Army awards $14.6B for wheeled vehicles, with AM General LLC as sole contractor

Contract Overview

Contract Amount: $14,632,728,417 ($14.6B)

Contractor: AM General LLC

Awarding Agency: Department of Defense

Start Date: 2000-11-06

End Date: 2010-04-30

Contract Duration: 3,462 days

Daily Burn Rate: $4.2M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 200106!001253!2100!AE07 !TACOM - WARREN !DAAE0701CS001 !A!N!*!N!P00005 !20010308!20010531!054681739!054681739!147854152!N!AM GENERAL CORPORATION !105 N NILES AVE !SOUTH BEND !IN!46617!71000!141!18!SOUTH BEND !ST. JOSEPH !INDIANA !+000002374774!N!N!000000000000!2320!TRUCKS AND TRUCK TRACTORS, WHEELED !A4B!NON-COMBAT VEHICLES !1000!NOT DISCERNABLE OR CLASSIFIED !336311!*!*!3! ! !H!*!*!*!B!*!*!N!B!D !N!J!1!001!N!1A!A!N!Z! ! !Y!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: SOUTH BEND, ST JOSEPH County, INDIANA, 46617

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $14.63 billion to AM GENERAL LLC for work described as: 200106!001253!2100!AE07 !TACOM - WARREN !DAAE0701CS001 !A!N!*!N!P00005 !20010308!20010531!054681739!054681739!147854152!N!AM GENERAL CORPORATION !105 N NILES AVE !SOUTH BEND !IN!46617!71000!141!18!SOUTH BEND !ST. J… Key points: 1. Significant long-term investment in wheeled vehicle production. 2. Sole-source nature raises questions about price competitiveness. 3. High contract value indicates critical, long-standing need. 4. Contract duration spans over a decade, suggesting program stability. 5. Focus on light trucks and utility vehicles for non-combat roles. 6. Potential for limited competition to impact innovation and cost savings.

Value Assessment

Rating: questionable

The contract value of over $14.6 billion for wheeled vehicles is substantial. However, without a competitive bidding process, it is difficult to benchmark the value for money. The firm-fixed-price nature suggests cost certainty for the government, but the lack of competition means taxpayers may not be benefiting from the lowest possible price. Further analysis would require comparison to similar sole-source contracts or independent cost estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to AM General Corporation. The data indicates no other bidders were considered, suggesting a lack of competition. This approach is typically justified when only one source can fulfill the requirement, but it limits the government's ability to leverage market forces for better pricing and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This means government funds may not be utilized as efficiently as they could be in a more open market.

Public Impact

The U.S. Army is the primary beneficiary, receiving essential non-combat wheeled vehicles. This contract supports the production of trucks and truck tractors, crucial for logistics and troop transport. The contract's duration and value suggest a significant impact on the Army's operational readiness. Workforce implications are likely substantial for AM General and its supply chain, particularly in Indiana.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Long contract duration may not reflect evolving technological needs.
Lack of competition could stifle innovation in vehicle design and manufacturing.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Long-term award indicates a stable, ongoing need for these vehicles.
AM General has a long-standing relationship and expertise in producing these vehicles.

Sector Analysis

This contract falls within the automotive manufacturing sector, specifically focusing on heavy trucks and utility vehicles. The North American Industry Classification System (NAICS) code 336311 (Automotive Wheel and Engine Manufacturing) and 336312 (Light Truck and Utility Vehicle Manufacturing) are relevant. The significant value of this contract suggests AM General is a major player in this niche, potentially dominating the market for specific military vehicle platforms.

Small Business Impact

The contract data indicates that this was not a small business set-aside. Given the sole-source nature and the large scale of the award, it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively pursued through a competitive process. The focus is on a large prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and auditing functions, potentially involving the Defense Contract Management Agency (DCMA) and the Department of Defense Office of Inspector General (DoD OIG). Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and payment milestones would be subject to review.

Related Government Programs

Military Vehicle Procurement
Tactical Wheeled Vehicles
Department of Defense Logistics Contracts
AM General Contracts
Heavy Truck Manufacturing

Risk Flags

Sole-source award
Long contract duration
Lack of detailed cost breakdown
Potential for price escalation over time

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.63 billion to AM GENERAL LLC. 200106!001253!2100!AE07 !TACOM - WARREN !DAAE0701CS001 !A!N!*!N!P00005 !20010308!20010531!054681739!054681739!147854152!N!AM GENERAL CORPORATION !105 N NILES AVE !SOUTH BEND !IN!46617!71000!141!18!SOUTH BEND !ST. JOSEPH !INDIANA !+000002374774!N!N!000000000000!2320!TRUCKS AND TRUCK TRACTORS, WHEELED !A4B!NON-COMBAT VEHICLES !1000!NOT DISCERNABLE OR CLASSIFIED !336311!*!*!3! ! !H!*!*!*!B!*!*!N!

Who is the contractor on this award?

The obligated recipient is AM GENERAL LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.63 billion.

What is the period of performance?

Start: 2000-11-06. End: 2010-04-30.

What is the historical spending trend for AM General Corporation with the Department of Defense for wheeled vehicles?

Historical spending data reveals a consistent and substantial relationship between AM General Corporation and the Department of Defense, particularly for wheeled vehicles. This specific contract, valued at over $14.6 billion and spanning from 2000 to 2010, represents a significant portion of that historical expenditure. Prior to and following this period, AM General has secured numerous other contracts for various military vehicle platforms, including the High Mobility Multipurpose Wheeled Vehicle (HMMWV). The cumulative spending underscores AM General's long-standing role as a primary supplier of tactical wheeled vehicles to the U.S. military. Analyzing the full scope of historical awards would provide a clearer picture of the total taxpayer investment in vehicles produced by this contractor over time and the evolution of their product lines and pricing.

How does the per-unit cost of the vehicles procured under this contract compare to market rates for similar commercial vehicles?

Determining the precise per-unit cost for vehicles under this contract is challenging due to the 'NOT DISCERNABLE OR CLASSIFIED' notation for the Product Service Code (PSC) and the lack of specific unit details in the provided data. Furthermore, military-grade vehicles often incorporate specialized features, armor, and modifications that differentiate them significantly from commercial counterparts, making direct comparisons difficult. However, given the sole-source nature of the award and the firm-fixed-price structure, it is plausible that the per-unit cost may be higher than what could be achieved through a competitive bidding process or compared to less specialized commercial trucks. Without detailed specifications and a competitive benchmark, a definitive per-unit cost comparison to market rates is not feasible with the current data.

What are the key performance indicators (KPIs) used to assess the performance of AM General Corporation under this contract?

The provided data does not explicitly detail the Key Performance Indicators (KPIs) used to assess AM General Corporation's performance under this specific contract. However, typical KPIs for large-scale vehicle manufacturing contracts with the Department of Defense often include on-time delivery rates, adherence to production schedules, quality control metrics (e.g., defect rates, warranty claims), compliance with technical specifications, and responsiveness to contract modifications or urgent requirements. For a firm-fixed-price contract of this magnitude, meeting delivery milestones and maintaining stringent quality standards would be paramount. The government's contracting officers and quality assurance representatives would likely monitor these aspects closely throughout the contract's duration.

What is the risk assessment associated with a sole-source contract of this magnitude and duration?

A sole-source contract of this magnitude ($14.6 billion) and duration (nearly 10 years) carries several inherent risks. The primary risk is the potential for inflated pricing due to the lack of competition, meaning taxpayers may not be receiving the best possible value. Another risk is vendor lock-in, where the government becomes heavily reliant on a single supplier, potentially limiting flexibility and bargaining power in the future. There's also a risk of complacency from the contractor, as the absence of competitive pressure might reduce the incentive for continuous improvement in efficiency, innovation, or cost reduction. Furthermore, the long duration increases the risk of the procured technology becoming outdated before the contract concludes, or the contractor facing financial instability that could disrupt supply.

How does this contract align with the Department of the Army's overall strategy for vehicle modernization and fleet management?

This contract, awarded in 2000 and ending in 2010, aligns with the Department of the Army's strategy during that era for maintaining and modernizing its fleet of tactical wheeled vehicles, particularly for non-combat roles. The significant investment in trucks and truck tractors indicates a sustained need for logistical support and troop mobility. While the specific vehicles procured under this contract served their purpose, the Army's subsequent vehicle modernization strategies have evolved, leading to new programs and platforms. The long duration suggests a focus on fulfilling existing requirements rather than rapid technological advancement, which might be addressed through separate, more agile procurement efforts. Understanding the specific vehicle types and their intended roles would provide further insight into this alignment.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Manufacturing › Light Truck and Utility Vehicle 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: Macandrews & Forbes Holdings Inc.

Address: 105 N NILES AVE, SOUTH BEND, IN, 46617

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $9,608,799,699

Exercised Options: $9,608,799,699

Current Obligation: $14,632,728,417

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline