DoD awards $46M to General Dynamics for PROPHET Enhanced Systems services, a sole-source contract

Contract Overview

Contract Amount: $45,969,375 ($46.0M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-03-26

End Date: 2023-09-30

Contract Duration: 918 days

Daily Burn Rate: $50.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TASK ORDER W56KGY21F0002 IS ISSUED IN ACCORDANCE WITH (IAW) THE TERMS AND CONDITIONS OF CONTRACT W56KGY-17-D-0006 FOR FY 21 SERVICES FOR THE PROPHET ENHANCED (PE) SYSTEMS.

Place of Performance

Location: SCOTTSDALE, MARICOPA County, ARIZONA, 85257

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $46.0 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: TASK ORDER W56KGY21F0002 IS ISSUED IN ACCORDANCE WITH (IAW) THE TERMS AND CONDITIONS OF CONTRACT W56KGY-17-D-0006 FOR FY 21 SERVICES FOR THE PROPHET ENHANCED (PE) SYSTEMS. Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Services are for FY21 PROPHET Enhanced (PE) Systems, indicating ongoing program support. 3. Contract duration of 918 days suggests a significant, long-term need. 4. Cost Plus Fixed Fee (CPFF) contract type may incentivize cost overruns. 5. No small business set-aside or subcontracting reported, potentially limiting small business participation. 6. Awarded by the Department of the Army, part of the broader Department of Defense. 7. The contract is for 'Other Communications Equipment Manufacturing' services.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific system focus. Without competitive bids, it's difficult to ascertain if the $45.97 million price represents fair market value. The Cost Plus Fixed Fee (CPFF) structure, while common for complex R&D or services where costs are uncertain, can lead to higher overall expenditures compared to fixed-price contracts if not managed diligently. Further analysis would require access to detailed cost breakdowns and historical pricing for similar services or systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances, or in cases of urgent need. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government. The justification for this sole-source award would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiary is the Department of the Army, receiving critical services for its PROPHET Enhanced (PE) Systems. These services are essential for the operation and maintenance of advanced communication and electronic warfare systems. The contract supports the warfighter by ensuring the readiness and effectiveness of key military technology. Geographic impact is primarily within Arizona (ST/SN), where the contractor is located, but the systems supported are likely deployed globally. Workforce implications include employment for skilled personnel at General Dynamics Mission Systems, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee (CPFF) contract type can incentivize higher costs if not closely monitored.
Lack of transparency in sole-source justification requires scrutiny.
No indication of small business subcontracting opportunities.

Positive Signals

Supports critical military communication and electronic warfare systems.
Awarded to an established defense contractor with likely relevant expertise.
Long contract duration suggests a stable, ongoing requirement.

Sector Analysis

The defense communications and electronics sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Companies like General Dynamics Mission Systems are key players, providing specialized equipment and services to government agencies. Spending in this area is driven by national security requirements and technological advancements in areas such as signal intelligence, electronic warfare, and secure communications. This contract fits within the broader category of defense electronics manufacturing and support services, a substantial segment of the overall defense budget.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there an indication of subcontracting goals. The sole-source nature of the award further limits opportunities for small businesses to participate directly. While General Dynamics Mission Systems may engage small businesses in its supply chain, the primary contract award does not prioritize small business participation. This could represent a missed opportunity to foster innovation and competition within the small business defense contracting ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and execution are subject to review by relevant oversight bodies within the Department of Defense, potentially including the Government Accountability Office (GAO) if protests are filed, and the Inspector General. Transparency is limited due to the non-competitive nature, making detailed public scrutiny of cost and performance more challenging.

Related Government Programs

PROPHET Systems
Department of Defense Communications Equipment
Electronic Warfare Systems
Tactical Communications

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.0 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. TASK ORDER W56KGY21F0002 IS ISSUED IN ACCORDANCE WITH (IAW) THE TERMS AND CONDITIONS OF CONTRACT W56KGY-17-D-0006 FOR FY 21 SERVICES FOR THE PROPHET ENHANCED (PE) SYSTEMS.

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS MISSION 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 $46.0 million.

What is the period of performance?

Start: 2021-03-26. End: 2023-09-30.

What is the specific nature of the 'PROPHET Enhanced (PE) Systems' and why is General Dynamics Mission Systems the sole provider?

The PROPHET Enhanced (PE) system is a component of the U.S. Army's intelligence, surveillance, and reconnaissance (ISR) capabilities, often integrated onto various platforms. It is designed for signals intelligence (SIGINT) and electronic warfare (EW) missions, allowing soldiers to detect, identify, and locate enemy transmissions. General Dynamics Mission Systems, Inc. is likely the sole provider due to proprietary technology, unique integration expertise, or having developed the original system under a previous sole-source or limited competition award. The specific justification for the sole-source nature of this task order, W56KGY21F0002, would detail the reasons why other vendors cannot provide the required services or modifications, potentially citing intellectual property rights, unique technical requirements, or the need for seamless integration with existing, specialized hardware and software.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for similar defense services?

Cost Plus Fixed Fee (CPFF) contracts are used when the level of effort or cost is uncertain at the time of award, common in research, development, or complex service contracts. The government pays the contractor's actual costs plus a predetermined fixed fee representing profit. This differs from Fixed Price contracts, where the price is set regardless of actual costs, incentivizing contractor efficiency. Compared to Cost Plus Incentive Fee (CPIF), CPFF offers less flexibility for adjusting the fee based on performance targets. While CPFF provides flexibility for the government to adapt to evolving requirements, it carries a higher risk of cost overruns if the contractor's costs escalate beyond initial estimates, as the fee remains fixed while costs increase. This necessitates robust government oversight to manage expenditures effectively.

What is the historical spending trend for PROPHET Enhanced (PE) Systems services provided by General Dynamics Mission Systems?

Analyzing historical spending for PROPHET Enhanced (PE) Systems services by General Dynamics Mission Systems requires accessing contract databases that track awards over time. While this specific task order is for $45.97 million for FY21 services, previous task orders under the parent contract W56KGY-17-D-0006, or related contracts for the PROPHET system, would provide a broader picture. Without direct access to that historical data, it's presumed that spending would fluctuate based on program needs, modernization efforts, and budget allocations. The current award suggests a significant, ongoing requirement for sustainment and potential upgrades. A comprehensive review would involve examining contract awards from the initial development phase through current sustainment activities to identify trends in cost, contract type, and competition levels.

What are the potential risks associated with a sole-source award of this magnitude in the defense sector?

Sole-source awards of this magnitude, like the $45.97 million for PROPHET Enhanced Systems, carry several risks for the Department of Defense and taxpayers. The primary risk is the lack of price competition, which can lead to inflated costs as the contractor faces no pressure to offer the lowest possible price. This can result in a suboptimal use of taxpayer funds. Another risk is reduced innovation; without the stimulus of competition, contractors may be less motivated to develop more efficient or advanced solutions. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future. Ensuring the justification for the sole-source award is robust and that rigorous oversight is applied to cost and performance is crucial to mitigate these risks.

How does the geographic location of the award (Arizona) relate to the operational deployment of the PROPHET Enhanced Systems?

The contract's mention of Arizona (ST/SN) likely refers to the business location of the contractor, General Dynamics Mission Systems, Inc., rather than the operational deployment site of the PROPHET Enhanced (PE) Systems. Defense contracts are often awarded based on the contractor's facilities where work is performed or managed. The PROPHET system itself is a tactical SIGINT/EW system deployed with Army units globally, supporting various combat and intelligence operations. Therefore, while the contract administration and potentially some development or integration work may occur in Arizona, the services rendered are critical for supporting military readiness and operations in diverse geographic theaters worldwide, wherever Army units equipped with PE systems are stationed or deployed.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corporation

Address: 8201 E MCDOWELL ROAD, SCOTTSDALE, AZ, 85257

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $64,031,974

Exercised Options: $45,969,375

Current Obligation: $45,969,375

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $5,807,886

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56KGY17D0006

IDV Type: IDC

Timeline