DoD awards $19.1M for ARV-30 prototype vehicles to General Dynamics Land Systems Inc

Contract Overview

Contract Amount: $19,119,960 ($19.1M)

Contractor: General Dynamics Land Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2024-02-29

End Date: 2026-02-28

Contract Duration: 730 days

Daily Burn Rate: $26.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ARV-30 PROTOTYPE VEHICLE PROCUREMENT.

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48310

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $19.1 million to GENERAL DYNAMICS LAND SYSTEMS INC. for work described as: ARV-30 PROTOTYPE VEHICLE PROCUREMENT. Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Performance period of 730 days suggests a focus on development and prototyping rather than immediate mass production. 4. The award is for a prototype vehicle, indicating early-stage development with inherent technical risks. 5. Geographic concentration in Michigan for the contractor may have implications for regional economic impact. 6. The contract value is significant for a prototype, warranting close scrutiny of its cost-effectiveness.

Value Assessment

Rating: questionable

The contract value of $19.1 million for a prototype vehicle is substantial. Without comparable sole-source prototype awards for similar advanced vehicles, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type introduces risk, as the government pays costs plus a fixed fee, potentially leading to higher final costs than fixed-price contracts if cost controls are not robust. The fixed fee component, however, provides some predictability for the contractor's profit.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Army did not conduct a competitive bidding process. This typically occurs when only one responsible source is available or when a compelling justification for other than full and open competition exists. The lack of competition means potential cost efficiencies that could arise from multiple bidders vying for the contract were not realized.

Taxpayer Impact: The absence of competition means taxpayers may not be receiving the lowest possible price for this prototype vehicle. Without a competitive process, there is less pressure on the contractor to optimize costs.

Public Impact

The primary beneficiaries are the Department of Defense and the U.S. Army, who will receive advanced prototype vehicles for evaluation. The contract supports the development of next-generation armored vehicles, potentially enhancing military capabilities. The geographic impact is concentrated in Michigan, where General Dynamics Land Systems Inc. is located, potentially creating or sustaining high-skilled jobs in the defense manufacturing sector. This contract contributes to the modernization of military ground vehicle fleets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Prototype nature implies technical uncertainties and potential for scope changes.
Lack of detailed performance metrics in the provided data makes assessing efficiency difficult.

Positive Signals

Award to an established defense contractor with experience in armored vehicle manufacturing.
Focus on prototyping suggests investment in future military capabilities.
Fixed fee component provides some cost predictability for the contractor's profit.

Sector Analysis

The defense industrial base for armored vehicle manufacturing is a specialized sector characterized by high barriers to entry, significant R&D investment, and long product development cycles. Companies like General Dynamics Land Systems Inc. are key players in this market, often holding sole-source or limited-competition contracts for advanced platforms due to proprietary technology or existing production capabilities. Spending in this sector is driven by military modernization efforts and national security requirements.

Small Business Impact

This contract does not appear to involve a small business set-aside, as the awardee is a large defense contractor. There is no information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contracts can sometimes trickle down opportunities.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Inspector General investigations could be initiated if fraud, waste, or abuse is suspected. Transparency may be limited due to the sole-source nature and the classified or sensitive aspects of military vehicle development.

Related Government Programs

Future Combat Systems (FCS)
Ground Combat Vehicle (GCV) Program
Armored Multi-Purpose Vehicle (AMPV)

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.1 million to GENERAL DYNAMICS LAND SYSTEMS INC.. ARV-30 PROTOTYPE VEHICLE PROCUREMENT.

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 $19.1 million.

What is the period of performance?

Start: 2024-02-29. End: 2026-02-28.

What is the track record of General Dynamics Land Systems Inc. in delivering advanced armored vehicle prototypes on time and within budget?

General Dynamics Land Systems Inc. (GDLS) has a long and established history in developing and producing armored vehicles for the U.S. military and international partners. They were a key player in programs like the Abrams Main Battle Tank and the Stryker family of vehicles. While GDLS generally has a strong track record, specific performance on prototype contracts can vary. Prototype development inherently involves higher risk and potential for schedule slips or cost adjustments due to evolving requirements and technological challenges. A detailed review of GDLS's past performance on similar CPFF prototype contracts, including any cost overruns or schedule delays, would be necessary for a comprehensive assessment. However, their extensive experience suggests a high likelihood of successful technical execution, though cost and schedule adherence on novel projects always warrant close monitoring.

How does the $19.1 million cost for the ARV-30 prototype compare to similar advanced vehicle prototype contracts?

Benchmarking the $19.1 million cost for the ARV-30 prototype against similar contracts is challenging without more specific details on the vehicle's capabilities, complexity, and the scope of the prototype effort (e.g., number of units, testing phases). However, for advanced, next-generation armored vehicle prototypes, this figure is within a plausible range, especially considering the high R&D costs, specialized materials, and advanced systems involved. For context, previous programs for advanced vehicle prototypes have seen costs ranging from tens to hundreds of millions of dollars, depending on the program's scale and technological ambition. The sole-source nature and CPFF contract type also contribute to potential cost variations compared to competitively bid, fixed-price contracts. A more precise comparison would require access to data on comparable sole-source prototype awards for vehicles with similar technological advancements and developmental stages.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this ARV-30 prototype procurement?

The primary risk associated with the Cost Plus Fixed Fee (CPFF) contract type for the ARV-30 prototype is the potential for cost overruns. In a CPFF contract, the government agrees to pay the contractor's actual costs incurred, plus a predetermined fixed fee representing profit. If the contractor's costs exceed initial estimates, the government bears the burden of these increased expenses. While the fixed fee provides some predictability for the contractor's profit margin, it does not cap the total cost to the government. Effective oversight by the Army is crucial to scrutinize allowable costs, prevent inefficiencies, and ensure the contractor exercises cost control measures. The risk is mitigated to some extent by the fixed fee, which incentivizes the contractor to manage costs to avoid impacting their profit, but the ultimate cost to the government remains variable.

What is the expected program effectiveness or outcome of procuring the ARV-30 prototype vehicles?

The expected outcome of procuring the ARV-30 prototype vehicles is to evaluate and validate the design, capabilities, and performance of a new generation of armored reconnaissance vehicles for the U.S. Army. This prototype phase is critical for identifying potential design flaws, testing technological advancements, and gathering data to inform decisions about future production and fielding. The effectiveness will be measured by how well the prototypes meet the Army's requirements for survivability, mobility, lethality, and reconnaissance capabilities. Successful prototyping could lead to the modernization of the Army's ground vehicle fleet, enhancing soldier protection and battlefield effectiveness in complex environments. Conversely, if the prototypes reveal significant shortcomings, the program may be redesigned, canceled, or pivoted.

How does this sole-source award align with the Department of Defense's stated goals for competition and small business utilization?

The sole-source award for the ARV-30 prototype procurement presents a potential misalignment with the Department of Defense's (DoD) broader goals of maximizing competition and promoting small business participation. While sole-source awards are permissible under specific circumstances (e.g., unique capabilities, urgent needs), they inherently reduce competitive pressure, which is a key driver for innovation and cost savings. The DoD has made efforts to increase competition, but exceptions are often necessary for highly specialized or technologically advanced systems where only one or a few contractors possess the requisite expertise. Regarding small businesses, this award to a large prime contractor does not directly fulfill small business set-aside objectives. The DoD's success in small business utilization often depends on the subcontracting plans of large prime contractors, which are not detailed here.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV24R0024

Offers Received: 1

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: $27,819,198

Exercised Options: $19,119,960

Current Obligation: $19,119,960

Actual Outlays: $2,014,802

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline