DoD's $29.2M contract for vehicular parts awarded to ND DEFENSE LLC, with a high unit cost

Contract Overview

Contract Amount: $29,192,405 ($29.2M)

Contractor: ND Defense LLC

Awarding Agency: Department of Defense

Start Date: 2008-07-03

End Date: 2009-08-14

Contract Duration: 407 days

Daily Burn Rate: $71.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AXLE, VEHICULAR; ENGINE, DIESEL; TRANSMISSION; GENERATOR; HOOD ASSY; XFER CASE; STEERING GEAR; STARTER, ENGINE; DRYER, AIR ASSY; TURBOSUPERCHARGER

Place of Performance

Location: WARRENVILLE, DUPAGE County, ILLINOIS, 60555

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $29.2 million to ND DEFENSE LLC for work described as: AXLE, VEHICULAR; ENGINE, DIESEL; TRANSMISSION; GENERATOR; HOOD ASSY; XFER CASE; STEERING GEAR; STARTER, ENGINE; DRYER, AIR ASSY; TURBOSUPERCHARGER Key points: 1. The contract value of $29.2 million for vehicular parts represents a significant investment in military logistics. 2. The sole-source nature of this award raises questions about potential price inflation and limited market exploration. 3. A high average unit cost of $717,260 suggests specialized or high-value components were procured. 4. The contract duration of 407 days indicates a substantial supply chain requirement. 5. The procurement falls under the 'All Other Motor Vehicle Parts Manufacturing' NAICS code, suggesting a broad category of parts. 6. The award to a single vendor, ND DEFENSE LLC, warrants scrutiny regarding performance history and pricing justification.

Value Assessment

Rating: questionable

The average unit cost of $717,260 is exceptionally high and significantly deviates from typical vehicle part costs. Without specific details on the parts procured, it is difficult to benchmark accurately. However, this figure suggests either extremely high-value, specialized components or a potential overpayment. Comparison to similar large-scale procurements of complex vehicular systems would be necessary for a more precise valuation, but the initial data points to a concerning cost per unit.

Cost Per Unit: $717,260

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition limits the government's ability to solicit the best possible pricing and terms, potentially leading to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers may not be receiving the most competitive pricing available in the market, as the government did not leverage competitive bidding to drive down costs.

Public Impact

Military personnel and operations benefit from the supply of essential vehicular parts, ensuring vehicle readiness. The contract supports the Department of Defense's logistical capabilities, particularly within the Army, given the award to the Defense Logistics Agency. The geographic impact is primarily within Illinois, where the contractor ND DEFENSE LLC is located, potentially creating local economic benefits. The contract likely supports a specialized manufacturing workforce involved in producing these specific vehicular components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High average unit cost raises concerns about value for money.
Sole-source award limits competitive pricing and transparency.
Lack of detailed part specifications makes independent cost analysis difficult.
Contract awarded in 2008, historical data may not reflect current market conditions.

Positive Signals

Contract ensures critical vehicular parts are supplied to the Department of Defense.
Award to a single vendor may indicate specialized capabilities required for these parts.
Contract completion within the specified timeframe (407 days) suggests successful delivery.

Sector Analysis

This contract falls within the 'All Other Motor Vehicle Parts Manufacturing' sector, a broad category encompassing a wide range of components for vehicles. The defense industry relies heavily on specialized parts manufacturers to maintain its fleet. While specific market size data for this niche is not readily available, the Department of Defense represents a significant customer for such goods. Comparable spending benchmarks would require identifying contracts for similar high-value, specialized vehicular components within the defense sector.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary contractor, ND DEFENSE LLC, was expected to fulfill the contract requirements directly, potentially limiting opportunities for small businesses to participate in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring compliance with contract terms and financial accountability. The Defense Logistics Agency (DLA) would also maintain oversight of the contract's performance and fulfillment of military needs. Transparency is facilitated through contract databases, but detailed performance metrics and audit reports are often not publicly accessible.

Related Government Programs

Department of Defense Vehicle Procurement
Defense Logistics Agency Supply Chain Management
Motor Vehicle Parts Manufacturing Contracts
Federal Sole-Source Procurements

Risk Flags

High Unit Cost
Sole-Source Award
Lack of Competition
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.2 million to ND DEFENSE LLC. AXLE, VEHICULAR; ENGINE, DIESEL; TRANSMISSION; GENERATOR; HOOD ASSY; XFER CASE; STEERING GEAR; STARTER, ENGINE; DRYER, AIR ASSY; TURBOSUPERCHARGER

Who is the contractor on this award?

The obligated recipient is ND DEFENSE LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $29.2 million.

What is the period of performance?

Start: 2008-07-03. End: 2009-08-14.

What specific types of vehicular parts were procured under this contract?

The provided data indicates the contract covered a range of vehicular parts including 'AXLE, VEHICULAR; ENGINE, DIESEL; TRANSMISSION; GENERATOR; HOOD ASSY; XFER CASE; STEERING GEAR; STARTER, ENGINE; DRYER, AIR ASSY; TURBOSUPERCHARGER'. This list suggests a comprehensive set of components, likely for heavy-duty or specialized military vehicles, rather than standard automotive parts. The inclusion of major drivetrain and engine components points towards significant repair or overhaul needs for the military fleet.

How does the average unit cost of $717,260 compare to industry benchmarks for similar defense vehicle parts?

The average unit cost of $717,260 is exceptionally high and significantly deviates from typical benchmarks for individual vehicle parts. While some complex systems or major components like engines or transmissions can be costly, this figure suggests either the procurement of entire vehicle sub-assemblies, highly specialized military-grade equipment, or a potential misinterpretation of the unit cost if it represents a bundle of items. Without detailed specifications of the parts and their intended application, a direct comparison is challenging. However, for standard parts, this cost would be considered exorbitant. It is plausible that this contract involved the acquisition of complete, integrated systems or very large, complex modules for specialized military vehicles, driving the unit cost upwards.

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

A sole-source award of $29.2 million carries several risks. Primarily, the lack of competition means the government may have paid a premium, as there was no incentive for ND DEFENSE LLC to offer the lowest possible price. This can lead to inefficient use of taxpayer funds. Additionally, sole-source contracts can sometimes indicate a lack of market research or an over-reliance on a single supplier, which can create supply chain vulnerabilities if that supplier faces production issues or goes out of business. Transparency is also reduced, making it harder to scrutinize the pricing justification and ensure fair market value was obtained.

What is the track record of ND DEFENSE LLC in fulfilling large federal contracts, particularly sole-source awards?

Information on ND DEFENSE LLC's track record, especially concerning large sole-source awards, is not detailed in the provided data. To assess their reliability and performance, a review of their contract history with the federal government, including past performance evaluations, on-time delivery rates, and any disputes or contract terminations, would be necessary. Understanding their experience with similar sole-source procurements would also provide insight into their capacity and pricing strategies in non-competitive environments.

How does this contract fit into the broader spending patterns for vehicular parts within the Department of Defense?

This $29.2 million contract represents a significant, albeit singular, expenditure for vehicular parts. The Department of Defense procures a vast array of vehicles and parts, with annual spending in the billions. This specific contract, due to its sole-source nature and high unit cost, might represent a specialized need or a critical component for a particular fleet. Analyzing its place within broader spending requires comparing it to other contracts for similar parts or vehicle systems, and understanding the overall budget allocation for vehicle maintenance and sustainment within the DoD.

What oversight mechanisms were in place for this sole-source contract awarded in 2008?

For a sole-source contract of this size awarded in 2008, oversight would have involved multiple layers. The Defense Contract Management Agency (DCMA) would likely have been responsible for contract administration, monitoring performance, and ensuring compliance. The Defense Contract Audit Agency (DCAA) would have performed financial audits to verify costs and pricing. The contracting officer at the Defense Logistics Agency (DLA) would have had ultimate responsibility for the award and management of the contract. Publicly available information on specific oversight activities or findings for this contract is limited, but standard government auditing and contract management procedures would have been applied.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Parts Manufacturing › All Other Motor Vehicle Parts Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV08R0651

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Navistar International Corporation (UEI: 161984646)

Address: 4201 WINFIELD RD, WARRENVILLE, IL, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $29,192,405

Exercised Options: $29,192,405

Current Obligation: $29,192,405

Contract Characteristics

Cost or Pricing Data: NO

Timeline