Department of Defense awards $132.9M contract to AM General LLC for Army National Guard HMMWV recapitalization

Contract Overview

Contract Amount: $132,941,765 ($132.9M)

Contractor: AM General LLC

Awarding Agency: Department of Defense

Start Date: 2014-06-11

End Date: 2015-06-30

Contract Duration: 384 days

Daily Burn Rate: $346.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RECAPITALIZE THE ARMY NATIONAL GUARD S (ARNG) AGING FLEET OF HIGH MOBILITY MULTI-WHEELED VEHICLE (HMMWV) M1152A1B2 AND M1165A1B3 VARIANTS. AMG WILL RECAP HMMWVS TO CURRENT HMMWV CONFIGURATION, IN A LIKE-NEW CONDITION, MEETING THE REQUIREMENTS SET FORTH IN THE SEPTEMBER 2004 HMMWV OPERATIONS REQUIREMENT DOCUMENT. THE RECAP EFFORT WILL BE PERFORMED BY AMG S SUBCONTRACTOR RED RIVER ARMY DEPOT (RRAD) AND CONSIST OF VEHICLE DISASSEMBLY AND REASSEMBLY, ENSURING EACH VEHICLE HAS A MINIMUM OF ONE-QUARTER OF FUEL IN THE FUEL TANK, APPLICATION OF DESIGNATED MANDATORY REPLACEMENT PARTS AND COMPLIANCE (DISPOSITION OF PARTS, VEHICLE SERIAL NUMBER REGISTRATION, CORROSION PROTECTION AND PAINT) REQUIREMENTS, INSTALLATION OF AUTOMOTIVE IMPROVEMENT PROGRAM AND RELIABILITY ENHANCEMENT VEHICLE COMPONENTS, AND INSPECTION AND REPAIR ONLY AS NECESSARY (IROAN) OF THE HMMWV CAB IN ACCORDANCE WITH (IAW) THE TECHNICAL DATA PACKAGE (TDP) AND TECHNICAL MANUAL REQUIREMENTS. IF ANY OF THE ITEMS LISTED IN CLINS 0005AA THROUGH 0012AA, OR PORTIONS OF, ARE MISSING FROM THE VEHICLE, THE VEHICLE WILL NOT BE INDUCTED INTO THE RECAP PROGRAM UNLESS THE GOVERNMENT EXERCISES AN OPTION TO PROCURE THE MISSING ITEMS IN SUPPORT OF THE CANDIDATE VEHICLE. EACH ACCEPTED VEHICLE THAT GOES THROUGH THE IROAN PROCESS WILL BE SHIPPED TO THE CONTRACTOR S (AM GENERAL (AMG)) FACILITY AND INTEGRATED ONTO A NEW PRODUCTION ROLLING CHASSIS. THE CHASSIS WILL INCLUDE A NEW ENGINE, ENGINE COOLING SYSTEM, TRANSMISSION, AND SUSPENSION SYSTEM; MAKING THE HMMWV A LIKE-NEW VEHICLE.

Place of Performance

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

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $132.9 million to AM GENERAL LLC for work described as: RECAPITALIZE THE ARMY NATIONAL GUARD S (ARNG) AGING FLEET OF HIGH MOBILITY MULTI-WHEELED VEHICLE (HMMWV) M1152A1B2 AND M1165A1B3 VARIANTS. AMG WILL RECAP HMMWVS TO CURRENT HMMWV CONFIGURATION, IN A LIKE-NEW CONDITION, MEETING THE REQUIREMENTS SET FORTH IN THE SEPTEMBER 2004 HMMW… Key points: 1. Contract focuses on modernizing aging High Mobility Multi-Wheeled Vehicles (HMMWVs) to current configurations. 2. Effort involves vehicle disassembly, reassembly, and installation of reliability enhancement components. 3. Subcontracting with Red River Army Depot indicates a collaborative approach to maintenance and modernization. 4. The fixed-price contract structure aims to control costs for the extensive recapitalization effort. 5. This contract addresses a critical need to maintain the operational readiness of the Army National Guard's fleet.

Value Assessment

Rating: good

The contract value of $132.9 million for the recapitalization of HMMWVs appears reasonable given the scope of work. This involves bringing older vehicles to a 'like-new' condition, which includes disassembly, reassembly, and upgrades. While specific cost breakdowns per vehicle are not detailed, the firm-fixed-price nature suggests that AM General is responsible for managing costs within the awarded amount. Benchmarking against similar large-scale vehicle refurbishment contracts would provide further insight, but the price seems aligned with the complexity of restoring aging military hardware to current operational standards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that AM General LLC was the only source considered for this specific requirement. Sole-source awards often occur when a contractor possesses unique capabilities, proprietary technology, or is the original equipment manufacturer with essential knowledge for the required service. The lack of competition means that pricing and terms were negotiated directly with AM General, potentially limiting opportunities for cost savings that might arise from a competitive bidding process.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from potential price reductions that could have resulted from multiple companies bidding on the contract. This could lead to a higher overall cost for the recapitalization effort compared to a competed scenario.

Public Impact

The Army National Guard benefits directly through the modernization of its vehicle fleet, enhancing operational readiness and safety. Services delivered include comprehensive refurbishment and upgrade of HMMWV M1152A1B2 and M1165A1B3 variants. The geographic impact is national, as the Army National Guard operates across all states and territories. Workforce implications include employment at AM General and its subcontractor, Red River Army Depot, supporting skilled labor in vehicle maintenance and manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness for taxpayers.
Reliance on a single contractor for a critical fleet modernization may pose a risk if performance issues arise.
The contract's fixed-price nature could incentivize cost-cutting that might affect long-term durability if not closely monitored.

Positive Signals

AM General's established role as the original manufacturer of HMMWVs suggests deep technical expertise for this recapitalization.
The use of Red River Army Depot as a subcontractor leverages existing government-owned industrial facilities and expertise.
The firm-fixed-price contract provides cost certainty for the government, assuming performance meets requirements.
The contract aims to restore vehicles to a 'like-new' condition, directly addressing fleet readiness and reliability.

Sector Analysis

The defense industrial base for military vehicle manufacturing and maintenance is a critical sector. AM General LLC is a key player in this market, particularly known for its HMMWV production. This contract falls within the broader category of military vehicle sustainment and modernization. The market for such services is often characterized by specialized capabilities and long-term relationships between manufacturers and the Department of Defense. Spending in this area is driven by the need to maintain aging fleets and adapt to evolving operational requirements, ensuring readiness and technological parity.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, as indicated by 'ss: false' and 'sb: false'. The primary contractor is AM General LLC, a large business. While the contract doesn't mandate small business participation directly, subcontracting opportunities may arise. The involvement of Red River Army Depot, a government facility, might also influence subcontracting dynamics. Further analysis would be needed to determine if small businesses are engaged in the supply chain or specific service provisions under this agreement.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), as indicated by 'sa: Defense Contract Management Agency'. DCMA is responsible for ensuring contractor performance, compliance with contract terms, and quality assurance. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency is facilitated through contract databases, but detailed operational oversight reports are typically internal to the agency and the contractor unless specific Inspector General investigations are initiated.

Related Government Programs

Army Vehicle Modernization Programs
Tactical Wheeled Vehicle Fleet Sustainment
Military Vehicle Refurbishment Contracts
HMMWV Upgrade Initiatives

Risk Flags

Sole-source award
Potential for cost overruns without competition
Dependence on a single contractor for critical fleet modernization

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $132.9 million to AM GENERAL LLC. RECAPITALIZE THE ARMY NATIONAL GUARD S (ARNG) AGING FLEET OF HIGH MOBILITY MULTI-WHEELED VEHICLE (HMMWV) M1152A1B2 AND M1165A1B3 VARIANTS. AMG WILL RECAP HMMWVS TO CURRENT HMMWV CONFIGURATION, IN A LIKE-NEW CONDITION, MEETING THE REQUIREMENTS SET FORTH IN THE SEPTEMBER 2004 HMMWV OPERATIONS REQUIREMENT DOCUMENT. THE RECAP EFFORT WILL BE PERFORMED BY AMG S SUBCONTRACTOR RED RIVER ARMY DEPOT (RRAD) AND CONSIST OF VEHICLE DISASSEMBLY AND REASSEMBLY, ENSURING EACH VEHICLE HAS A MINIMUM OF ONE-QUAR

Who is the contractor on this award?

The obligated recipient is AM GENERAL LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $132.9 million.

What is the period of performance?

Start: 2014-06-11. End: 2015-06-30.

What is AM General LLC's track record with HMMWV recapitalization and sustainment contracts?

AM General LLC has a long and established history with the HMMWV platform, having been the original manufacturer. Their track record includes extensive production runs and ongoing sustainment efforts for various HMMWV variants. They have been involved in numerous contracts related to HMMWV upgrades, repairs, and modernization over the years. This includes efforts to enhance survivability, mobility, and power generation capabilities. Their deep institutional knowledge of the vehicle's design, manufacturing processes, and common failure points positions them as a primary candidate for recapitalization efforts. Past performance data, often assessed by the DoD, would detail their success in meeting delivery schedules, quality standards, and cost targets on previous HMMWV-related contracts.

How does the cost per vehicle for this recapitalization compare to industry benchmarks or previous similar contracts?

The provided data does not include a per-vehicle cost breakdown, making a direct comparison difficult. The total contract value is $132.9 million for an unspecified number of HMMWVs. To benchmark, one would need to know the quantity of vehicles being recapitalized. If, for example, 500 vehicles were included, the cost per vehicle would be approximately $265,800. This figure needs to be compared against the cost of new HMMWV variants or the cost of similar refurbishment programs undertaken by other military branches or allied nations. Factors such as the extent of disassembly, the specific upgrades included (e.g., armor, engine, electronics), and the condition of the incoming vehicles significantly influence per-unit costs. Without these details, a precise benchmark is challenging.

What are the primary risks associated with a sole-source contract for critical vehicle modernization?

The primary risk of a sole-source contract for critical vehicle modernization, such as this HMMWV recapitalization, is the potential for reduced cost-effectiveness due to the lack of competition. Without competing bids, the government may not achieve the lowest possible price. Another risk is contractor performance; if AM General encounters unforeseen technical challenges, production delays, or quality issues, the government has limited alternative options without renegotiating or potentially terminating the contract, which can be complex and costly. Furthermore, sole-source awards can sometimes lead to complacency on the part of the contractor regarding innovation or efficiency improvements, as the pressure to win future contracts through competitive bidding is absent for this specific award.

How effective is the recapitalization process in extending the service life and improving the capability of HMMWVs?

The effectiveness of the recapitalization process in extending the service life and improving HMMWV capabilities hinges on the specific scope of work defined in the contract. This contract aims to bring vehicles to a 'like-new' condition, meeting requirements from a 2004 document, and includes installing 'Automotive Improvement Program and Reliability Enhancement Vehicle Components.' This suggests a significant overhaul intended to restore functionality and incorporate relevant upgrades. If executed properly, recapitalization can significantly extend a vehicle's operational life by replacing worn components, addressing obsolescence, and improving reliability, thereby deferring the need for entirely new vehicle procurements. The success is measured by the vehicles meeting performance standards post-refurbishment and their sustained operational readiness in the field.

What are the historical spending patterns for HMMWV maintenance, repair, and modernization by the Department of Defense?

Historical spending on HMMWV maintenance, repair, and modernization by the Department of Defense has been substantial over the decades, reflecting the platform's widespread use and extended service life. The DoD has consistently allocated significant funds towards sustaining the large HMMWV fleet, especially during periods of extensive deployment. This includes spending on routine maintenance, component replacements, armor upgrades (like the Armor Systems Manufacturing Program - ASMP), and various modernization initiatives aimed at improving survivability and performance. Contracts for these services have been awarded to various entities, including AM General and other defense contractors specializing in vehicle sustainment. Spending fluctuates based on operational tempo, fleet age, and the introduction of new vehicle programs, but maintaining the existing HMMWV fleet has remained a consistent budgetary item.

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: W56HZV13R0514

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Macandrews & Forbes Holdings Inc. (UEI: 878304849)

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

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

Financial Breakdown

Contract Ceiling: $151,380,486

Exercised Options: $132,941,765

Current Obligation: $132,941,765

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline