DoD's $32.1M sole-source HMMWV procurement raises questions on competition and value

Contract Overview

Contract Amount: $32,109,715 ($32.1M)

Contractor: AM General LLC

Awarding Agency: Department of Defense

Start Date: 2015-03-12

End Date: 2015-06-12

Contract Duration: 92 days

Daily Burn Rate: $349.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SOLE SOURCE FMS PROCUREMENT OF 160 M1151A1B1 HMMWVS.

Place of Performance

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

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $32.1 million to AM GENERAL LLC for work described as: SOLE SOURCE FMS PROCUREMENT OF 160 M1151A1B1 HMMWVS. Key points: 1. Sole-source procurement limits competitive pressure, potentially impacting price. 2. High unit cost suggests potential for cost savings through competition. 3. Contract awarded to a single source without a competitive process. 4. Limited competition may indicate specific contractor capabilities or market structure. 5. Short contract duration suggests a focused, potentially urgent need. 6. Fixed-price contract shifts risk to the contractor, but initial pricing is key.

Value Assessment

Rating: questionable

The unit price for these HMMWVs appears high when compared to similar military vehicle procurements. Without a competitive bidding process, it is difficult to ascertain if the government received the best possible value. The fixed-price nature of the contract provides some cost certainty, but the initial negotiated price is critical for ensuring value for money. Further analysis of the specific model's features and market alternatives would be needed for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The Department of the Army directly negotiated with AM General LLC. This approach bypasses the standard competitive process, which typically involves soliciting bids from multiple vendors. The lack of competition means there was no direct price comparison from alternative suppliers, potentially leading to a higher price than if the contract had been competed.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically achieved through competitive bidding. This can result in higher overall spending for the same quantity and quality of goods.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will utilize these armored vehicles. The contract delivers 160 M1151A1B1 HMMWVs, enhancing tactical mobility and protection. The geographic impact is primarily within military operational theaters, though production benefits Indiana. Workforce implications include continued employment at AM General LLC and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
High unit cost warrants scrutiny for value for money.
Lack of competition may indicate barriers to entry for other manufacturers.

Positive Signals

Fixed-price contract shifts cost overrun risk to the contractor.
Award to established manufacturer AM General LLC suggests reliance on proven capabilities.

Sector Analysis

This contract falls within the broader defense manufacturing sector, specifically focusing on armored vehicle production. The market for such specialized vehicles is often concentrated among a few key players due to high R&D costs, stringent military specifications, and established relationships. Comparable spending benchmarks would involve analyzing other procurements of similar armored personnel carriers or tactical vehicles by various military branches.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, AM General LLC, is a large business. There is no explicit information provided regarding subcontracting plans to small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contractors often utilize small businesses in their supply chains.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in the fixed-price contract type, which obligates the contractor to deliver the specified goods within the agreed price. Transparency is limited by the sole-source nature of the award, as the justification for not competing is not publicly detailed. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Tactical Wheeled Vehicles
Armored Vehicles
Military Truck Manufacturing
Ground Combat Vehicles

Risk Flags

Sole-source award
Potentially high unit cost
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.1 million to AM GENERAL LLC. SOLE SOURCE FMS PROCUREMENT OF 160 M1151A1B1 HMMWVS.

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 $32.1 million.

What is the period of performance?

Start: 2015-03-12. End: 2015-06-12.

What is the historical spending pattern for M1151A1B1 HMMWVs by the Department of Defense?

Historical spending data for the M1151A1B1 HMMWV variant is not directly available in this dataset. However, the procurement of HMMWVs has been ongoing for many years, with various configurations and upgrades. AM General LLC has been the primary manufacturer. Analyzing past contracts for similar HMMWV variants would reveal trends in quantity, pricing, and contract types. A review of historical contract awards for HMMWVs would likely show a pattern of significant investment in these vehicles, reflecting their importance in military operations. Without specific historical data, it's difficult to pinpoint exact spending trends, but the continuous need for these vehicles suggests consistent, substantial budgetary allocations over time.

How does the unit cost of this procurement compare to other HMMWV variants or similar armored vehicles?

The unit cost for the M1151A1B1 HMMWVs in this procurement is approximately $200,623 ($32,109,715.2 / 160 units). This figure appears to be on the higher end when compared to publicly available data for earlier HMMWV variants or less specialized armored vehicles. For instance, older HMMWV models were procured at significantly lower unit costs. While the M1151A1B1 is an upgraded variant with enhanced protection, the substantial cost warrants a detailed comparison against contemporary armored vehicle procurements from other manufacturers or different branches of the military. Benchmarking against vehicles with similar protection levels and payload capacities would provide a clearer picture of whether this price represents fair market value, especially considering the sole-source nature of this award.

What is the justification for this procurement being sole-source?

The provided data indicates this was a 'SOLE SOURCE FMS PROCUREMENT'. While the specific justification is not detailed, sole-source procurements are typically justified when only one responsible source can provide the required supplies or services. This could be due to unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or specific foreign military sales (FMS) requirements that dictate a particular supplier. For military vehicles like HMMWVs, justifications might include unique design, existing fleet commonality, or specific upgrade packages only available from the original manufacturer. Without the official justification document, the precise rationale remains speculative, but it implies that the Department of the Army determined AM General LLC was the only viable option at the time of award.

What are the performance capabilities and intended use of the M1151A1B1 HMMWV variant?

The M1151A1B1 is an upgraded variant of the High Mobility Multipurpose Wheeled Vehicle (HMMWV) designed to provide enhanced protection and carrying capacity. It is typically configured as an up-armored variant, offering improved survivability against threats such as improvised explosive devices (IEDs) and small arms fire. This variant often serves in roles requiring a higher level of protection for personnel and equipment, such as troop transport, command and control, or reconnaissance missions in potentially hostile environments. The 'A1B1' designation usually signifies specific upgrades related to armor packages, suspension, and potentially power train improvements to handle the increased weight. Its intended use is to replace older, less protected HMMWV variants and provide a more robust platform for modern battlefield conditions.

What is AM General LLC's track record with HMMWV production and government contracts?

AM General LLC has a long and extensive track record as the primary manufacturer of the HMMWV for the U.S. military and allied nations since the 1980s. They have produced hundreds of thousands of HMMWVs in various configurations. Their history includes numerous government contracts, both competitive and sole-source, for the production, sustainment, and modernization of the HMMWV fleet. AM General has also been involved in developing next-generation light tactical vehicles. Their established manufacturing capabilities, deep understanding of the HMMWV platform, and existing infrastructure position them as a key, often sole, provider for HMMWV-related procurements. This long-standing relationship and specialized expertise are typical factors contributing to sole-source awards for specific HMMWV variants or upgrades.

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: W56HZV15R0091

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: $32,109,715

Exercised Options: $32,109,715

Current Obligation: $32,109,715

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline