DoD's $260M Navy Systems Contract with General Dynamics Faces Scrutiny Over Cost-Plus Structure
Contract Overview
Contract Amount: $260,032,504 ($260.0M)
Contractor: General Dynamics Mission Systems, Inc.
Awarding Agency: Department of Defense
Start Date: 2019-07-19
End Date: 2027-07-18
Contract Duration: 2,921 days
Daily Burn Rate: $89.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: DESIGN, DEVELOP, INTEGRATE NAVY SYSTEMS
Place of Performance
Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $260.0 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: DESIGN, DEVELOP, INTEGRATE NAVY SYSTEMS Key points: 1. The contract's cost-plus fixed fee structure may incentivize higher spending. 2. Lack of small business participation raises concerns about broad economic benefit. 3. The long duration and significant value present substantial taxpayer risk. 4. The sector is critical for national defense, but efficiency is paramount.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns as the contractor is reimbursed for all allowable costs plus a fixed fee. Without strong oversight, this can result in prices higher than market rates for similar systems.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
While the contract was awarded under full and open competition, the CPFF structure may not have driven the most cost-effective solution. Price discovery is less robust when costs are reimbursed.
Taxpayer Impact: The CPFF contract type, combined with the large value and long duration, poses a significant risk of taxpayer funds being spent inefficiently.
Public Impact
Taxpayers may bear the brunt of cost increases due to the CPFF structure. The Navy's operational capabilities depend on the successful integration of these systems. Limited small business involvement means fewer opportunities for smaller, potentially innovative firms.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-Plus Fixed Fee structure
- No small business participation
- Long contract duration
- High contract value
Positive Signals
- Full and open competition awarded
- Critical defense systems development
Sector Analysis
This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is crucial for national defense, but often involves complex, high-cost systems where efficient procurement is challenging.
Small Business Impact
The contract explicitly states no small business participation. This limits opportunities for smaller, potentially agile companies to contribute to critical defense systems and may reduce overall economic benefit.
Oversight & Accountability
The Cost Plus Fixed Fee structure necessitates robust government oversight to manage costs and ensure contractor performance. The long duration of this contract requires sustained vigilance to prevent cost creep and ensure value for money.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Cost-Plus Fixed Fee structure incentivizes spending.
- No small business participation.
- Long contract duration increases risk exposure.
- Potential for cost overruns.
- Limited transparency on specific cost drivers.
Tags
search-detection-navigation-guidance-aer, department-of-defense, va, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $260.0 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. DESIGN, DEVELOP, INTEGRATE NAVY 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 Navy).
What is the total obligated amount?
The obligated amount is $260.0 million.
What is the period of performance?
Start: 2019-07-19. End: 2027-07-18.
How effectively is the Department of the Navy managing costs under this Cost Plus Fixed Fee contract to ensure value for taxpayer money?
Effective cost management under a CPFF contract relies heavily on stringent oversight, detailed audits, and clear performance metrics. The government must actively monitor all allowable costs, challenge any questionable expenses, and ensure the fixed fee remains appropriate for the work performed. Without rigorous controls, the inherent risk of cost overruns is high, potentially leading to significant taxpayer expense.
What are the primary risks associated with the lack of small business participation in this significant defense contract?
The primary risks include missed opportunities for innovation and competition, as small businesses often bring specialized expertise and agile approaches. It also limits economic impact by concentrating the large contract value within a single large corporation, potentially excluding a segment of the industrial base from contributing to national security efforts and gaining valuable experience.
How does the long duration and cost-plus nature of this contract impact the Navy's ability to adapt to evolving technological needs?
The long duration (nearly 8 years) combined with a cost-plus structure can create inertia, making it harder for the Navy to pivot to new technologies if the contractor's incentives are tied to the existing program. While the fixed fee provides some cost certainty, the overall flexibility to incorporate rapid technological advancements might be reduced compared to contracts with shorter terms or different incentive structures.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: FIRE CONTROL EQPT.
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002418R6407
Offers Received: 3
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Wico Limited
Address: 12450 FAIR LAKES CIR STE 800, FAIRFAX, VA, 22033
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $353,371,297
Exercised Options: $296,205,263
Current Obligation: $260,032,504
Actual Outlays: $9,394,140
Subaward Activity
Number of Subawards: 159
Total Subaward Amount: $41,706,191
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2019-07-19
Current End Date: 2027-07-18
Potential End Date: 2027-07-18 00:00:00
Last Modified: 2026-01-14
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