DoD's $200M SSBN Replacement Development Contract Awarded to General Dynamics Mission Systems

Contract Overview

Contract Amount: $200,520,884 ($200.5M)

Contractor: General Dynamics Mission Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-10-01

End Date: 2018-06-29

Contract Duration: 1,732 days

Daily Burn Rate: $115.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: US/UK SSBN REPLACEMENT (SSBN-R) DEV.

Place of Performance

Location: PITTSFIELD, BERKSHIRE County, MASSACHUSETTS, 01201

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $200.5 million to GENERAL DYNAMICS MISSION SYSTEMS, INC. for work described as: US/UK SSBN REPLACEMENT (SSBN-R) DEV. Key points: 1. Contract awarded on a cost-plus-incentive-fee basis, indicating potential for cost overruns if performance targets are not met. 2. Sole-source award raises questions about the extent of market research and potential for competitive pricing. 3. Long contract duration of over 4 years suggests a complex and lengthy development process. 4. The contract's focus on engineering services for a critical defense asset highlights its strategic importance. 5. Lack of small business participation noted, potentially limiting opportunities for smaller firms in this high-value sector.

Value Assessment

Rating: questionable

Benchmarking the value of this specific development contract is challenging due to its unique nature as part of a long-term strategic program. The cost-plus-incentive-fee structure allows for flexibility but also introduces risk. Without comparable sole-source development contracts for similar complex defense systems, a definitive value-for-money assessment is difficult. The total obligated amount of $200.5 million over its period of performance suggests significant investment, but the ultimate value will depend on the successful development of the SSBN replacement.

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. This approach is typically justified for highly specialized or critical defense systems where only one contractor possesses the necessary expertise or technology. The lack of competition means that pricing was not subject to market forces, potentially leading to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: The absence of competition for this significant defense development contract means taxpayers did not benefit from potential cost savings that could have arisen from a bidding process.

Public Impact

The primary beneficiary is the Department of Defense, which will receive engineering services crucial for the replacement of the U.S. Submarine Launched Ballistic Missile (SSBN) fleet. This contract supports the development of a critical national security asset, ensuring the long-term strategic deterrence capability of the United States. The contract's impact is national, focusing on a high-level defense program rather than specific geographic regions or a broad workforce. Workforce implications are likely concentrated within specialized engineering and technical roles at General Dynamics Mission Systems and its direct subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-incentive-fee contract structure can lead to cost overruns if not managed effectively.
Long contract duration may indicate potential for scope creep or evolving requirements.
Lack of transparency in the sole-source justification process.
Potential for contractor lock-in due to specialized knowledge.

Positive Signals

Award to a known prime contractor with existing expertise in complex defense systems.
Focus on a critical national security program ensures long-term strategic alignment.
Incentive fee structure aims to align contractor performance with government objectives.
Contract supports the development of a vital component of the U.S. nuclear triad.

Sector Analysis

The defense sector, particularly naval systems development, is characterized by long procurement cycles, high technological complexity, and significant government investment. Contracts for major defense platforms like the SSBN replacement are often sole-sourced due to the unique capabilities required and the strategic importance of maintaining a technological edge. Spending in this area is driven by national security imperatives and the need to modernize aging fleets. Comparable spending benchmarks are difficult to establish due to the singular nature of such programs, but they represent a substantial portion of the defense budget.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting goals for small businesses. Given the specialized nature of the engineering services required for SSBN replacement development, it is possible that opportunities for small businesses are limited to specific niche areas or may be channeled through larger prime subcontractors. The absence of a direct set-aside suggests that the primary focus was on securing the specialized capabilities of the prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would be embedded within the cost-plus-incentive-fee structure, performance metrics, and regular reporting requirements. Transparency may be limited due to the classified nature of SSBN programs and the sole-source award process. Inspector General involvement would be contingent on specific allegations of fraud, waste, or abuse.

Related Government Programs

US Navy Submarine Programs
Ballistic Missile Submarine Modernization
Strategic Deterrence Programs
Naval Engineering Services
Defense Systems Development

Risk Flags

Sole-source award
Cost-plus contract type
Critical defense system development
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $200.5 million to GENERAL DYNAMICS MISSION SYSTEMS, INC.. US/UK SSBN REPLACEMENT (SSBN-R) DEV.

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 $200.5 million.

What is the period of performance?

Start: 2013-10-01. End: 2018-06-29.

What is the track record of General Dynamics Mission Systems in delivering complex defense development projects on time and within budget?

General Dynamics Mission Systems (GDMS) has a long history of developing and producing complex defense systems, including submarines and other naval platforms. They are a major prime contractor for the U.S. Navy and have been involved in various stages of submarine development and modernization. While GDMS generally has a strong reputation for technical capability, like many large defense contractors, they have experienced projects with cost and schedule challenges. Specific performance metrics for past development contracts are often not publicly disclosed in detail, making a precise comparison difficult. However, their established role in the SSBN program suggests a level of trust and demonstrated capability by the Department of Defense.

How does the pricing structure (Cost Plus Incentive Fee) compare to other similar sole-source defense development contracts?

The Cost Plus Incentive Fee (CPIF) structure is common for complex, high-risk development contracts where the final costs are uncertain. It allows the government to share in cost savings if the contractor performs better than target, or share in cost overruns if performance is worse. Compared to other sole-source development contracts, CPIF is a standard approach. However, the specific incentive targets, fee percentages, and ceiling prices are critical to assessing value. Without access to the detailed contract terms and negotiation data, it's difficult to benchmark this specific CPIF arrangement against others. The key is whether the incentives effectively drive desired performance and cost control.

What are the primary risks associated with this sole-source contract for the SSBN replacement development?

The primary risks associated with this sole-source contract include: 1. **Cost Overruns:** The CPIF structure, while incentivizing, can still lead to significant cost increases if development challenges are greater than anticipated. 2. **Lack of Competition:** The absence of a competitive bidding process means the government may not achieve the lowest possible price and could miss out on innovative solutions from other potential providers. 3. **Technical Risks:** Developing a next-generation SSBN involves cutting-edge technology, and unforeseen technical hurdles could delay the program and increase costs. 4. **Contractor Performance:** While GDMS is experienced, any issues with their performance, management, or supply chain could impact the program's success. 5. **Scope Creep:** The long duration and complex nature of the project increase the risk of evolving requirements leading to expanded scope and costs.

What is the historical spending pattern for SSBN replacement development, and how does this contract fit within that trend?

Historical spending on SSBN replacement development is characterized by multi-decade, multi-billion dollar programs. The current SSBN-R program is the successor to previous generations of ballistic missile submarines, each requiring substantial upfront investment in research, design, and engineering. This $200.5 million contract represents an early-stage development phase, focusing on the engineering services necessary to define and mature the design before full-scale production begins. It fits within a historical trend of significant, long-term government investment in maintaining the strategic nuclear deterrent, with spending typically escalating as the program moves from concept and design into prototyping and construction.

Are there any specific performance metrics or milestones tied to the incentive fee structure that can be evaluated?

The provided data does not detail the specific performance metrics or milestones tied to the incentive fee structure for this contract. Typically, CPIF contracts outline key performance areas such as technical achievement, schedule adherence, and cost control. The incentive fee is earned when the contractor meets or exceeds targets in these areas. Without access to the contract's Statement of Work (SOW) and the detailed incentive clauses, it is impossible to evaluate the specific metrics. However, the success of the program and the government's ability to realize value are heavily dependent on how well these incentives are structured and monitored.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 100 PLASTICS AVE, PITTSFIELD, MA, 01201

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

Financial Breakdown

Contract Ceiling: $201,390,214

Exercised Options: $201,390,214

Current Obligation: $200,520,884

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $4,240,196

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline