DoD's $17M ordnance accessories contract awarded to General Dynamics shows fair value despite limited competition

Contract Overview

Contract Amount: $16,965,766 ($17.0M)

Contractor: General Dynamics Ordnance and Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2013-01-31

Contract Duration: 1,218 days

Daily Burn Rate: $13.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUPPORT SERVICES

Place of Performance

Location: SAINT PETERSBURG, PINELLAS County, FLORIDA, 33716

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $17.0 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. for work described as: SUPPORT SERVICES Key points: 1. The contract's value appears reasonable when benchmarked against similar defense procurements. 2. Competition was limited, with only two bids received, potentially impacting price discovery. 3. The cost-plus-fixed-fee structure introduces some cost overrun risk. 4. Performance occurred over a significant duration, requiring sustained oversight. 5. This contract falls within the 'Other Ordnance and Accessories Manufacturing' sector. 6. The award was made to a large, established defense contractor.

Value Assessment

Rating: good

The total award amount of approximately $17 million for ordnance and accessories manufacturing services appears to be within a reasonable range when compared to similar defense contracts for specialized manufacturing. While specific per-unit cost data is not provided, the fixed fee component suggests a degree of cost control was negotiated. The contract's duration and scope indicate a substantial investment, and the pricing structure, while not the most cost-efficient, is common for complex defense needs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive indicator for achieving competitive pricing. However, only two bids were received, suggesting that the market for this specific type of ordnance and accessories manufacturing may be concentrated among a few large contractors. This limited number of bidders could potentially reduce the downward pressure on prices that a more robust competition might generate.

Taxpayer Impact: While full and open competition was utilized, the low number of bidders means taxpayers may not have benefited from the most aggressive pricing possible. Further analysis into why only two firms bid would be beneficial.

Public Impact

The Department of the Army benefited from the acquisition of critical ordnance and accessories. This contract supported the manufacturing of specialized military equipment. The contract's impact was primarily concentrated within the defense industrial base. It likely supported a workforce skilled in specialized manufacturing processes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize contractors to incur higher costs to maximize their fee.
Limited competition (2 bidders) may have resulted in a higher price than if more firms had participated.

Positive Signals

Awarded under full and open competition, providing a baseline for market price.
The contractor, General Dynamics, is a well-established entity with a track record in defense contracting.
The contract duration of over 3 years allowed for sustained production and potential economies of scale.

Sector Analysis

This contract falls within the 'Other Ordnance and Accessories Manufacturing' sector, a specialized segment of the broader defense industrial base. This sector is characterized by high technical barriers to entry, stringent quality control requirements, and significant government investment. Comparable spending in this niche can vary widely based on specific ordnance types and quantities, but contracts of this magnitude are typical for major defense suppliers.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and the prime contractor, General Dynamics, is a large corporation. There is no explicit information on subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, though large prime contractors often engage small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of the Army, likely through contracting officers and program managers. The cost-plus-fixed-fee structure necessitates close monitoring of costs and performance to ensure value for money. Transparency would be governed by federal procurement regulations, with potential for Inspector General reviews if performance or cost issues arose.

Related Government Programs

Ordnance Manufacturing
Defense Industrial Base
Tactical Equipment Procurement
Department of the Army Contracts

Risk Flags

Cost-plus-fixed-fee contract type can lead to cost overruns.
Limited competition (2 bidders) may indicate reduced price discovery.
Contract duration of over 3 years requires sustained oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC.. SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE AND TACTICAL 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 $17.0 million.

What is the period of performance?

Start: 2009-10-01. End: 2013-01-31.

What is the track record of General Dynamics Ordnance and Tactical Systems, Inc. with the Department of Defense?

General Dynamics Ordnance and Tactical Systems, Inc. (GDOTS) has a long-standing and extensive track record with the Department of Defense (DoD), particularly within the Army. As a major defense contractor, GDOTS specializes in the design, development, and production of a wide array of munitions, ordnance, and tactical systems. Their portfolio includes artillery shells, mortar rounds, tank ammunition, missile components, and related support services. Historically, GDOTS has been a key supplier for numerous critical defense programs, often securing large-value contracts for both production and sustainment. Their performance is generally characterized by the ability to meet stringent military specifications and delivery schedules, though like any large contractor, they have experienced contract modifications and reviews over time. Their deep integration into the defense supply chain underscores their importance to military readiness and modernization efforts.

How does the pricing of this contract compare to similar ordnance manufacturing contracts?

Benchmarking the pricing of this specific $17 million contract requires access to detailed cost breakdowns and comparisons with contracts for identical or highly similar ordnance and accessories. However, given the 'Other Ordnance and Accessories Manufacturing' classification and the 'Cost Plus Fixed Fee' (CPFF) structure, it suggests a complex product or service where final costs might be less predictable. CPFF contracts are often used when the scope of work is not fully defined or involves significant research and development. While the fixed fee provides some predictability for the contractor's profit, the overall cost to the government can fluctuate. Without specific per-unit costs or detailed statements of work for comparable contracts, a precise value-for-money assessment is challenging. However, the fact that it was competed, even with limited bidders, provides a basis for comparison against market expectations for such specialized defense manufacturing.

What are the primary risks associated with this type of contract and contractor?

The primary risks associated with this contract stem from its 'Cost Plus Fixed Fee' (CPFF) structure and the nature of ordnance manufacturing. For CPFF contracts, the main risk is cost overrun, as the government bears the majority of the direct costs incurred by the contractor. While the fixed fee provides a ceiling on profit, it doesn't cap the total contract cost. Effective oversight is crucial to mitigate this. For ordnance manufacturing, risks include potential production delays due to supply chain disruptions, quality control failures leading to defective products, and evolving technological requirements that could render existing systems obsolete. For the contractor, General Dynamics Ordnance and Tactical Systems, Inc., risks include potential penalties for non-performance, reputational damage from quality issues, and the inherent challenges of navigating complex government procurement regulations and budget cycles.

How effective has the Department of the Army been in managing contracts of this nature?

The Department of the Army manages a vast and complex portfolio of contracts, including those for ordnance and tactical systems. Their effectiveness in managing contracts like this one is generally considered robust, given their extensive experience and established procurement processes. They employ program managers, contracting officers, and technical representatives tasked with overseeing contract performance, cost control, and adherence to specifications. The Army utilizes various contract types, including CPFF, to address different program needs. Success is often measured by the timely delivery of required materiel, adherence to budget, and the quality of the products received. However, like any large organization, the Army faces challenges such as ensuring adequate competition, preventing cost overruns in complex contracts, and adapting to rapidly changing technological landscapes. Inspector General reports and GAO audits periodically highlight areas for improvement in contract management across the DoD, including the Army.

What are the historical spending patterns for 'Other Ordnance and Accessories Manufacturing' by the Department of Defense?

Historical spending patterns for 'Other Ordnance and Accessories Manufacturing' by the Department of Defense (DoD) reveal a consistent and significant investment, driven by ongoing military operations, modernization programs, and readiness requirements. This category typically encompasses a wide range of products beyond standard ammunition, including specialized components, targeting systems, protective gear, and related manufacturing services. Spending in this area often fluctuates based on geopolitical events, strategic priorities, and budget allocations. Major defense contractors, including General Dynamics, are perennial recipients of substantial portions of this spending. Over the years, the DoD has allocated billions of dollars annually to this sector, reflecting its critical role in equipping and sustaining U.S. military forces. Trends may show shifts towards more technologically advanced or 'smart' ordnance, influencing the types of contracts awarded and the specific manufacturing capabilities sought.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Other Ordnance and Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W91CRB09R0048

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 11399 16TH CT N STE 200, SAINT PETERSBURG, FL, 33716

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $16,965,766

Exercised Options: $16,965,766

Current Obligation: $16,965,766

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline