DoD awards $15.3M for 71,196 track shoes, with potential for more, to VAREC NV

Contract Overview

Contract Amount: $15,314,260 ($15.3M)

Contractor: Varec NV

Awarding Agency: Department of Defense

Start Date: 2025-12-16

End Date: 2027-09-22

Contract Duration: 645 days

Daily Burn Rate: $23.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TRACK SHOE, VEHICULAR, QTY 71,196 WITH 100% OPTION NSN: 2530-00-078-2908, MFR PART NUMBER: 11677988-6

Plain-Language Summary

Department of Defense obligated $15.3 million to VAREC NV for work described as: TRACK SHOE, VEHICULAR, QTY 71,196 WITH 100% OPTION NSN: 2530-00-078-2908, MFR PART NUMBER: 11677988-6 Key points: 1. The contract's value of $15.3 million for track shoes suggests a unit cost of approximately $215, indicating a need for careful benchmarking against similar defense procurements. 2. Full and open competition was utilized, which is generally positive for price discovery, but the number of bidders (9) warrants scrutiny to ensure robust market engagement. 3. The firm-fixed-price contract type shifts risk to the contractor, which is favorable for the government in managing cost overruns. 4. The duration of 645 days for delivery and potential option period suggests a sustained need for these critical components. 5. The award to VAREC NV, a manufacturer in the armored vehicle component sector, aligns with the Defense Logistics Agency's mission to equip military forces. 6. The absence of small business set-aside or subcontracting goals requires examination to understand the impact on smaller enterprises within the defense industrial base.

Value Assessment

Rating: fair

The awarded amount of $15.3 million for 71,196 track shoes results in a per-unit cost of approximately $215. This figure requires comparison with historical data for similar NSNs and contract types. Without specific benchmark data, it's difficult to definitively assess value for money. However, the firm-fixed-price nature of the contract provides cost certainty for the government, mitigating risks of overruns.

Cost Per Unit: $215 per unit (estimated)

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. Nine bids were received, suggesting a reasonable level of interest in this procurement. While nine bidders is a healthy number, further analysis would be needed to determine if this represents the full spectrum of capable suppliers and if the competition effectively drove down prices.

Taxpayer Impact: The use of full and open competition with multiple bidders generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and better quality goods.

Public Impact

The primary beneficiaries are the U.S. Army units requiring armored vehicle components for operational readiness. The contract delivers essential track shoe components, crucial for the mobility and functionality of armored vehicles. The geographic impact is national, supporting military operations across various theaters. Workforce implications include supporting manufacturing jobs within the defense industrial base, specifically in the production of specialized vehicle parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of explicit small business subcontracting goals may limit opportunities for smaller firms in the supply chain.
The unit cost, while not definitively high without benchmarks, warrants continued monitoring for potential cost efficiencies in future procurements.
The reliance on a single manufacturer for a critical component, even if competitively sourced, could pose a long-term supply chain risk if not managed proactively.

Positive Signals

The firm-fixed-price contract structure provides cost predictability for the government.
Full and open competition ensures a broad base of potential suppliers can participate.
The award to a specialized manufacturer suggests alignment with industry expertise for this specific component.

Sector Analysis

This contract falls within the Defense Logistics Agency's (DLA) broader mission of providing supply chain management for the U.S. military. The sector involves specialized manufacturing for heavy vehicles, specifically armored components. The market size for such components is tied to defense spending levels and the operational tempo of armored forces. Comparable spending benchmarks would involve analyzing historical DLA or other military branch procurements for similar track systems or heavy vehicle parts.

Small Business Impact

This contract did not include a small business set-aside, nor were specific subcontracting goals mentioned in the provided data. This suggests that the primary award went to a large business or that subcontracting opportunities were not explicitly mandated. Further investigation into the contractor's actual subcontracting practices would be necessary to determine the extent of small business participation and its impact on the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms and financial accountability. The Department of Defense's Inspector General also provides oversight for waste, fraud, and abuse. Transparency is facilitated through contract databases like SAM.gov, where award details are published.

Related Government Programs

DLA Troop Support
Army Ground Vehicle Systems
Heavy Equipment Manufacturing
Military Vehicle Components
Track Systems Procurement

Risk Flags

Potential supply chain vulnerability if VAREC NV is a sole or primary source.
Need for robust quality assurance to ensure component reliability in harsh conditions.
Price competitiveness requires ongoing benchmarking against market rates and historical data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.3 million to VAREC NV. TRACK SHOE, VEHICULAR, QTY 71,196 WITH 100% OPTION NSN: 2530-00-078-2908, MFR PART NUMBER: 11677988-6

Who is the contractor on this award?

The obligated recipient is VAREC NV.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $15.3 million.

What is the period of performance?

Start: 2025-12-16. End: 2027-09-22.

What is VAREC NV's track record with the Department of Defense for similar components?

VAREC NV's specific track record with the Department of Defense for track shoes or similar armored vehicle components would require a deeper dive into historical contract awards. A review of their past performance, including on-time delivery rates, quality of goods provided, and any past disputes or contract modifications, is crucial for assessing reliability. Information on previous awards, their values, and the specific components supplied would offer insight into their experience and capability in fulfilling large-scale defense orders. Without this specific historical data, the assessment relies on the general understanding of their role as a manufacturer in this specialized sector.

How does the estimated unit cost of $215 compare to industry benchmarks for military track shoes?

The estimated unit cost of $215 for these track shoes requires careful comparison against industry benchmarks and historical government procurement data for similar National Stock Numbers (NSNs) and component types. Factors such as material composition, manufacturing complexity, volume discounts, and specific vehicle application significantly influence pricing. If this unit cost is substantially higher than comparable contracts awarded under similar conditions (e.g., firm-fixed-price, full and open competition), it could indicate potential overpricing or unique cost drivers. Conversely, if it aligns with or is lower than benchmarks, it suggests competitive pricing. A thorough analysis would involve accessing historical contract databases and market research reports.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential supply chain disruptions, quality control issues, and cost overruns if the firm-fixed-price (FFP) structure is compromised by unforeseen circumstances. Supply chain risks are mitigated by the DLA's role in managing logistics and potentially having alternative suppliers or inventory. Quality control is managed through contract specifications and inspection processes. The FFP structure itself is a risk mitigation tool for the government, placing the burden of cost control on the contractor. However, risks related to the contractor's financial stability or production capacity could still emerge, necessitating ongoing monitoring by the contracting officer and relevant oversight bodies.

How effective is the 'full and open competition' strategy in ensuring value for money for this specific procurement?

The 'full and open competition' strategy is generally effective in promoting value for money by allowing a wide range of potential suppliers to bid, thereby fostering price competition. In this case, nine bids were received, suggesting a reasonably competitive environment. The effectiveness hinges on whether these nine bidders represented the most capable and cost-competitive sources in the market. If the competition successfully drove down prices to a level consistent with market rates and historical data, then it was effective. However, if the winning bid was significantly higher than anticipated or if subsequent contract modifications indicate pricing issues, the effectiveness may be questioned. Continuous monitoring of contract performance and pricing trends is key to assessing long-term value.

What are the historical spending patterns for NSN 2530-00-078-2908 or similar track shoes by the Department of Defense?

Analyzing historical spending patterns for NSN 2530-00-078-2908 or comparable track shoes by the Department of Defense is essential for context. This involves examining past contract awards for this specific NSN, including quantities, prices, contract types, and awarded contractors over several fiscal years. Understanding historical price trends, fluctuations, and the typical number of bidders can reveal whether the current $15.3 million award represents an anomaly, an increase due to market conditions, or a standard procurement. Significant deviations from historical averages, especially without clear justification (e.g., inflation, increased demand, technological upgrades), would warrant further investigation into the current contract's pricing and overall value.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SPRDL125R0195

Offers Received: 9

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ANTWERPSESTEENWEG 106, MECHELEN

Business Categories: Category Business, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $31,119,772

Exercised Options: $15,314,260

Current Obligation: $15,314,260

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline