DoD Awards $45.9M for HMMWV Capability Expansion Kits, Sole-Sourced to AM General LLC

Contract Overview

Contract Amount: $45,881,838 ($45.9M)

Contractor: AM General LLC

Awarding Agency: Department of Defense

Start Date: 2017-09-21

End Date: 2018-01-29

Contract Duration: 130 days

Daily Burn Rate: $352.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF SUPPLEMENTAL HIGH MOBILITY MULTIPURPOSE WHEELED VEHICLE (HMMWV) EXPANDED CAPACITY VEHICLE (ECV) CAPABILITY EXPANSION KITS (CONTRACT OPTION).

Place of Performance

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

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $45.9 million to AM GENERAL LLC for work described as: PROCUREMENT OF SUPPLEMENTAL HIGH MOBILITY MULTIPURPOSE WHEELED VEHICLE (HMMWV) EXPANDED CAPACITY VEHICLE (ECV) CAPABILITY EXPANSION KITS (CONTRACT OPTION). Key points: 1. Contract awarded to AM General LLC for HMMWV expansion kits. 2. Significant funding of $45.9 million allocated for this procurement. 3. This contract was not competed, raising questions about price discovery. 4. The sector is Military Armored Vehicle, Tank, and Tank Component Manufacturing.

Value Assessment

Rating: fair

The contract value of $45.9 million for expansion kits appears substantial. Without competitive bids, it's difficult to benchmark pricing against similar contracts or market rates, suggesting potential for overpayment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was sole-sourced, meaning it was not competed. This lack of competition limits price discovery and may result in a higher price than if multiple vendors had submitted bids.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of a competitive bidding process for these essential vehicle upgrades.

Public Impact

Enhances the capability of existing HMMWV fleet, improving soldier protection and operational effectiveness. Supports the U.S. Army's ongoing modernization efforts for tactical vehicles. Ensures continued operational readiness by upgrading critical vehicle components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Lack of transparency in pricing due to no-bid contract.
Potential for cost overruns without competitive pressure.

Positive Signals

Addresses critical capability gaps for HMMWV fleet.
Supports existing vehicle platform, potentially leveraging existing supply chains.
Ensures timely delivery of essential upgrades.

Sector Analysis

The defense sector, specifically armored vehicle manufacturing, often involves complex, specialized components. While sole-sourcing can be justified for unique capabilities, it necessitates rigorous oversight to ensure fair pricing and value for taxpayer dollars.

Small Business Impact

This contract was awarded to AM General LLC, a large business. There is no indication that small businesses were involved in this specific sole-source procurement, missing an opportunity for their participation.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure the government is receiving fair value. Auditing the contractor's cost and pricing data would be prudent to validate the $45.9 million expenditure.

Related Government Programs

Military Armored Vehicle, Tank, and Tank Component Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition
Potential for inflated pricing
Limited transparency in cost justification
No small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.9 million to AM GENERAL LLC. PROCUREMENT OF SUPPLEMENTAL HIGH MOBILITY MULTIPURPOSE WHEELED VEHICLE (HMMWV) EXPANDED CAPACITY VEHICLE (ECV) CAPABILITY EXPANSION KITS (CONTRACT OPTION).

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 $45.9 million.

What is the period of performance?

Start: 2017-09-21. End: 2018-01-29.

What is the justification for awarding this contract sole-source, and what steps were taken to ensure fair and reasonable pricing without competition?

The justification for a sole-source award typically involves unique capabilities or urgent needs. Without competitive bids, the government must rely on detailed cost proposals, historical pricing, or independent government cost estimates to ensure fair and reasonable pricing. A thorough review of AM General's pricing structure and profit margins would be essential to validate the $45.9 million expenditure.

What is the long-term cost implication of sole-sourcing HMMWV upgrades, and could this approach lead to higher overall fleet modernization costs?

Sole-sourcing can lead to higher long-term costs if not managed carefully. Without competitive pressure, contractors may not be incentivized to reduce prices over time. This could result in the Army paying more for future upgrades or replacements than if a competitive process had been used, potentially impacting the overall budget for fleet modernization.

How does the awarded price of $45.9 million compare to the estimated value or previous procurements of similar HMMWV capability expansion kits?

Benchmarking this $45.9 million award is challenging due to the sole-source nature. A comparison would require access to internal government cost estimates, data from previous sole-source awards for similar kits, or industry benchmarks for HMMWV upgrades. Without this comparative data, assessing the value for money is difficult and relies heavily on the contractor's provided cost breakdown.

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: W56HZV17R0173

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: KPS Capital Partners, LP (UEI: 071159078)

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: $46,701,312

Exercised Options: $45,881,838

Current Obligation: $45,881,838

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline