DoD's $47M purchase of 1 HEMAT trailer from DRS Sustainment Systems, Inc. raises value concerns

Contract Overview

Contract Amount: $47,152,373 ($47.2M)

Contractor: DRS Sustainment Systems, Inc

Awarding Agency: Department of Defense

Start Date: 2008-09-11

End Date: 2011-05-15

Contract Duration: 976 days

Daily Burn Rate: $48.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PURCHASE OF HEMAT TRAILERS

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63121

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $47.2 million to DRS SUSTAINMENT SYSTEMS, INC for work described as: PURCHASE OF HEMAT TRAILERS Key points: 1. The contract's value appears high for a single unit, necessitating a thorough cost-benefit analysis. 2. Limited competition for this specialized equipment may have impacted pricing and overall value. 3. The extended performance period suggests potential for cost overruns or scope creep. 4. This purchase falls within the heavy-duty truck manufacturing sector, requiring comparison to similar procurements. 5. The lack of competition warrants scrutiny to ensure fair market pricing was achieved. 6. The firm-fixed-price contract type offers some cost certainty, but the unit price remains a key concern.

Value Assessment

Rating: questionable

The reported value of $47,152,373 for one HEMAT trailer is exceptionally high. Without detailed cost breakdowns, it is difficult to benchmark against similar specialized vehicles. However, this price point suggests a significant deviation from typical heavy equipment acquisition costs. Further analysis is needed to understand the specific technological or operational requirements that justify such a substantial investment for a single unit. The contract's duration of 976 days also contributes to the overall cost, and the value proposition for taxpayers is unclear at this unit price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition procurement. The data explicitly states 'NOT COMPETED'. This lack of competition means there was no opportunity for multiple vendors to bid, which typically drives down prices and encourages innovation. Without a competitive bidding process, it is challenging to ascertain if the government received the best possible price or if alternative solutions were overlooked. The justification for a sole-source award would be critical to understanding this decision.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium for this equipment, as there was no market pressure to ensure the lowest feasible price.

Public Impact

The primary beneficiaries are the Department of the Army, receiving specialized heavy equipment for its operations. The service delivered is the provision of one HEMAT trailer, a critical piece of logistical or operational equipment. The geographic impact is primarily within the operational areas of the Department of the Army, potentially worldwide. Workforce implications are likely related to the operation and maintenance of this specialized trailer by military personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High unit cost raises concerns about value for money.
Lack of competition suggests potential for inflated pricing.
Extended contract duration could lead to unforeseen costs.
Absence of detailed justification for sole-source award.

Positive Signals

Firm-fixed-price contract provides some cost predictability.
The equipment is likely critical for specific military operations.

Sector Analysis

The procurement falls under the Heavy Duty Truck Manufacturing (NAICS 336120) sector. This sector involves the production of heavy trucks and specialized vehicles. The market for highly specialized military equipment like HEMAT trailers is often niche, with a limited number of manufacturers capable of meeting stringent defense requirements. Benchmarking this specific procurement against broader heavy truck manufacturing data may be misleading due to its specialized nature. However, within the defense industrial base, such procurements are not uncommon, though the unit cost here appears exceptionally high.

Small Business Impact

The data indicates that small business participation was not a factor in this contract (ss: false, sb: false). There is no indication of small business set-asides or subcontracting requirements. Therefore, this contract does not appear to have a direct positive impact on the small business ecosystem. The focus was likely on specialized capabilities rather than small business engagement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Accountability measures would be tied to contract performance and delivery. Transparency is limited due to the sole-source nature and lack of public justification. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Vehicle Procurement
Heavy Equipment Acquisition
Military Logistics Support
Specialized Defense Systems

Risk Flags

High Unit Cost
Sole-Source Award
Lack of Competition
Extended Performance Period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.2 million to DRS SUSTAINMENT SYSTEMS, INC. PURCHASE OF HEMAT TRAILERS

Who is the contractor on this award?

The obligated recipient is DRS SUSTAINMENT SYSTEMS, INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $47.2 million.

What is the period of performance?

Start: 2008-09-11. End: 2011-05-15.

What specific capabilities does the HEMAT trailer provide, and how do these justify the high unit cost?

The HEMAT (Heavy Expanded Mobility Ammunition Trailer) is a specialized trailer designed to transport large quantities of ammunition for heavy artillery systems. Its unique features likely include enhanced mobility for off-road conditions, robust construction to withstand harsh environments, and specialized loading/unloading mechanisms. The high cost could be attributed to the advanced engineering, specialized materials, limited production runs, and stringent military specifications required for such a critical piece of equipment. Without detailed technical specifications and cost breakdowns from the contractor, it remains difficult to definitively justify the $47 million unit price solely on publicly available data. Further inquiry into the specific technical requirements and manufacturing costs would be necessary for a complete assessment.

What was the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award typically stems from a lack of available competition, unique capabilities held by a single contractor, or urgent and compelling needs that preclude a competitive process. For specialized military equipment like the HEMAT trailer, it's possible that only DRS Sustainment Systems, Inc. possessed the proprietary technology, manufacturing expertise, or existing infrastructure to produce the trailer to the required military specifications within the necessary timeframe. The Department of the Army would have had to document this justification, often through a Justification and Approval (J&A) document, which would detail why other sources were not capable of meeting the requirement. Without access to this specific J&A, the precise reasons remain speculative, but typically revolve around unique technical capabilities or critical operational needs.

How does the $47 million unit cost compare to other similar specialized military vehicle procurements?

Comparing the $47 million unit cost of the HEMAT trailer to other specialized military vehicle procurements is challenging without specific details on the nature of those other vehicles. However, as a general benchmark, this figure appears exceptionally high for a single trailer, even a highly specialized one. For context, many advanced combat vehicles, such as main battle tanks or infantry fighting vehicles, can have unit costs in the millions, but often tens of millions, not typically approaching $47 million for a trailer. Procurements for highly specialized support equipment, like advanced mobile command centers or unique engineering vehicles, might reach higher figures, but a trailer is generally expected to be less costly than a self-propelled platform. The high cost suggests either extreme specialization, unique technological integration, or potentially a lack of competitive pricing pressure.

What are the risks associated with a sole-source procurement of this magnitude?

Sole-source procurements of this magnitude carry several inherent risks. Firstly, the primary risk is the potential for overpayment due to the absence of price competition. Without competing bids, the contractor may not feel compelled to offer the lowest possible price. Secondly, there's a risk of reduced innovation, as there's less incentive for the sole provider to invest in improving the product or process when they have a guaranteed contract. Thirdly, there's a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future options and flexibility. Finally, sole-source awards can sometimes indicate a lack of adequate market research or planning, raising questions about whether alternative, more cost-effective solutions were overlooked.

What is the historical spending pattern for HEMAT trailers or similar equipment by the Department of Defense?

Analyzing historical spending patterns for HEMAT trailers specifically is difficult without access to detailed contract databases that track this particular item over time. However, the Department of Defense (DoD) historically spends billions annually on a wide array of vehicles, equipment, and support systems. Procurements for specialized logistical assets like the HEMAT trailer are part of this larger spending picture. If this $47 million contract represents a single unit purchase, it suggests either a very rare and high-value acquisition or a significant escalation in cost compared to previous purchases of similar equipment. Without historical data points for this specific item or closely related ones, it's hard to establish a trend, but the reported value warrants investigation into whether it aligns with or deviates from past spending norms for such assets.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Manufacturing › Heavy Duty Truck Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA (UEI: 428869465)

Address: 201 EVANS LN, SAINT LOUIS, MO, 63121

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $47,152,373

Exercised Options: $47,152,373

Current Obligation: $47,152,373

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV05D0332

IDV Type: IDC

Timeline