DoD awards $902.6M for vehicle transmission parts, with RENK AMERICA LLC as sole provider

Contract Overview

Contract Amount: $902,580,414 ($902.6M)

Contractor: Renk America LLC

Awarding Agency: Department of Defense

Start Date: 2020-06-12

End Date: 2025-12-11

Contract Duration: 2,008 days

Daily Burn Rate: $449.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UCA HARDWARE THOR III HMPT XMS AND ANCILLARY HARDWARE

Place of Performance

Location: MUSKEGON, MUSKEGON County, MICHIGAN, 49442

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $902.6 million to RENK AMERICA LLC for work described as: UCA HARDWARE THOR III HMPT XMS AND ANCILLARY HARDWARE Key points: 1. Significant contract value for specialized vehicle components. 2. Sole-source award raises questions about competition and potential cost efficiencies. 3. Long contract duration suggests a critical, ongoing need for these parts. 4. Focus on transmission and powertrain parts indicates a specialized niche within defense manufacturing. 5. Fixed-price contract type aims to control costs, but sole-source nature may limit savings. 6. Geographic concentration in Michigan for manufacturing.

Value Assessment

Rating: questionable

The contract's value of over $900 million for vehicle transmission parts is substantial. However, without competitive bidding, it is difficult to benchmark the value for money. The sole-source nature means there's no direct comparison to other offers, and pricing may not reflect market competition. The contract's long duration (over 2000 days) also implies a significant, sustained investment, making price scrutiny even more important.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, RENK AMERICA LLC, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and potentially lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition. Without multiple bids, there is less pressure on the contractor to offer the most competitive pricing, potentially increasing the overall cost to the government.

Public Impact

The U.S. Army benefits from a dedicated supplier for critical vehicle transmission and powertrain components. Ensures the continued operation and maintenance of military vehicles requiring these specialized parts. Supports manufacturing jobs and economic activity within Michigan, where the contractor is located. Maintains readiness for military ground vehicle fleets by securing a supply chain for essential hardware.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Long contract duration could lead to cost overruns if not managed tightly.
Lack of transparency in the sole-source justification process.
Potential for vendor lock-in due to specialized nature of parts.

Positive Signals

Firm fixed-price contract type helps to cap costs.
Long-term award provides supply chain stability for critical components.
Focus on specialized, high-demand defense manufacturing.

Sector Analysis

This contract falls within the Motor Vehicle Transmission and Power Train Parts Manufacturing sector, a critical component of the broader defense industrial base. The market for specialized military vehicle parts is often characterized by high barriers to entry due to stringent quality requirements and unique specifications. Spending in this area is directly tied to military readiness and the sustainment of existing vehicle fleets. Comparable spending benchmarks are difficult to establish due to the specialized nature and sole-source award.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' flag is also false, suggesting no specific small business subcontracting goals were mandated within the contract terms. This means opportunities for small businesses to participate as prime contractors or significant subcontractors may be limited for this particular award.

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 is limited due to the sole-source nature. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Military Vehicle Procurement
Defense Logistics Agency (DLA) Contracts
Tactical Wheeled Vehicle Programs
Army Ground Vehicle Sustainment

Risk Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $902.6 million to RENK AMERICA LLC. UCA HARDWARE THOR III HMPT XMS AND ANCILLARY HARDWARE

Who is the contractor on this award?

The obligated recipient is RENK AMERICA 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 $902.6 million.

What is the period of performance?

Start: 2020-06-12. End: 2025-12-11.

What is the specific justification for awarding this contract on a sole-source basis to RENK AMERICA LLC?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source can provide the required supplies or services, often due to unique capabilities, proprietary technology, or urgent and compelling needs. For this contract, the justification would likely detail why RENK AMERICA LLC is the only viable provider of the UCA HARDWARE THOR III HMPT XMS and ancillary hardware. Without this documentation, it's impossible to fully assess the necessity of bypassing competitive procedures. This lack of competition raises concerns about potential overpricing and limits the government's ability to explore alternative solutions or achieve better value through market forces.

How does the pricing of this contract compare to similar, competitively awarded contracts for vehicle transmission parts?

Direct comparison of pricing is not feasible for this contract due to its sole-source nature. Competitive awards allow for price discovery through multiple bids, establishing a market-driven price point. Since RENK AMERICA LLC was the only bidder solicited, there is no benchmark against which to measure the fairness or competitiveness of the pricing. While the contract is firm fixed-price, which aims to control costs, the absence of competition means the government cannot be certain it received the best possible price. Further analysis would require access to internal government cost estimates or pricing data, which is not publicly available.

What are the key risks associated with a sole-source contract of this magnitude and duration?

The primary risks associated with a sole-source contract of this magnitude ($902.6M) and duration (ending 2025) include potential overpricing, reduced innovation, and vendor lock-in. Without competitive pressure, RENK AMERICA LLC may not be incentivized to offer the lowest possible price or to innovate in its product offerings. The long-term nature of the contract could also make it difficult for the government to switch suppliers in the future, even if better alternatives emerge. Furthermore, the lack of transparency inherent in sole-source awards can obscure potential inefficiencies or cost escalations. Robust oversight and performance monitoring are crucial to mitigate these risks.

What is the historical spending pattern for UCA HARDWARE THOR III HMPT XMS and ancillary hardware with the Department of Defense?

The provided data only pertains to this specific definitive contract awarded on June 12, 2020, with an end date of December 11, 2025. It does not offer historical spending data prior to this award. To understand historical spending patterns, one would need to access contract databases for previous awards related to 'UCA HARDWARE THOR III HMPT XMS' or similar components, potentially under different contract vehicles or with different contractors. The duration of this contract (2008 days) suggests a sustained need, implying that similar procurements may have occurred previously, but this data point alone does not confirm that.

What is the significance of the PSC code (if available) and NAICS code (336350) in understanding this contract?

The NAICS code 336350, 'Motor Vehicle Transmission and Power Train Parts Manufacturing,' clearly defines the industry sector for this contract. It indicates that the procured items are specialized components for vehicle drivetrains. This classification helps in understanding the nature of the goods and the type of manufacturing involved. While the PSC code is listed as blank (''), a relevant PSC would typically further specify the product or service, such as '2530 - Transmission, Power Take-Off, and Drive Unit Parts.' The NAICS code confirms the contract supports a specific segment of the defense industrial base focused on vehicle manufacturing and maintenance.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Parts Manufacturing › Motor Vehicle Transmission and Power Train Parts Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV19R0011

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 76 S GETTY STREET, MUSKEGON, MI, 49442

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $1,902,580,413

Exercised Options: $902,580,414

Current Obligation: $902,580,414

Actual Outlays: $24,180,916

Subaward Activity

Number of Subawards: 499

Total Subaward Amount: $159,664,529

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline