The Contract

The US Department of Defense Press Desk released today that General Dynamics Corporation [NYSE: GD] has been awarded a contract to the sum of $310,582,092 for various engineering changes within the Abrams M1A2 System Enhancement Package Version 3.

 

Source Excerpt

Department of the Army Contract:

“General Dynamics Land Systems Inc., Sterling Heights, Michigan, has been awarded a $310,582,092 cost-plus-incentive-fee contract for the design, development and integration of multiple engineering changes into the Abrams M1A2 System Enhancement Package Version 3. One bid was solicited and one bid was received. Work will be performed in Sterling Heights, Michigan; Lima, Ohio; Scranton, Pennsylvania; and Tallahassee, Florida, with an estimated completion date of Feb., 28, 2024. Fiscal 2017 research, development, test and evaluation funds in the amount of $12,500,000 were obligated at the time of the award. U.S. Army Contracting Command, Warren, Michigan, is the contracting activity (W56HZV-17-C-0188).”

Source

 

Contract Interpretation

  • Cost-Plus-Incentive-Fee: A contract that provides for the initially negotiated amount to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. The amount can be increased when allowable costs come in at less than target costs, or fees can be decreased when allowable costs exceed target costs. As such, this kind of contract creates an incentive for the contractor to come in at or under target costs. More

 

The M1A2 Abrams System Enhancement Program Version 3

The M1A2 Main Battle Tank (MBT) entered service in 1992, replacing the M1A1 MBT of the same name. System Enhancement Program Version 3 (SEPv3) was approved in 2015, with the intention of continuing to improve upon an already great platform. Improvements in survivability, including increased protection in the underbody against IEDs, improved power generation and distribution, network compatibility, energy efficiency and increased lethality are all goals of SEPv3.

“M1A2 Abrams Battle Tank” by Lance Cpl. Jamie Arzola. WARNING: Loud.

The M1A2 MBT is produced by General Dynamics, so it is of no surprise that they were the sole bid for this particular contract.

 


Disclaimer

As of this moment, I do not own shares of General Dynamics Corporation. My opinions are entirely my own and may or may not reflect the opinions of my peers on TickHounds. I am not being compensated for sharing my due diligence in any way other than what tips may be accrued.

Most information for this post was retrieved from various sources listed throughout the post. For other sources, see below:

M1A2 System Enhancement Program Version 3
Original Image Source