Department of Defense procures 13 LAV-25A2 vehicles for $23.9M to replace war losses

Contract Overview

Contract Amount: $23,944,596 ($23.9M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2012-12-31

End Date: 2014-10-31

Contract Duration: 669 days

Daily Burn Rate: $35.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CONTRACT GDLS-C THROUGH THE CCC FOR THE PROCUREMENT OF 13 LIGHT ARMORED VEHICLES - 25A2 CONFIGURATION (LAV-25A2) TO REPLACE VEHICLES LOST SUPPORTING THE WAR IN AFGHANISTAN.

Plain-Language Summary

Department of Defense obligated $23.9 million to CANADIAN COMMERCIAL CORPORATION for work described as: CONTRACT GDLS-C THROUGH THE CCC FOR THE PROCUREMENT OF 13 LIGHT ARMORED VEHICLES - 25A2 CONFIGURATION (LAV-25A2) TO REPLACE VEHICLES LOST SUPPORTING THE WAR IN AFGHANISTAN. Key points: 1. Value for money is difficult to assess due to the lack of competition and limited public data on unit costs. 2. The sole-source nature of this procurement limits price discovery and potentially increases costs for taxpayers. 3. A key risk indicator is the non-competitive award, which bypasses standard market mechanisms for price validation. 4. This contract supports the Army's need for armored vehicles, directly addressing losses incurred in Afghanistan. 5. The procurement falls within the broader defense manufacturing sector, specifically for armored vehicle components.

Value Assessment

Rating: questionable

The contract value of $23.9 million for 13 Light Armored Vehicles (LAV-25A2) averages to approximately $1.84 million per vehicle. Benchmarking this against similar contracts is challenging due to the sole-source nature and the specific configuration (25A2). However, the absence of competitive bidding means there's no direct market validation of this price. Without more detailed cost breakdowns or comparisons to other recent LAV procurements, it's difficult to definitively assess value for money, but the lack of competition raises concerns.

Cost Per Unit: Approximately $1.84 million per vehicle (LAV-25A2 configuration).

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis through the Canadian Commercial Corporation (CCC). This means that the Department of Defense did not conduct a competitive bidding process to solicit offers from multiple vendors. Sole-source awards are typically justified when only one vendor can provide the required goods or services, or in specific intergovernmental procurement scenarios like this one. The lack of competition limits the government's ability to negotiate the best possible price and may result in higher costs.

Taxpayer Impact: Taxpayers may have paid a premium for these vehicles due to the absence of a competitive bidding process. Without competing offers, there is less pressure on the supplier to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Army units requiring modern armored vehicles to replace equipment lost in combat operations. The contract delivers 13 Light Armored Vehicles (LAV-25A2) configured for specific military roles. The geographic impact is primarily within military operational theaters where these vehicles will be deployed. This procurement supports jobs within the defense manufacturing sector, including those involved in the production and assembly of armored vehicles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Limited transparency on specific cost components for the LAV-25A2 configuration.
Reliance on a foreign commercial corporation for procurement may introduce additional complexities or lead times.

Positive Signals

Addresses a critical need to replace war-lost equipment.
Procurement through CCC may leverage existing international agreements.
Firm Fixed Price contract provides cost certainty once awarded.

Sector Analysis

This contract falls within the broader defense industrial base, specifically the segment focused on military armored vehicle manufacturing. The market for such specialized vehicles is relatively concentrated, with a few key global players. The procurement of LAV-25A2s by the Department of the Army highlights the ongoing need for modern, adaptable armored platforms to support ground operations. Spending in this sector is often driven by geopolitical events, modernization programs, and the need to replace aging or combat-expended equipment.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the sole-source nature and the procurement through the Canadian Commercial Corporation, it is unlikely that small businesses were directly solicited or had opportunities for subcontracting under this specific award. Further analysis would be needed to determine if the prime contractor or CCC engages small businesses in their broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management oversight mechanisms. As the award was made through the Canadian Commercial Corporation, there may be additional layers of oversight involving intergovernmental agreements. Transparency is limited due to the sole-source nature and the foreign procurement channel. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Light Armored Vehicle (LAV) Family of Vehicles
Armored Personnel Carriers
Military Vehicle Procurement
Foreign Military Sales (indirectly, via CCC)
Department of the Army Equipment Modernization

Risk Flags

Sole-source award
Procurement via foreign entity
Limited public cost transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.9 million to CANADIAN COMMERCIAL CORPORATION. CONTRACT GDLS-C THROUGH THE CCC FOR THE PROCUREMENT OF 13 LIGHT ARMORED VEHICLES - 25A2 CONFIGURATION (LAV-25A2) TO REPLACE VEHICLES LOST SUPPORTING THE WAR IN AFGHANISTAN.

Who is the contractor on this award?

The obligated recipient is CANADIAN COMMERCIAL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $23.9 million.

What is the period of performance?

Start: 2012-12-31. End: 2014-10-31.

What is the track record of the Canadian Commercial Corporation (CCC) in facilitating defense procurements for the U.S. Department of Defense?

The Canadian Commercial Corporation (CCC) acts as a government-to-government contracting agency for Canadian exporters. For the U.S. Department of Defense, CCC facilitates procurements by leveraging its expertise in international trade and government contracting. While CCC has a history of supporting various U.S. government agencies, including the DoD, specific performance metrics or a detailed track record for defense procurements are not readily available in the public domain. Their role is primarily to facilitate the transaction, ensuring compliance with Canadian trade regulations and U.S. procurement requirements. The success of such contracts often depends on the specific capabilities and reliability of the Canadian prime contractor involved.

How does the unit cost of $1.84 million per LAV-25A2 compare to historical or contemporary procurements of similar vehicles?

Directly comparing the $1.84 million per LAV-25A2 unit cost is challenging without more specific data on the configuration and the competitive environment at the time of procurement. LAV variants have historically ranged in price, influenced by upgrades, mission packages, and order volumes. For instance, earlier procurements or different configurations might have had significantly different unit costs. The sole-source nature of this contract, awarded in 2012, means there was no competitive pressure to drive down the price. Publicly available data on recent, comparable LAV procurements, especially for the specific 25A2 configuration, is limited, making a precise benchmark difficult. However, costs for complex military platforms often exceed $1 million per unit, and this figure is plausible within that context, though the lack of competition prevents a definitive value assessment.

What are the primary risks associated with procuring military vehicles through a sole-source contract via a foreign commercial corporation?

Procuring military vehicles through a sole-source contract via a foreign commercial corporation like the Canadian Commercial Corporation (CCC) presents several risks. Firstly, the lack of competition inherently reduces the government's leverage to negotiate the best possible price, potentially leading to higher costs for taxpayers. Secondly, sole-source awards can sometimes indicate a lack of available alternatives or a failure in the initial market research or competitive solicitation process. Thirdly, relying on a foreign entity and its supply chain can introduce geopolitical risks, potential delays due to international regulations or political factors, and complexities in contract management and oversight. Finally, transparency regarding the cost breakdown and profit margins may be reduced compared to a fully competed domestic contract.

What is the strategic importance of the LAV-25A2 configuration for the U.S. Army, particularly in replacing war-lost vehicles?

The Light Armored Vehicle (LAV) family, including the LAV-25A2 configuration, is strategically important for the U.S. Army due to its versatility, mobility, and firepower. The LAV-25A2 is typically equipped with a 25mm cannon, providing significant direct fire capability. Replacing vehicles lost in combat, such as those in Afghanistan, is critical for maintaining operational readiness and force protection. These vehicles offer a balance of protection and mobility, allowing them to operate effectively in various environments, from counter-insurgency operations to more conventional warfare scenarios. Ensuring adequate numbers of these platforms is vital for troop safety and mission success, especially when facing threats that necessitate armored support.

How has U.S. Army spending on armored vehicles like the LAV evolved over the period encompassing this contract (around 2012-2014)?

During the period around 2012-2014, the U.S. Army's spending on armored vehicles was influenced by ongoing conflicts, particularly in Afghanistan and Iraq, and a broader focus on vehicle modernization. While troop drawdowns were occurring in some theaters, the need to replace combat-lost or heavily used equipment remained significant. Spending patterns would have reflected a mix of sustainment for existing fleets, modernization programs, and procurement of new platforms to address capability gaps or replace losses. Contracts for vehicles like the LAV would have been part of a larger defense budget allocation aimed at maintaining force projection capabilities and addressing specific operational requirements, often balancing cost-efficiency with urgent operational needs.

Industry Classification

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

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV12R0575

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of Canada (UEI: 241015486)

Address: 50 O'CONNOR ST SUITE 1100, OTTAWA

Business Categories: Category Business, Foreign Government, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $23,944,596

Exercised Options: $23,944,596

Current Obligation: $23,944,596

Contract Characteristics

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline