competitive bidding or robust negotiation to ensure fair pricing for taxpayers, especially when such sales are government-to-government.

What are the potential risks associated with awarding a contract of this magnitude on a sole-source basis?

Awarding a contract of $273 million on a sole-source basis carries several risks. Primarily, it eliminates the potential for cost savings that competition typically drives, meaning taxpayers might pay more than necessary. There's also a risk of reduced innovation, as the sole contractor faces less pressure to improve products or processes. Furthermore, it can lead to contractor lock-in, making future procurements from the same vendor more expensive and less flexible. Dependence on a single supplier can also create supply chain vulnerabilities. Finally, a lack of transparency in the sole-source justification can raise concerns about fairness and potential favoritism.

What is the historical spending pattern for armored vehicle procurement by the Department of Defense, and how does this contract fit?

The Department of Defense has a long history of procuring armored vehicles, with significant spending allocated to programs like the Abrams tank, Bradley Fighting Vehicle, and various Stryker variants. Spending in this category fluctuates based on modernization cycles, operational demands, and geopolitical threats. This $273 million contract for the MOROCCO 150 PROGRAM, while substantial, represents a specific instance of foreign military sales rather than direct U.S. Army procurement for its own forces. It fits within the broader context of defense industrial base support and international security cooperation, but its sole-source nature distinguishes it from many of the larger, competitively awarded domestic programs.

What oversight mechanisms are in place for foreign military sales contracts awarded by the Department of Defense?

Foreign Military Sales (FMS) contracts, like the MOROCCO 150 PROGRAM, are subject to oversight from multiple U.S. government entities. The Defense Security Cooperation Agency (DSCA) manages the FMS program, ensuring compliance with U.S. law and policy. The Department of Defense's contracting and program management offices oversee the execution of individual contracts, including performance and financial management. Additionally, the Government Accountability Office (GAO) may audit FMS programs, and the Department of State plays a role in approving the sale itself. The Inspector General of the Department of Defense also has jurisdiction to investigate allegations of fraud, waste, or abuse within these contracts.

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: W56HZV15R0215

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 38500 MOUND RD, STERLING HEIGHTS, MI, 48310

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,983,462,557

Exercised Options: $273,462,557

Current Obligation: $273,462,557

Subaward Activity

Number of Subawards: 2100

Total Subaward Amount: $541,639,948

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline