Army National Guard receives 740 HMMWVs for $207M, awarded via sole-source contract to AM General LLC

Contract Overview

Contract Amount: $207,093,052 ($207.1M)

Contractor: AM General LLC

Awarding Agency: Department of Defense

Start Date: 2018-10-18

End Date: 2020-04-13

Contract Duration: 543 days

Daily Burn Rate: $381.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 740 M1152A1 HMMWVS FOR THE ARMY NATIONAL GUARD

Place of Performance

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

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $207.1 million to AM GENERAL LLC for work described as: 740 M1152A1 HMMWVS FOR THE ARMY NATIONAL GUARD Key points: 1. Value for money is difficult to assess due to the sole-source nature of the award. 2. Competition dynamics were absent, as the contract was not competed. 3. Risk indicators include potential for overpayment and lack of market-driven pricing. 4. Performance context shows a 543-day duration for delivery. 5. Sector positioning is within the defense manufacturing of armored vehicles.

Value Assessment

Rating: fair

The total award of $207 million for 740 HMMWVs averages to approximately $279,730 per vehicle. Without competitive bidding, it is challenging to benchmark this price against market rates or similar contracts. The firm fixed-price contract type offers some cost certainty, but the lack of competition raises concerns about whether the Army received the best possible value.

Cost Per Unit: Approximately $279,730 per HMMWV.

Competition Analysis

Competition Level: sole-source

This contract was awarded to AM General LLC without competition, indicated as 'NOT COMPETED'. This suggests that either only one source was capable of meeting the requirement, or a decision was made to sole-source the award for other reasons. The absence of multiple bidders means there was no opportunity for price discovery through a competitive process, potentially leading to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not have benefited from the cost savings that typically arise from a competitive bidding process. This could result in a higher overall expenditure for these vehicles than if multiple vendors had vied for the contract.

Public Impact

The primary beneficiaries are the Army National Guard units receiving the HMMWVs for operational readiness. The services delivered include the provision of 740 M1152A1 HMMWVs. The geographic impact is primarily within the United States, supporting National Guard operations. Workforce implications are related to the manufacturing and support of these military vehicles by AM General LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Lack of transparency in the justification for not competing the award.
Dependence on a single contractor for critical military vehicle supply.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Delivery of essential equipment to enhance the Army National Guard's capabilities.
AM General LLC is an established manufacturer of HMMWVs, suggesting technical capability.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on armored vehicles. The market for military vehicles is often characterized by specialized requirements and long-standing relationships between government agencies and prime contractors. Benchmarking this spending against other similar HMMWV procurements or other armored vehicle acquisitions would provide further context on its relative scale and cost-effectiveness.

Small Business Impact

The data indicates that small business participation was not a primary consideration for this specific award, as the 'sb' field is false and the 'smb' field is not applicable. There is no indication of small business set-asides or subcontracting plans being a significant factor in this sole-source procurement. The impact on the small business ecosystem is likely minimal for this particular transaction.

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 firm fixed-price structure, which caps the government's liability. Transparency is limited due to the sole-source nature, with justifications for such awards usually being internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Army Vehicle Procurement
National Guard Equipment Modernization
Tactical Wheeled Vehicles
Armored Vehicle Manufacturing
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $207.1 million to AM GENERAL LLC. 740 M1152A1 HMMWVS FOR THE ARMY NATIONAL GUARD

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 $207.1 million.

What is the period of performance?

Start: 2018-10-18. End: 2020-04-13.

What is AM General LLC's track record with the Department of Defense for HMMWV production?

AM General LLC has a long and established history as the original manufacturer of the High Mobility Multipurpose Wheeled Vehicle (HMMWV), commonly known as the Humvee. They have been supplying these vehicles to the U.S. military for decades, including various configurations and upgrades. Their track record includes fulfilling numerous contracts for HMMWV production, maintenance, and modernization programs across different branches of the armed forces. This extensive experience suggests a deep understanding of the vehicle's design, manufacturing processes, and the specific requirements of military operations. However, the long-standing sole-source relationship for certain aspects of HMMWV production has also drawn scrutiny regarding cost-effectiveness and opportunities for innovation from competitors.

How does the per-unit cost of these HMMWVs compare to other recent procurements?

The per-unit cost of approximately $279,730 for these M1152A1 HMMWVs is difficult to directly compare without knowing the specific configuration, year of manufacture, and the competitive environment of other procurements. However, historical data suggests that HMMWV costs can vary significantly. For instance, earlier models or different configurations might have had lower per-unit costs, while heavily armored variants or those with advanced systems could be substantially more expensive. The fact that this was a sole-source award to AM General LLC, the original manufacturer, may mean the price is not as competitive as it could be if other manufacturers were involved or if the contract had undergone a robust competitive bidding process. Benchmarking against similar sole-source awards for specialized military vehicles is necessary for a more accurate comparison.

What are the primary risks associated with awarding a sole-source contract for military vehicles?

The primary risks associated with awarding a sole-source contract for military vehicles include a lack of price competition, which can lead to inflated costs for the government and taxpayers. Without competing bids, there is less incentive for the contractor to offer the lowest possible price. Furthermore, sole-source awards can stifle innovation by limiting opportunities for other manufacturers to enter the market or propose alternative solutions. There's also a risk of vendor lock-in, where the government becomes overly dependent on a single supplier, potentially impacting long-term supply chain resilience and flexibility. Finally, the justification process for sole-source contracts needs to be rigorous to ensure it is truly necessary and not simply a matter of convenience, to maintain public trust and accountability.

What is the expected program effectiveness or impact of receiving these 740 HMMWVs?

The delivery of 740 M1152A1 HMMWVs is expected to significantly enhance the operational readiness and capabilities of the Army National Guard. These vehicles are designed for various missions, including troop transport, cargo hauling, and as platforms for specialized equipment. The M1152A1 variant, in particular, is often configured for enhanced protection and payload capacity compared to earlier models. Receiving a substantial number of these vehicles allows the National Guard to modernize its fleet, replace aging assets, and ensure its units are equipped to meet state and federal mission requirements. This directly impacts the Guard's ability to respond to domestic emergencies, support overseas deployments, and maintain a high level of preparedness, thereby improving overall national security posture.

How has spending on HMMWVs or similar tactical vehicles evolved over the past five years?

Spending on HMMWVs and similar tactical vehicles by the Department of Defense has seen fluctuations over the past five years, influenced by evolving military needs, budget allocations, and the strategic focus on modernization versus sustainment. While the HMMWV has been a staple, there has been a gradual shift towards exploring and procuring more modern, protected, and versatile platforms, such as the Joint Light Tactical Vehicle (JLTV), which is intended to replace many HMMWV roles. Consequently, while procurements of HMMWVs continue, particularly for National Guard units or specific applications, the overall trend might show a decrease in the volume of new HMMWV buys compared to peak years, with increased investment in the JLTV program and other specialized vehicles. However, sustainment and upgrade contracts for existing HMMWV fleets remain significant.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Macandrews & Forbes Holdings Inc.

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: $207,093,052

Exercised Options: $207,093,052

Current Obligation: $207,093,052

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $2,992,018

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV17D0071

IDV Type: IDC

Timeline