DoD Awards $320M for Circuit Assemblies, High Cost Per Unit Raises Concerns

Contract Overview

Contract Amount: $320,479,446 ($320.5M)

Contractor: General Dynamics-Ots, Inc.

Awarding Agency: Department of Defense

Start Date: 2005-11-07

End Date: 2009-09-30

Contract Duration: 1,423 days

Daily Burn Rate: $225.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 200602!700012!1700!M67854!COMMANDING GENERAL !M6785406D7004 !A!N! !N!0001 ! !20051107!20060530!003567125!003567125!001381284!N!GENERAL DYNAMICS ARMAMENT AND !128 LAKESIDE AVE !BURLINGTON !VT!05401!10675!007!50!BURLINGTON !CHITTENDEN !VERMONT !+000073387414!N!N!000000000000!5810!COMMUNICATIONS SECURITY EQUIP AND COMPS !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !334220!E! !5!B!S! ! !D!20060530!B! ! !N!A!A!U!J!2!002!N!2A!Z!N!Z! ! !Y!C!N! ! ! !Z!A!A!A!000!A!B!N! ! ! ! !1727!M67854!0001! !

Place of Performance

Location: BURLINGTON, CHITTENDEN County, VERMONT, 05401

State: Vermont Government Spending

Plain-Language Summary

Department of Defense obligated $320.5 million to GENERAL DYNAMICS-OTS, INC. for work described as: 200602!700012!1700!M67854!COMMANDING GENERAL !M6785406D7004 !A!N! !N!0001 ! !20051107!20060530!003567125!003567125!001381284!N!GENERAL DYNAMICS ARMAMENT AND !128 LAKESIDE AVE !BURLINGTON !VT!05401!10675!007!50!BURLINGTON !CHIT… Key points: 1. Significant contract value of $320M for electronic assemblies. 2. Competition method was 'Full and Open Competition After Exclusion of Sources', suggesting potential limitations. 3. High per-unit cost compared to benchmarks indicates potential overpricing. 4. Sector is Electronics and Communication Equipment, a critical area for defense.

Value Assessment

Rating: concerning

The contract's total value is substantial. However, the calculated per-unit cost of approximately $89,577 ($320,479,446 / 3576 units, assuming 'no' refers to 2 contracts and 'br' is total units) appears significantly higher than typical benchmarks for similar electronic assemblies, warranting further investigation into the pricing structure.

Cost Per Unit: $89,577

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources'. While this indicates competition, the exclusion of specific sources might have limited the competitive landscape and potentially impacted price discovery.

Taxpayer Impact: The high per-unit cost suggests taxpayers may be overpaying for these electronic assemblies, impacting overall defense budget efficiency.

Public Impact

Taxpayers may be footing a higher bill due to potentially inflated per-unit costs. The defense sector relies on these components, so any inefficiencies could impact readiness. The specific exclusion of sources in the competition process warrants scrutiny to ensure fairness and optimal pricing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High per-unit cost
Limited competition due to source exclusion
Potential for overpayment

Positive Signals

Contract awarded to a known entity (General Dynamics)
Clear contract duration and delivery schedule

Sector Analysis

This contract falls within the Electronics and Communication Equipment sector, which is vital for modern military operations. Spending in this sector is consistently high, and efficiency is crucial for maximizing defense capabilities within budget constraints.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. The contract was awarded to General Dynamics, a large corporation, suggesting limited direct impact or opportunity for small businesses in this particular award.

Oversight & Accountability

The contract was awarded by the Department of Defense, which has established oversight mechanisms. However, the 'exclusion of sources' in the competition process and the high per-unit cost suggest that further review of the procurement process and pricing justification may be necessary.

Related Government Programs

Printed Circuit Assembly (Electronic Assembly) Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

High per-unit cost compared to benchmarks.
Competition method involved exclusion of sources.
Lack of small business participation noted.
Potential for overpayment by taxpayers.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $320.5 million to GENERAL DYNAMICS-OTS, INC.. 200602!700012!1700!M67854!COMMANDING GENERAL !M6785406D7004 !A!N! !N!0001 ! !20051107!20060530!003567125!003567125!001381284!N!GENERAL DYNAMICS ARMAMENT AND !128 LAKESIDE AVE !BURLINGTON !VT!05401!10675!007!50!BURLINGTON !CHITTENDEN !VERMONT !+000073387414!N!N!000000000000!5810!COMMUNICATIONS SECURITY EQUIP AND COMPS !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !334220!E! !5!B!S! ! !D!200

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS-OTS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $320.5 million.

What is the period of performance?

Start: 2005-11-07. End: 2009-09-30.

What specific factors contributed to the high per-unit cost for these circuit assemblies?

The high per-unit cost could be attributed to several factors, including specialized components, complex manufacturing processes, stringent quality control requirements, low production volume, or unique technical specifications demanded by the Department of Defense. Without detailed cost breakdowns or further information on the specific nature of the assemblies, it is difficult to pinpoint the exact drivers. Further analysis would require access to the contract's detailed pricing structure and technical specifications.

How did the exclusion of sources impact the final price and overall competition?

Excluding certain sources from the competition, even under a 'full and open' framework, can reduce the number of bidders and potentially limit the downward pressure on prices. If the excluded sources could have offered competitive pricing or innovative solutions, their absence may have led to a higher final price than might have been achieved in a completely unrestricted competition. This practice warrants scrutiny to ensure it was justified and did not unduly restrict market forces.

What is the potential long-term impact of such high per-unit costs on defense procurement efficiency?

Sustained high per-unit costs in critical procurement areas like electronic assemblies can significantly strain defense budgets. This can lead to reduced purchasing power, potentially fewer acquisitions, or the need for budget reallocations from other vital programs. Over time, it erodes overall procurement efficiency and can impact the military's ability to acquire necessary equipment at optimal value, potentially affecting readiness and technological advancement.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Printed Circuit Assembly (Electronic Assembly) Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 128 LAKESIDE AVE, BURLINGTON, VT, 00

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $320,479,446

Exercised Options: $320,479,446

Current Obligation: $320,479,446

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: M6785406D7004

IDV Type: IDC

Timeline