Army National Guard awards $59.9M contract for HMMWV recapitalization to AM General LLC

Contract Overview

Contract Amount: $59,910,577 ($59.9M)

Contractor: AM General LLC

Awarding Agency: Department of Defense

Start Date: 2018-09-24

End Date: 2019-10-31

Contract Duration: 402 days

Daily Burn Rate: $149.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RECAPITALIZATION OF HMMWVS FOR THE ARMY NATIONAL GUARD; 300 EA M1165A1B3 AND 30 EA M1152A1B2

Place of Performance

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

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $59.9 million to AM GENERAL LLC for work described as: RECAPITALIZATION OF HMMWVS FOR THE ARMY NATIONAL GUARD; 300 EA M1165A1B3 AND 30 EA M1152A1B2 Key points: 1. Contract awarded for modernization of existing HMMWV fleet, enhancing operational readiness. 2. Focus on M1165A1B3 and M1152A1B2 variants indicates specific upgrade needs. 3. Sole-source award raises questions about potential cost efficiencies and market alternatives. 4. Fixed-price contract structure aims to control costs, but initial price needs benchmarking. 5. Limited competition may impact the government's ability to secure the best value. 6. Contract duration of 402 days suggests a focused, albeit significant, upgrade effort.

Value Assessment

Rating: fair

The contract value of $59.9 million for 330 HMMWV recapitalizations appears substantial. Without specific details on the scope of work for each variant (M1165A1B3 and M1152A1B2), a direct comparison to similar contracts is challenging. However, the average cost per vehicle is approximately $181,547. This figure needs to be benchmarked against industry standards for vehicle modernization and against other government contracts for similar services to determine if it represents good value for money. The sole-source nature of the award also limits the ability to assess competitive pricing.

Cost Per Unit: Approximately $181,547 per vehicle (330 vehicles total).

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to AM General LLC. This means that the Department of the Army did not conduct a competitive bidding process. While sole-source awards can be justified under certain circumstances (e.g., unique capabilities, urgent needs), they typically result in less price discovery and potentially higher costs for the government compared to full and open competition. The lack of competition here means taxpayers may not have benefited from the most cost-effective solution available in the market.

Taxpayer Impact: The sole-source nature of this award means taxpayers did not benefit from competitive pricing, potentially leading to a higher overall cost for the HMMWV recapitalization.

Public Impact

The Army National Guard benefits from modernized HMMWV vehicles, improving their tactical mobility and survivability. Services delivered include the recapitalization of 330 HMMWV vehicles, extending their service life. The geographic impact is primarily within the operational areas of the Army National Guard units receiving the upgraded vehicles. Workforce implications include potential employment opportunities at AM General LLC's facilities for manufacturing and technical support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Lack of transparency in the justification for a sole-source award.
Potential for higher per-unit costs due to absence of competitive bidding.
Dependence on a single contractor for critical vehicle modernization.

Positive Signals

Contract addresses a clear need for modernization of existing military assets.
Firm fixed-price contract type helps to control costs once negotiated.
AM General LLC is a known entity with established experience in HMMWV production and support.
Award supports the readiness and operational capabilities of the Army National Guard.

Sector Analysis

The contract falls within the Military Armored Vehicle, Tank, and Tank Component Manufacturing sector. This sector is characterized by specialized production, often involving sole-source or limited competition due to the unique nature of defense equipment and the established expertise of incumbent contractors. Spending in this area is driven by military modernization programs and the need to maintain and upgrade existing fleets. Benchmarking for such specialized manufacturing is often done against historical government contracts for similar platforms rather than broad commercial market rates.

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 this information, it is difficult to assess the direct impact on the small business ecosystem, though large sole-source contracts can sometimes limit opportunities for smaller specialized firms to participate.

Oversight & Accountability

Oversight for this contract would primarily 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 regarding the justification for the sole-source award and the specific technical requirements would be key to assessing accountability. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

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

Risk Flags

Sole Source Award
Lack of Competition
High Per-Unit Cost Potential

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.9 million to AM GENERAL LLC. RECAPITALIZATION OF HMMWVS FOR THE ARMY NATIONAL GUARD; 300 EA M1165A1B3 AND 30 EA M1152A1B2

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 $59.9 million.

What is the period of performance?

Start: 2018-09-24. End: 2019-10-31.

What specific upgrades are included in the recapitalization of the M1165A1B3 and M1152A1B2 HMMWV variants?

The provided data does not detail the specific technical upgrades included in the recapitalization process for the M1165A1B3 and M1152A1B2 HMMWV variants. Typically, recapitalization efforts aim to extend the service life of existing platforms by addressing obsolescence, improving performance, enhancing survivability, and incorporating new technologies. This could include upgrades to the powertrain, suspension, armor, electronics, and communication systems. A thorough review of the contract's Statement of Work (SOW) or Performance Work Statement (PWS) would be necessary to understand the precise scope of modernization for these specific HMMWV models. Without this, it's difficult to fully assess the value proposition of the $59.9 million award.

How does the per-unit cost of $181,547 for HMMWV recapitalization compare to industry benchmarks or similar government contracts?

The per-unit cost of approximately $181,547 for HMMWV recapitalization is a significant figure that requires careful benchmarking. Without detailed specifications of the upgrades performed, direct comparisons are challenging. However, historical data for similar vehicle modernization programs within the Department of Defense, or even commercial heavy vehicle refurbishment, can provide context. If this cost is substantially higher than comparable efforts, it could indicate potential inefficiencies or a lack of competitive pressure due to the sole-source award. Conversely, if the scope of work involves extensive upgrades to bring older vehicles to near-new standards, the cost might be justifiable. Further analysis would involve comparing this cost against other sole-source awards for similar services or against competitively bid programs if available.

What is the justification for awarding this contract on a sole-source basis to AM General LLC?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'SOLE SOURCE'. Federal procurement regulations allow for sole-source awards under specific circumstances, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For a defense contractor like AM General LLC, which is the original manufacturer of the HMMWV, the justification might stem from proprietary knowledge, unique tooling, specialized expertise required for the specific recapitalization process, or the need to maintain commonality with existing fleets. A formal Justification for Other Than Full and Open Competition (JOFOC) document would typically be required and should detail the rationale. Without access to this justification, it is difficult to definitively assess the necessity of the sole-source award.

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

AM General LLC has a long and established track record with the HMMWV platform, having been the original manufacturer and primary supplier for decades. They have been involved in various production, upgrade, and sustainment contracts for the HMMWV fleet across different branches of the U.S. military. Their experience includes delivering new HMMWV variants, providing spare parts, and performing maintenance and repair services. This extensive history suggests they possess the necessary technical expertise, manufacturing capabilities, and institutional knowledge to undertake complex recapitalization efforts. However, the performance and cost-effectiveness of their previous contracts, particularly sole-source ones, would be crucial for a comprehensive assessment.

What are the potential risks associated with a sole-source contract for vehicle recapitalization?

The primary risk associated with a sole-source contract for vehicle recapitalization is the potential for reduced value for money due to a lack of competition. Without competing bids, the government may pay a higher price than necessary. There's also a risk of complacency from the contractor, potentially leading to less focus on efficiency or innovation. Furthermore, sole-source awards can limit opportunities for other capable companies, including small businesses, to enter the market or gain experience. Dependence on a single supplier can also create supply chain vulnerabilities if that supplier faces production issues or financial instability. Finally, the absence of a competitive process can sometimes lead to less stringent oversight if not actively managed by the procuring agency.

How does this $59.9 million contract fit into the broader context of Army National Guard vehicle modernization spending?

This $59.9 million contract represents a specific investment in modernizing a portion of the Army National Guard's HMMWV fleet. The Army National Guard operates a vast inventory of vehicles, and modernization efforts are typically part of a larger, multi-year strategy to maintain readiness and address aging equipment. Spending on HMMWV recapitalization fits within broader categories of tactical wheeled vehicle sustainment and upgrade programs. The total annual spending on such programs can run into hundreds of millions or even billions of dollars across the entire Department of Defense. This particular contract addresses a specific quantity (330 vehicles) and variants, suggesting it's one component of a larger modernization plan rather than a comprehensive fleet overhaul.

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: W56HZV18R0085

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: $59,910,577

Exercised Options: $59,910,577

Current Obligation: $59,910,577

Subaward Activity

Number of Subawards: 42

Total Subaward Amount: $7,676,195

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline