DoD awards $38M for APS A KITS to General Dynamics, raising value-for-money questions due to sole-source nature

Contract Overview

Contract Amount: $38,033,174 ($38.0M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2018-12-06

End Date: 2020-08-31

Contract Duration: 634 days

Daily Burn Rate: $60.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: APS A KITS

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $38.0 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: APS A KITS Key points: 1. The contract's sole-source award limits competitive pressure, potentially impacting overall value. 2. A high unit price for the APS A KITS suggests a need for further benchmarking. 3. The fixed-price contract structure shifts some risk to the government. 4. Performance duration of 634 days indicates a substantial project timeline. 5. The award falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. 6. No small business set-aside was applied, suggesting limited direct impact on small businesses.

Value Assessment

Rating: questionable

The contract's value is difficult to assess without comparable sole-source awards. The fixed-price nature provides some cost certainty, but the lack of competition raises concerns about whether the government secured the best possible price. Benchmarking against similar systems or previous procurements would be necessary to determine if the $38 million award represents fair market value. The absence of a competitive bidding process inherently limits the government's ability to drive down costs through negotiation.

Cost Per Unit: N/A

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 solicited. This approach is typically used when only one source possesses the necessary capabilities or when urgency precludes a competitive process. The lack of multiple bidders means there was no direct price competition, which can lead to higher costs for the government compared to fully competed contracts.

Taxpayer Impact: Sole-source awards limit the government's leverage in price negotiations, potentially resulting in higher expenditures for taxpayers. Without competitive bids, there's less assurance that the awarded price reflects the lowest achievable cost.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical APS A KITS. This contract supports the development and delivery of specialized system components. The contract is geographically focused within Michigan, where the contractor is based. It likely supports a specialized workforce within General Dynamics Land Systems Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value for money.
Fixed-price contract shifts some risk to the government, especially if costs escalate unexpectedly.
Lack of small business participation may limit opportunities for smaller firms in the supply chain.

Positive Signals

Award to an established contractor like General Dynamics suggests a degree of reliability.
Fixed-price contract provides cost certainty once awarded, assuming no change orders.
Specific system components are being procured, indicating a defined need.

Sector Analysis

The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized area within defense manufacturing. This sector is characterized by high technological requirements and often involves a limited number of prime contractors capable of meeting stringent specifications. Spending in this area is critical for maintaining advanced military capabilities. Comparable spending benchmarks are difficult to establish without more specific details on the APS A KITS themselves, but the overall defense instrumentation market is substantial.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. Consequently, the direct impact on the small business ecosystem is likely minimal. Opportunities for small businesses would primarily arise if General Dynamics Land Systems Inc. chooses to subcontract portions of this work, which is not explicitly mandated by the contract terms.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the contract terms, particularly the fixed-price structure which obligates the contractor to deliver specified goods or services. Transparency is limited due to the sole-source nature of the award, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Systems Procurement
Navigation and Guidance Systems
Advanced Manufacturing Contracts
Sole-Source Defense Awards

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns in fixed-price contracts
Limited transparency in procurement process

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.0 million to GENERAL DYNAMICS LAND SYSTEMS INC.. APS A KITS

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $38.0 million.

What is the period of performance?

Start: 2018-12-06. End: 2020-08-31.

What is the specific function and technical capability of the APS A KITS being procured?

The provided data does not specify the exact function or technical capabilities of the 'APS A KITS'. The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' suggests these kits are related to advanced systems for military applications. Without further details, it's presumed they are critical components for enhancing situational awareness, targeting, or operational effectiveness of defense platforms. The $38 million award suggests a significant technological component or a substantial quantity of these kits.

Why was this contract awarded on a sole-source basis instead of being competed?

The data indicates the contract was awarded on a 'NOT COMPETED' basis, signifying a sole-source procurement. Common justifications for sole-source awards include the unique capability of a single contractor, urgent and compelling needs that preclude full and open competition, or situations where only one responsible source exists. Without specific documentation from the Department of Defense justifying this award, it is presumed that General Dynamics Land Systems Inc. was identified as the only entity capable of meeting the stringent requirements for the APS A KITS within the necessary timeframe or under the specific contract parameters.

How does the $38 million contract value compare to similar procurements for navigation and guidance systems?

Direct comparison of the $38 million contract value is challenging without knowing the exact specifications and quantity of the APS A KITS. However, the NAICS code 334511 covers a broad range of sophisticated instruments. Awards in this category can range from a few million to hundreds of millions of dollars, depending on complexity and scale. Given this is a sole-source award to General Dynamics, a major defense contractor, the price may reflect specialized development, proprietary technology, or a specific integration requirement. A thorough value analysis would require benchmarking against other sole-source or competitively awarded contracts for analogous systems, considering factors like technological advancement, quantity, and contractor overhead.

What are the potential risks associated with a sole-source, fixed-price contract of this magnitude?

A primary risk with sole-source contracts is the potential for inflated pricing due to the lack of competitive pressure, meaning taxpayers may not be receiving the best value. For a fixed-price contract, the risk shifts to the government if the contractor encounters unforeseen cost increases during performance, potentially leading to change orders that could escalate the total cost beyond the initial $38 million. Additionally, reliance on a single source can create long-term dependencies and limit future competition if the technology or system becomes standardized. Contractor performance issues, though less likely with established firms, also pose a risk.

What is General Dynamics Land Systems Inc.'s track record with similar defense contracts?

General Dynamics Land Systems Inc. (GDLS) is a well-established and significant defense contractor with a long history of producing ground combat vehicles, weapon systems, and related technologies for the U.S. military and international allies. Their track record includes major programs like the Abrams Main Battle Tank and Stryker family of vehicles. While specific details on their performance for 'APS A KITS' are not provided, GDLS generally has extensive experience in complex defense systems integration and manufacturing. Their size and established position suggest a capacity to handle large, technically demanding contracts, though like any large contractor, they may have faced scrutiny on specific program costs or schedules in the past.

What is the historical spending trend for 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' by the Department of Defense?

Historical spending by the Department of Defense (DoD) within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511) is substantial and generally trends upwards, driven by modernization efforts and the need for advanced battlefield technologies. The DoD consistently invests billions annually in research, development, and procurement of systems related to intelligence, surveillance, reconnaissance (ISR), electronic warfare, and precision navigation. This specific contract of $38 million represents a small fraction of the overall DoD budget allocated to this sector, but it is indicative of ongoing investments in sophisticated instrumentation critical for maintaining military superiority.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV18R0125

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: $38,033,174

Exercised Options: $38,033,174

Current Obligation: $38,033,174

Subaward Activity

Number of Subawards: 125

Total Subaward Amount: $94,876,216

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline