DoD's $83M R&D contract with General Dynamics Mission Systems raises questions on competition and value
Contract Overview
Contract Amount: $83,208,547 ($83.2M)
Contractor: General Dynamics Mission Systems, Inc.
Awarding Agency: Department of Defense
Start Date: 2011-04-29
End Date: 2018-07-31
Contract Duration: 2,650 days
Daily Burn Rate: $31.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: ENGINEERING SERVICES
Place of Performance
Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $83.2 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over 7 years suggests a long-term need for these specialized services. 3. Research and Development focus indicates investment in future capabilities, but performance metrics are key. 4. The 'Cost Plus Fixed Fee' structure can incentivize cost overruns if not tightly managed. 5. Virginia location may point to specific regional defense industry strengths or facility requirements. 6. Lack of small business involvement raises concerns about broader economic impact and subcontracting opportunities.
Value Assessment
Rating: questionable
Benchmarking the value of this $83.2 million R&D contract is challenging due to its non-competitive nature and specific technical focus. The 'Cost Plus Fixed Fee' (CPFF) contract type, while common for R&D, carries inherent risks of cost escalation if oversight is insufficient. Without comparable competitively awarded contracts for similar specialized engineering services, it's difficult to definitively assess if the fixed fee represents fair market value. The duration of over 7 years also means that the initial fixed fee may not reflect current market conditions or evolving project needs.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a 'NOT COMPETED' basis, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of meeting the agency's needs, often due to proprietary technology, unique capabilities, or urgent requirements. The lack of competition means that potential cost savings that could arise from a bidding process were not realized, and the government did not benefit from a range of technical approaches or pricing strategies.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government missed opportunities to secure potentially lower prices and more innovative solutions that a competitive bidding process could have generated.
Public Impact
The primary beneficiaries are likely the Department of Defense, which gains access to specialized engineering and R&D capabilities. Services delivered include research and development in physical, engineering, and life sciences, excluding biotechnology. The geographic impact is concentrated in Virginia, where General Dynamics Mission Systems has a significant presence. Workforce implications include the employment of highly skilled engineers and scientists working on advanced defense projects.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Non-competitive award limits transparency and potential cost savings.
- CPFF contract type can lead to cost overruns without stringent oversight.
- Long contract duration (over 7 years) increases risk of scope creep and price drift.
- Lack of small business participation limits broader economic benefits and subcontracting opportunities.
Positive Signals
- Award to a large, established defense contractor like General Dynamics suggests access to significant expertise and resources.
- Focus on R&D indicates investment in critical future defense technologies.
- Contract awarded by the Department of Defense, a key national security entity.
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on engineering services. The North American Industry Classification System (NAICS) code 541712 covers R&D in physical, engineering, and life sciences. The federal government is a major investor in R&D, particularly within the defense sector, to maintain technological superiority. Comparable spending benchmarks are difficult to establish for highly specialized R&D efforts, but the $83.2 million total award over more than seven years represents a substantial investment in a specific technological area.
Small Business Impact
This contract does not appear to have involved small business set-asides, as indicated by 'sb': false. General Dynamics Mission Systems is a large prime contractor. The absence of small business participation as a prime contractor or potentially through mandated subcontracting goals (if not explicitly stated) means that opportunities for smaller innovative firms to contribute to this significant R&D effort were likely limited. This could impact the broader small business defense ecosystem that relies on prime contractors to flow down work.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). The 'Cost Plus Fixed Fee' structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable, and that the fixed fee is earned. Transparency is limited by the non-competitive nature of the award. Specific Inspector General (IG) jurisdiction would depend on the DoD component awarding and managing the contract.
Related Government Programs
- Department of Defense Research and Development Programs
- Advanced Engineering Services Contracts
- Cost Plus Fixed Fee Contracts
- Defense Technology Innovation Initiatives
Risk Flags
- Non-competitive award
- Cost Plus Fixed Fee structure
- Lack of small business participation
Tags
defense, research-and-development, engineering-services, general-dynamics-mission-systems, department-of-defense, cost-plus-fixed-fee, not-competed, virginia, large-business, definitive-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $83.2 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. ENGINEERING SERVICES
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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $83.2 million.
What is the period of performance?
Start: 2011-04-29. End: 2018-07-31.
What specific R&D projects or technological advancements did this contract support?
The provided data indicates the contract was for 'ENGINEERING SERVICES' under NAICS code 541712, 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. However, the specific R&D projects or technological advancements are not detailed in the summary data. General Dynamics Mission Systems is known for its work in areas such as command and control, intelligence, surveillance, reconnaissance (ISR), and cyber warfare. Therefore, this contract likely supported the development of advanced systems, prototypes, or foundational research in one or more of these defense-critical domains. Further investigation into contract line item numbers (CLINs) and associated documentation would be required to identify the precise nature of the R&D activities.
How does the $83.2 million total award compare to similar R&D contracts for engineering services within the DoD?
Direct comparison of the $83.2 million total award for this specific 'ENGINEERING SERVICES' R&D contract is challenging without more granular data on the scope and technical complexity. However, R&D contracts within the DoD can range from tens of millions to billions of dollars, depending on the program's strategic importance and technological maturity. Given the 7-year duration (2011-2018), the average annual spend was approximately $11.9 million. This figure is substantial but not extraordinary for specialized defense R&D. The key differentiator here is the non-competitive award, which makes direct value-for-money comparisons with competitively sourced contracts difficult.
What were the justifications for awarding this contract on a sole-source basis?
The data explicitly states the contract was 'NOT COMPETED', implying a sole-source justification was used. Common reasons for sole-source awards in R&D include: 1) Unique or highly specialized capabilities possessed by only one contractor, often due to prior investment in proprietary technology or unique expertise. 2) Urgent and compelling needs where competition would cause unacceptable delays. 3) Follow-on work to a previous R&D effort where only the original contractor possesses the necessary knowledge. Without access to the specific justification documentation (e.g., Justification and Approval - J&A), the precise reason remains unknown, but it suggests a belief within the DoD that General Dynamics Mission Systems was the only viable option at the time of award.
What are the potential risks associated with a 'Cost Plus Fixed Fee' (CPFF) contract for R&D?
The primary risk with a CPFF contract, especially for R&D, is the potential for cost overruns. While the 'fixed fee' provides the contractor with a target profit, the 'cost plus' element means the government reimbursesthe contractor for allowable costs incurred. If the R&D effort proves more complex or expensive than initially estimated, costs can escalate significantly. Effective oversight is crucial to scrutinize incurred costs, ensure they are reasonable and allocable to the contract, and prevent inefficiencies. The contractor has less incentive to control costs compared to fixed-price contracts, as their profit (the fee) is fixed regardless of the final cost, although they risk not earning the fee if performance is poor.
How has General Dynamics Mission Systems performed on previous DoD contracts, particularly R&D efforts?
General Dynamics Mission Systems (GDMS) is a major defense contractor with a long history of performing complex R&D and systems integration for the DoD. While specific performance metrics for this particular $83.2 million contract are not detailed in the provided data, GDMS generally has a track record of delivering on large-scale defense programs. However, like many large contractors, they may have faced performance issues or contract disputes on specific projects. A comprehensive assessment would require reviewing contract performance reports (e.g., CPARS), past performance evaluations, and any documented disputes or claims associated with GDMS's portfolio of R&D contracts with the DoD.
What is the significance of the 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' classification (NAICS 541712)?
NAICS code 541712 signifies that the core activity of this contract involved scientific inquiry and experimentation aimed at discovering or developing new knowledge and capabilities in fields like physics, chemistry, engineering disciplines (e.g., aerospace, electrical, mechanical), and biological sciences (excluding direct biotechnology applications). This classification highlights the contract's focus on innovation and future technological advancement rather than the production of existing goods or standard services. Contracts under this code often involve high levels of uncertainty, require specialized expertise, and are critical for maintaining a technological edge, particularly in the defense sector.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002410R6268
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 9500 INNOVATION DR, MANASSAS, VA, 20110
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $84,407,299
Exercised Options: $84,407,299
Current Obligation: $83,208,547
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $187,123
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2011-04-29
Current End Date: 2018-07-31
Potential End Date: 2018-07-31 00:00:00
Last Modified: 2023-01-12
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