DoD awards $55.4M facilities support contract to General Dynamics Land Systems Inc. for Michigan operations

Contract Overview

Contract Amount: $55,381,157 ($55.4M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2023-09-28

End Date: 2027-09-30

Contract Duration: 1,463 days

Daily Burn Rate: $37.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: YEAR 3 DELIVERY ORDER.

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $55.4 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: YEAR 3 DELIVERY ORDER. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Lack of competition raises concerns about price discovery and potential for inflated costs. 3. Contract duration extends to September 2027, suggesting a long-term need for these services. 4. Facilities support services are critical for maintaining operational readiness. 5. The contract is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle. 6. Geographic concentration in Michigan may indicate specific base or facility support needs.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes a definitive value assessment difficult without further data on the base IDIQ's pricing and performance history. Benchmarking against similar facilities support contracts for large defense installations is recommended. The fixed fee component provides some cost control, but the cost-plus aspect leaves room for variability. Without a competitive bidding process, it's challenging to ascertain if the government is receiving optimal value for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor is uniquely qualified or when it's deemed not to be in the government's best interest to compete. The absence of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without multiple bids, there's less assurance that the pricing reflects the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense and the personnel operating at the supported facilities in Michigan. Services delivered include essential facilities support, ensuring operational readiness and maintenance of infrastructure. The geographic impact is concentrated in Michigan, likely supporting a specific military installation or complex. Workforce implications may include the utilization of General Dynamics' personnel and potentially local subcontractors for specialized tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for this significant award.
Cost-plus-fixed-fee contract type can lead to cost uncertainty.
Long contract duration without competitive re-evaluation.

Positive Signals

General Dynamics is an established defense contractor with a track record.
Facilities support is a critical and necessary service for military operations.
The contract is a delivery order under an existing IDIQ, suggesting some prior vetting.

Sector Analysis

Facilities Support Services fall under the broader professional, scientific, and technical services sector. This sector is characterized by a mix of large, established companies and specialized service providers. The market size for government facilities management is substantial, driven by the extensive real estate holdings of federal agencies. This contract represents a portion of the Department of Defense's ongoing investment in maintaining its infrastructure, aligning with broader trends in outsourcing non-core operational functions.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). While General Dynamics is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of subcontracting to small businesses will depend on the prime contractor's strategy and the specific requirements of the facilities support services. Further analysis of subcontracting plans would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The cost-plus-fixed-fee structure necessitates robust financial oversight to ensure costs are reasonable and allocable. Transparency is generally maintained through contract reporting mechanisms, but the sole-source nature limits public visibility into the negotiation process. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Base Operations Support (BOS)
Logistics and Maintenance Services
Facilities Engineering and Management
Department of Defense Facilities Maintenance

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.4 million to GENERAL DYNAMICS LAND SYSTEMS INC.. YEAR 3 DELIVERY ORDER.

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 $55.4 million.

What is the period of performance?

Start: 2023-09-28. End: 2027-09-30.

What is General Dynamics Land Systems Inc.'s track record with similar facilities support contracts for the Department of Defense?

General Dynamics Land Systems Inc. (GDLS) is primarily known for its vehicle manufacturing capabilities, particularly armored vehicles. While they possess extensive experience in large-scale program management and complex logistics, their direct track record specifically in providing comprehensive facilities support services as a prime contractor may be less extensive compared to companies specializing in this area. However, as a major defense contractor, they likely have experience managing large workforces, ensuring compliance, and overseeing complex operations, which are transferable skills. A review of their past performance on other DoD contracts, even if not solely facilities-focused, would provide insight into their ability to manage cost, schedule, and quality for large service contracts. It's important to differentiate between their core defense manufacturing and their role as a facilities service provider in this instance.

How does the pricing structure (Cost Plus Fixed Fee) compare to industry benchmarks for facilities support services?

The Cost Plus Fixed Fee (CPFF) contract type is common in government contracting, especially for services where the scope may evolve or is difficult to define precisely upfront. For facilities support, CPFF means the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Benchmarking CPFF pricing is complex as it depends heavily on the specific services, geographic location, labor rates, and the efficiency of the contractor. Generally, CPFF contracts can be more expensive for the government than fixed-price contracts if costs escalate significantly, as the government bears the risk of cost overruns. However, the fixed fee provides some predictability on profit. Industry benchmarks often focus on metrics like cost per square foot, cost per facility, or labor hour rates. Without specific details on the services provided and the labor mix, a direct comparison is challenging, but the lack of competition for this award suggests the government may not be achieving the most competitive rates achievable through a fully open bidding process.

What are the primary risks associated with a sole-source award for facilities support services?

The primary risks associated with a sole-source award for facilities support services include: 1. **Lack of Price Competition:** The government may pay a higher price than if the contract were competed, as there is no market pressure to drive down costs. 2. **Reduced Innovation:** Without competitive pressure, the contractor may have less incentive to innovate or improve service delivery efficiency. 3. **Potential for Complacency:** The incumbent contractor might become complacent, assuming continued awards without needing to demonstrate superior performance or cost-effectiveness. 4. **Limited Contractor Pool:** If the sole-source justification is narrow, it might overlook other capable contractors who could offer better value or specialized expertise. 5. **Oversight Burden:** Increased vigilance and robust oversight are required from the government to ensure costs are reasonable and services are adequately performed, as the usual checks and balances of competition are absent.

What is the historical spending pattern for facilities support services at this specific Department of Defense location or for similar installations?

Historical spending data for facilities support services at this specific DoD location or similar installations is crucial for context. Without access to that specific data, we can infer general trends. The DoD is one of the largest consumers of facilities management services globally, with annual spending in the billions across various installations. Spending patterns are influenced by factors such as the size and age of facilities, the level of operational tempo, modernization efforts, and budget allocations. Contracts for facilities support are often long-term due to the nature of the services required. If this $55.4 million contract represents a significant increase or decrease compared to previous spending for similar services at this location, it would warrant further investigation. Analyzing historical spending can reveal trends in contract types, contractor performance, and overall cost efficiency over time.

How does the contract duration (through September 2027) align with typical facilities support service contracts in the federal government?

The contract duration, extending through September 2027 (approximately four years from the award date), aligns with typical facilities support service contracts in the federal government. These services are essential for maintaining ongoing operations and infrastructure, often requiring long-term commitments to ensure stability and continuity. Many federal facilities support contracts are awarded as multi-year IDIQ vehicles with subsequent delivery orders or task orders that can extend for several years, often with options for renewal. This duration allows for efficient planning, workforce stability, and the implementation of long-term maintenance and improvement strategies. The length also reflects the significant investment and transition costs associated with changing service providers in such critical areas.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

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: $55,381,157

Exercised Options: $55,381,157

Current Obligation: $55,381,157

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $10,526,795

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV21D0085

IDV Type: IDC

Timeline