DoD Awards $932M for Armored Vehicle Exchange, Sole-Source Contract to General Dynamics

Contract Overview

Contract Amount: $932,096,462 ($932.1M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2020-06-10

End Date: 2023-08-31

Contract Duration: 1,177 days

Daily Burn Rate: $791.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: DELIVERY ORDER 0001 TO CALL-UP 143 DVH A1 ECP EXCHANGE VEHICLES.

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $932.1 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: DELIVERY ORDER 0001 TO CALL-UP 143 DVH A1 ECP EXCHANGE VEHICLES. Key points: 1. Significant investment in military vehicle modernization. 2. Sole-source award raises questions about competition and potential cost savings. 3. Long-term contract duration suggests ongoing program needs. 4. Focus on armored vehicle components indicates a critical defense capability.

Value Assessment

Rating: questionable

The contract value of $932M is substantial. Without competitive bidding, it's difficult to assess if this price represents fair value compared to potential market alternatives. The fixed-price incentive structure aims to control costs, but the baseline is set without competitive pressure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and may result in higher costs for taxpayers compared to a fully competitive process. The justification for sole-sourcing is critical for understanding this decision.

Taxpayer Impact: The lack of competition in this large contract could lead to higher expenditures than necessary, impacting the efficient use of taxpayer funds.

Public Impact

Ensures continued availability of critical military hardware. Supports jobs within the defense manufacturing sector. Potential for increased costs due to lack of competition. Impacts the readiness and modernization of Army ground forces.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Sole-source award limits competition.
High contract value warrants scrutiny.
Long duration may mask cost inefficiencies.

Positive Signals

Addresses critical defense needs.
Fixed-price incentive contract aims for cost control.

Sector Analysis

The defense sector, particularly armored vehicle manufacturing, is characterized by high R&D costs, long production cycles, and significant government reliance. Spending benchmarks are difficult to establish due to the specialized nature of these assets and the prevalence of sole-source or limited competition contracts.

Small Business Impact

This contract was awarded to General Dynamics Land Systems Inc., a large prime contractor. There is no indication of small business participation in the provided data, suggesting potential missed opportunities for subcontracting and economic inclusion.

Oversight & Accountability

The sole-source nature of this award necessitates robust oversight from the Department of Defense to ensure the contractor is meeting performance requirements and that costs are reasonable. Transparency regarding the justification for sole-sourcing is essential for accountability.

Related Government Programs

Military Armored Vehicle, Tank, and Tank Component Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award
Lack of transparency on justification
Potential for inflated costs
Limited small business participation indicated
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $932.1 million to GENERAL DYNAMICS LAND SYSTEMS INC.. DELIVERY ORDER 0001 TO CALL-UP 143 DVH A1 ECP EXCHANGE VEHICLES.

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 $932.1 million.

What is the period of performance?

Start: 2020-06-10. End: 2023-08-31.

What was the specific justification for awarding this contract on a sole-source basis, and were any alternatives considered?

The justification for a sole-source award typically involves factors such as unique capabilities, urgent needs, or lack of viable alternatives. Without further documentation, it's impossible to confirm the specific reasons. Agencies are expected to document these justifications thoroughly to ensure fair and efficient procurement, and alternatives should always be explored to the extent practicable.

How does the per-unit cost of these exchange vehicles compare to similar vehicles procured through competitive means, if such data is available?

Direct comparison of per-unit costs is challenging without access to specific vehicle configurations and competitive contract data. However, the absence of competition inherently raises concerns that the negotiated price may be higher than what could have been achieved through a bidding process. Benchmarking against publicly available data for similar, competitively procured vehicles would be necessary for a thorough assessment.

What mechanisms are in place to ensure cost control and contractor performance given the long duration and sole-source nature of this contract?

The contract utilizes a Fixed Price Incentive (FPI) structure, which includes target costs, target profits, and share ratios for cost variances. This incentivizes the contractor to control costs. Additionally, contract performance metrics and regular reporting requirements are standard oversight mechanisms to ensure delivery of quality vehicles within agreed-upon timelines and specifications.

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

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

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: $932,096,462

Exercised Options: $932,096,462

Current Obligation: $932,096,462

Subaward Activity

Number of Subawards: 704

Total Subaward Amount: $253,802,087

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV20D0005

IDV Type: IDC

Timeline