DoD awards $25.4M for M1A1 Vehicle Kits, a sole-source contract with KNDS USA Inc

Contract Overview

Contract Amount: $25,366,218 ($25.4M)

Contractor: Knds USA Inc.

Awarding Agency: Department of Defense

Start Date: 2012-09-20

End Date: 2014-06-30

Contract Duration: 648 days

Daily Burn Rate: $39.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: M1A1 VEHICLE KIT

Place of Performance

Location: LYNCHBURG, LYNCHBURG CITY County, VIRGINIA, 24502

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $25.4 million to KNDS USA INC. for work described as: M1A1 VEHICLE KIT Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Significant investment in armored vehicle components suggests ongoing modernization or sustainment efforts. 3. Fixed-price contract type aims to control costs, but initial pricing requires further benchmarking. 4. The contract duration of 648 days indicates a substantial, multi-year requirement. 5. Focus on M1A1 tank components points to a specific fleet sustainment strategy. 6. Virginia is the state associated with this contract award.

Value Assessment

Rating: fair

The contract value of $25.4 million for M1A1 vehicle kits is substantial. Without specific details on the kits' components or quantities, direct comparison to similar contracts is challenging. However, the sole-source nature of this award raises concerns about potential overpayment compared to a competitively bid scenario. Benchmarking the per-unit cost against historical M1A1 upgrade or maintenance contracts would be crucial to assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or proprietary rights. The lack of competition means that the Department of Defense did not benefit from the price discovery and potential cost savings that typically arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competition. Without a competitive environment, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Army's armored vehicle fleet, ensuring operational readiness and modernization. Services delivered include the provision of kits for the M1A1 Abrams main battle tank. The geographic impact is national, supporting military operations and readiness across various deployments. Workforce implications include potential sustainment and manufacturing jobs related to armored vehicle components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Contract duration and value warrant close monitoring for cost overruns or scope creep.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to KNDS USA Inc. suggests a strategic relationship or specialized capability.
Focus on M1A1 tank components indicates support for a critical defense asset.

Sector Analysis

The defense industrial base for armored vehicles is a critical sector, involving specialized manufacturing and sustainment capabilities. Contracts for components and upgrades of platforms like the M1A1 Abrams are essential for maintaining military readiness. Spending in this area is often characterized by long-term sustainment needs and periodic modernization efforts. Comparable spending benchmarks would involve looking at other major armored vehicle platform sustainment contracts within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside. The award to KNDS USA Inc., a significant defense contractor, suggests that subcontracting opportunities for small businesses may exist, but this is not guaranteed. The impact on the small business ecosystem would depend on KNDS USA Inc.'s subcontracting plan and the availability of specialized small businesses capable of providing components or services for armored vehicle kits.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense's contracting and program management offices. Accountability measures would be tied to the firm fixed-price terms and delivery schedules. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

M1 Abrams Tank System
Armored Vehicle Manufacturing
Defense Logistics Agency
Army Combat Systems

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.4 million to KNDS USA INC.. M1A1 VEHICLE KIT

Who is the contractor on this award?

The obligated recipient is KNDS USA INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $25.4 million.

What is the period of performance?

Start: 2012-09-20. End: 2014-06-30.

What specific components are included in the M1A1 Vehicle Kit, and what is the rationale behind the sole-source award to KNDS USA Inc.?

The provided data does not specify the exact components within the M1A1 Vehicle Kit. The rationale for the sole-source award to KNDS USA Inc. is also not detailed in the given information. Typically, sole-source justifications are based on factors such as unique technical capabilities, proprietary technology, essential support for existing systems where only one source can provide the required parts or services, or urgent and compelling needs where competition is not feasible. Without further documentation, it is difficult to ascertain the precise reasons for this specific award. Further investigation into the contract's justification documentation (e.g., a Justification and Approval document) would be necessary to understand the specific rationale.

How does the $25.4 million contract value compare to historical spending on M1A1 vehicle kits or similar components?

Comparing the $25.4 million contract value requires historical data on M1A1 vehicle kits or similar components. The provided data indicates this is a definitive contract awarded on September 20, 2012, with an end date of June 30, 2014, spanning 648 days. To benchmark this value, one would need to analyze previous contracts for M1A1 kits, looking at the total value, duration, and quantity of items procured. For instance, if previous competitively awarded contracts for similar kits averaged $15 million over a similar period, this $25.4 million sole-source award might indicate a higher cost. Conversely, if the scope or complexity of these kits is significantly greater than previous procurements, the price might be justified. Accessing historical contract databases and performing a detailed cost-benefit analysis would be necessary for a robust comparison.

What are the potential risks associated with a sole-source contract of this magnitude for military vehicle components?

The primary risk associated with a sole-source contract of this magnitude is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price for the M1A1 vehicle kits. Other risks include reduced innovation, as the sole provider may have less incentive to improve products or processes, and potential vendor lock-in, making it difficult to switch suppliers in the future. There's also a risk of complacency in quality or delivery if the contractor faces no competitive threat. Furthermore, a sole-source award can raise concerns about fairness and transparency in the procurement process, potentially leading to public scrutiny.

What is the expected impact of these M1A1 vehicle kits on the operational readiness and modernization of the U.S. Army's armored fleet?

The M1A1 vehicle kits are crucial for maintaining and potentially enhancing the operational readiness and modernization of the U.S. Army's armored fleet. These kits likely contain components necessary for the upkeep, repair, or upgrade of the M1A1 Abrams main battle tank. By ensuring the availability of these kits, the Army can perform essential maintenance, address wear and tear, and potentially incorporate improvements that extend the service life or enhance the capabilities of the M1A1 tanks. This directly contributes to the fleet's ability to meet deployment requirements and maintain a technological edge against potential adversaries. The timely delivery of these kits is therefore vital for sustained combat effectiveness.

Can the performance and cost-effectiveness of KNDS USA Inc. on this contract be assessed based on available data?

Assessing the performance and cost-effectiveness of KNDS USA Inc. on this specific $25.4 million M1A1 vehicle kit contract is challenging with the provided data alone. The contract was awarded as Firm Fixed Price (FFP), which generally aims to control costs by setting a definitive price. However, the sole-source nature of the award complicates cost-effectiveness analysis, as there was no competitive benchmark. Performance assessment would typically involve reviewing delivery timelines, quality of components received, and adherence to contract specifications. Without post-award performance reports, defect data, or comparative pricing from other sources, a definitive judgment on KNDS USA Inc.'s performance and the cost-effectiveness of this particular contract is difficult. Further review of contract close-out data and any performance evaluations would be needed.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W911KF12R0013

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Knds Deutschland Gmbh & CO. KG (UEI: 315389499)

Address: 30 MILLRACE DR, LYNCHBURG, VA, 24502

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

Financial Breakdown

Contract Ceiling: $25,366,218

Exercised Options: $25,366,218

Current Obligation: $25,366,218

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline