Army National Guard HMMWV recapitalization contract awarded to AM General LLC for up to $47.4M

Contract Overview

Contract Amount: $47,400,786 ($47.4M)

Contractor: AM General LLC

Awarding Agency: Department of Defense

Start Date: 2016-02-25

End Date: 2018-12-31

Contract Duration: 1,040 days

Daily Burn Rate: $45.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RECAPITALIZATION OF THE ARMY NATIONAL GUARD (ARNG) HIGH MOBILITY MULTIPURPOSE WHEELED VEHICLES (HMMWV). THE CONTRACTOR WILL CONVERT, UPGRADE AND MODERNIZE THE M1151 HMMWV TO THE CURRENT M1167 HMMWV CONFIGURATION, UP TO 251 VEHICLES.

Place of Performance

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

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $47.4 million to AM GENERAL LLC for work described as: RECAPITALIZATION OF THE ARMY NATIONAL GUARD (ARNG) HIGH MOBILITY MULTIPURPOSE WHEELED VEHICLES (HMMWV). THE CONTRACTOR WILL CONVERT, UPGRADE AND MODERNIZE THE M1151 HMMWV TO THE CURRENT M1167 HMMWV CONFIGURATION, UP TO 251 VEHICLES. Key points: 1. Contract focuses on modernizing existing HMMWV fleet to current M1167 configuration. 2. Sole-source award to AM General LLC, the original manufacturer, raises questions about competition. 3. Definitive contract with a firm-fixed-price type suggests predictable costs for the government. 4. The contract duration of 1040 days indicates a substantial, multi-year effort. 5. This contract supports the readiness and modernization of the Army National Guard's vehicle fleet.

Value Assessment

Rating: fair

Benchmarking the value of this specific recapitalization effort is challenging without detailed cost breakdowns or comparisons to similar upgrade programs. The firm-fixed-price nature provides cost certainty, but the absence of competition could mean the government did not secure the lowest possible price. The reported award amount of $47.4 million for up to 251 vehicles suggests an average cost per vehicle, but the actual cost will depend on the final number of vehicles upgraded and the specific scope of work performed for each.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to AM General LLC. As the original manufacturer of the HMMWV, AM General possesses unique knowledge and tooling for the vehicle's systems. However, a sole-source award bypasses the competitive bidding process, which typically drives down prices and encourages innovation. Without competition, there is a risk that the government may not have obtained the best possible value.

Taxpayer Impact: The lack of competition for this sole-source contract means taxpayers may have paid a premium compared to what could have been achieved through a competitive bidding process. This limits the government's ability to leverage market forces for cost savings.

Public Impact

The Army National Guard benefits from modernized and more capable HMMWV vehicles, enhancing operational readiness. Services delivered include the conversion, upgrade, and modernization of up to 251 M1151 HMMWVs to the M1167 configuration. The geographic impact is primarily on Army National Guard units across the United States. Workforce implications include skilled labor at AM General for vehicle modification and potential training for ARNG personnel on the upgraded vehicles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Potential for cost overruns if scope expands beyond initial estimates.
Dependence on a single contractor for critical vehicle modernization.

Positive Signals

Firm-fixed-price contract provides cost certainty.
AM General's established expertise in HMMWV manufacturing.
Modernization effort improves vehicle survivability and capability for the ARNG.

Sector Analysis

This contract falls within the broader defense industrial base, specifically focusing on military vehicle manufacturing and modernization. The market for such specialized vehicle upgrades is often dominated by a few key players with the necessary technical expertise and existing production lines. AM General LLC, as the original equipment manufacturer, holds a significant position in this niche. Comparable spending benchmarks would involve looking at other military vehicle upgrade programs or new vehicle procurements within the Department of Defense.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the available data. The award to AM General LLC, a large prime contractor, suggests that the primary work will be performed by the prime or its direct large business suppliers. This limits direct opportunities for small businesses to participate in this specific contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General's office for the Department of Defense could investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

HMMWV Procurement
Light Tactical Vehicle Modernization
Army Ground Vehicle Programs
National Guard Equipment Modernization

Risk Flags

Sole-source award may limit cost-effectiveness.
Potential for scope creep in modernization efforts.
Dependence on a single supplier for critical upgrades.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.4 million to AM GENERAL LLC. RECAPITALIZATION OF THE ARMY NATIONAL GUARD (ARNG) HIGH MOBILITY MULTIPURPOSE WHEELED VEHICLES (HMMWV). THE CONTRACTOR WILL CONVERT, UPGRADE AND MODERNIZE THE M1151 HMMWV TO THE CURRENT M1167 HMMWV CONFIGURATION, UP TO 251 VEHICLES.

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 $47.4 million.

What is the period of performance?

Start: 2016-02-25. End: 2018-12-31.

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

AM General LLC has a long and extensive history with the High Mobility Multipurpose Wheeled Vehicle (HMMWV), having been the original manufacturer and primary supplier for decades. They have been responsible for the production of hundreds of thousands of HMMWVs for the U.S. military and allied nations. Their track record includes numerous contracts for new vehicle production, spare parts, maintenance, and various upgrade and modernization programs aimed at extending the vehicle's service life and improving its capabilities, such as armor integration and powertrain enhancements. This specific contract for recapitalization builds upon that deep institutional knowledge and manufacturing capability.

How does the cost per vehicle in this contract compare to other HMMWV upgrade programs?

Directly comparing the cost per vehicle for this specific recapitalization contract ($47.4M / up to 251 vehicles, approximately $188,844 per vehicle) to other HMMWV upgrade programs is difficult without detailed specifications of the work performed in each program. Upgrade costs can vary significantly based on the extent of modernization, the specific components replaced or enhanced (e.g., powertrain, suspension, armor, electronics), and the number of vehicles involved. Sole-source awards, like this one, also tend to have less transparent pricing than competitively bid programs. However, this figure should be evaluated against the cost of new vehicle procurement to determine the overall value proposition.

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

The primary risks associated with a sole-source award for vehicle modernization, such as this HMMWV recapitalization, include a lack of price competition, which can lead to higher costs for the government than might be achieved through a competitive process. There's also a potential for reduced innovation, as the contractor may face less pressure to develop cost-saving efficiencies or cutting-edge solutions. Furthermore, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single supplier, potentially creating vendor lock-in and limiting future flexibility. Ensuring robust oversight and negotiation is crucial to mitigate these risks.

What is the expected impact of this modernization on the Army National Guard's operational effectiveness?

The modernization of HMMWVs to the M1167 configuration is expected to significantly enhance the operational effectiveness of the Army National Guard (ARNG). The M1167 typically incorporates improved armor protection, potentially offering better survivability for troops in various operational environments. Upgrades often include enhancements to the powertrain, suspension, and other critical systems, leading to increased reliability, mobility, and reduced maintenance downtime. By bringing older vehicles up to a more current standard, the ARNG can maintain a more capable and consistent fleet, ensuring readiness for both domestic support missions and potential federal deployments.

What are the historical spending trends for HMMWV-related contracts by the Department of Defense?

Historical spending on HMMWV-related contracts by the Department of Defense has been substantial over the past several decades, reflecting the vehicle's widespread use. Initial procurement costs were significant, followed by ongoing expenditures for spare parts, maintenance, upgrades, and fielding. Spending patterns have evolved, with a greater emphasis in recent years shifting towards modernization and recapitalization of existing fleets rather than large-scale new vehicle procurements, as seen in this contract. The total lifecycle cost, including upgrades and sustainment, represents a considerable investment in tactical wheeled vehicle readiness.

Are there any specific performance metrics or Key Performance Indicators (KPIs) defined in this contract?

The provided data does not specify the performance metrics or Key Performance Indicators (KPIs) defined within this particular contract. However, for a recapitalization effort of this nature, typical KPIs would likely include adherence to schedule (delivery dates for upgraded vehicles), quality of workmanship (meeting technical specifications and defect rates), and potentially performance of the upgraded vehicles in testing or operational scenarios. Firm-fixed-price contracts often tie payment milestones to the successful completion of defined phases or deliverables, implicitly incorporating performance expectations.

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: W56HZV15R0118

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: KPS Capital Partners, LP

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: $57,443,845

Exercised Options: $47,400,786

Current Obligation: $47,400,786

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline