DoD awards $520.6M for M1 Abrams Family of Vehicles to General Dynamics, facing limited competition

Contract Overview

Contract Amount: $520,580,431 ($520.6M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2020-12-18

End Date: 2026-02-28

Contract Duration: 1,898 days

Daily Burn Rate: $274.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: M1 ABRAMS FAMILY OF VEHICLES.

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $520.6 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: M1 ABRAMS FAMILY OF VEHICLES. Key points: 1. Significant investment in armored vehicle manufacturing, primarily for the Army. 2. Sole reliance on General Dynamics raises concerns about price discovery and innovation. 3. Long-term contract (2020-2026) indicates sustained demand for Abrams tanks. 4. Fixed Price Incentive contract type aims to balance cost control with performance.

Value Assessment

Rating: questionable

The contract value of $520.6M is substantial. Without competitive bidding, it's difficult to assess if this price represents fair value compared to potential alternatives or market benchmarks for similar advanced armored vehicles.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to General Dynamics Land Systems Inc. This lack of competition limits the government's ability to leverage market forces for better pricing and potentially restricts access to innovative solutions from other manufacturers.

Taxpayer Impact: The absence of competition may lead to higher costs for taxpayers, as there is less pressure on the contractor to offer the most competitive price.

Public Impact

Ensures continued production and modernization of a key military asset. Supports jobs and economic activity within the defense manufacturing sector. Potential for extended reliance on a single supplier for critical defense equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Lack of price benchmarks due to no-bid.
Long-term contract duration.
Fixed Price Incentive contract can lead to cost overruns if not managed.

Positive Signals

Maintains critical defense capability.
Supports established manufacturing base.
Contract aims for performance incentives.

Sector Analysis

The defense sector, particularly armored vehicle manufacturing, is characterized by high barriers to entry and often involves long-term, complex contracts. Spending benchmarks are difficult to establish due to the specialized nature of these systems.

Small Business Impact

This contract does not appear to involve small businesses as prime contractors. Opportunities for small businesses would likely be as subcontractors to General Dynamics, but this information is not detailed in the provided data.

Oversight & Accountability

The sole-source nature of this award warrants close oversight from the Department of Defense to ensure fair pricing and performance. Robust auditing and performance monitoring are crucial 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 limits competition.
Potential for inflated pricing.
Lack of transparency in cost determination.
Long-term dependency on a single supplier.
Risk of technological stagnation without competitive pressure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $520.6 million to GENERAL DYNAMICS LAND SYSTEMS INC.. M1 ABRAMS FAMILY OF 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 $520.6 million.

What is the period of performance?

Start: 2020-12-18. End: 2026-02-28.

What is the justification for the sole-source award, and what steps are being taken to ensure fair pricing without competition?

The justification for a sole-source award typically involves unique capabilities or urgent needs. The Department of Defense should have documented this justification. To ensure fair pricing, the agency likely relies on cost analyses, historical pricing data, and potentially independent cost estimates. Robust negotiation and contract surveillance are critical to mitigate the risks associated with non-competitive procurement.

How does the per-unit cost of the M1 Abrams compare to similar advanced armored vehicles produced competitively?

Without competitive bidding data for the M1 Abrams or direct comparisons to similarly advanced, recently procured armored vehicles, a precise per-unit cost benchmark is unavailable. The 'questionable' value rating reflects this uncertainty. A thorough analysis would require access to detailed cost breakdowns and comparisons with international counterparts or alternative domestic platforms, if any exist.

What is the long-term strategy for ensuring the availability of competitive options or mitigating risks associated with sole-source reliance for Abrams tank production?

The long-term strategy should involve exploring potential future competitions, perhaps for upgrades or next-generation vehicles. Mitigating sole-source risks includes fostering industrial base resilience, encouraging technology insertion from diverse sources, and maintaining strong government oversight of the incumbent contractor's performance and pricing. Periodic market research and strategic sourcing initiatives are essential.

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: $520,580,431

Exercised Options: $520,580,431

Current Obligation: $520,580,431

Subaward Activity

Number of Subawards: 598

Total Subaward Amount: $215,885,349

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV21D0001

IDV Type: IDC

Timeline