Daimler Truck North America awarded $43.7M for 191 military trucks, a sole-source procurement

Contract Overview

Contract Amount: $43,669,680 ($43.7M)

Contractor: Daimler Truck North America LLC

Awarding Agency: Department of Defense

Start Date: 2011-07-13

End Date: 2012-12-30

Contract Duration: 536 days

Daily Burn Rate: $81.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 191 M915A5 LIINE HAUL VEHICLES REQUIRED FOR CONUS USE.

Place of Performance

Location: PORTLAND, MULTNOMAH County, OREGON, 97217

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $43.7 million to DAIMLER TRUCK NORTH AMERICA LLC for work described as: 191 M915A5 LIINE HAUL VEHICLES REQUIRED FOR CONUS USE. Key points: 1. The contract value of $43.7 million for 191 vehicles suggests a per-unit cost of approximately $228,637. 2. This procurement was sole-sourced, raising questions about potential price overruns and lack of competitive pressure. 3. The contract duration of 536 days indicates a moderate-term supply chain commitment. 4. The vehicles are designated for CONUS use, implying domestic operational requirements. 5. The absence of small business set-asides suggests this contract did not prioritize small business participation. 6. The firm-fixed-price contract type shifts cost risk to the contractor, but the sole-source nature may limit its effectiveness.

Value Assessment

Rating: fair

The per-unit cost of approximately $228,637 for these military trucks appears high when compared to commercial heavy-duty truck pricing. However, the specialized nature of military vehicles, including armor and specific functionalities, can justify a significant cost premium. Without detailed specifications and a comparison to similar military vehicle procurements, a definitive value assessment is challenging. The sole-source nature of this award limits the ability to benchmark against competitive bids.

Cost Per Unit: Approximately $228,637 per vehicle (based on total contract value and quantity).

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This approach is typically used when only one responsible source can satisfy the agency's needs. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government compared to a competed award.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding, as the government did not benefit from potential cost savings that arise from multiple offers.

Public Impact

The primary beneficiaries are the U.S. Army units requiring logistical support vehicles for CONUS operations. The contract delivers 191 M915A5 Line Haul Vehicles, essential for transporting equipment and supplies. The geographic impact is primarily within the continental United States, supporting domestic military readiness. The contract supports jobs within Daimler Truck North America and its supply chain.

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 sole-sourcing.
No explicit small business subcontracting goals mentioned.

Positive Signals

Firm-fixed-price contract type provides cost certainty to the government.
Daimler Truck North America is an established manufacturer with experience in heavy-duty vehicles.

Sector Analysis

The military vehicle manufacturing sector is a specialized segment of the broader automotive industry. This contract falls under the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' North American Industry Classification System (NAICS) code. Spending in this sector is heavily influenced by defense budgets and geopolitical needs. Comparable spending benchmarks would involve other large-scale military vehicle procurements, which are often subject to unique specifications and competitive dynamics.

Small Business Impact

This contract does not appear to have included a small business set-aside. The sole-source nature of the award further limits opportunities for small businesses to participate directly or indirectly through subcontracting, unless specifically mandated by the prime contractor. Analysis of subcontracting plans would be necessary to determine any potential impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which holds the contractor responsible for performance within the agreed price. Transparency regarding the sole-source justification and the specific technical requirements would be key areas for oversight assessment.

Related Government Programs

Military Truck Procurement
Logistics Vehicle Systems
Department of Defense Vehicle Contracts
Heavy-Duty Truck Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potentially high per-unit cost

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.7 million to DAIMLER TRUCK NORTH AMERICA LLC. 191 M915A5 LIINE HAUL VEHICLES REQUIRED FOR CONUS USE.

Who is the contractor on this award?

The obligated recipient is DAIMLER TRUCK NORTH 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 $43.7 million.

What is the period of performance?

Start: 2011-07-13. End: 2012-12-30.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under circumstances such as unique capabilities, urgent needs, or when only one responsible source is available. For this contract, the Army would have had to document why other manufacturers could not meet the requirements for the M915A5 Line Haul Vehicles. Without this documentation, it is difficult to assess if the sole-source decision was appropriate and if it truly represented the best value for the government, or if it was a missed opportunity for competitive savings.

How does the per-unit cost compare to similar military truck procurements?

The calculated per-unit cost of approximately $228,637 is a significant figure. To provide a precise comparison, data on similar military line-haul vehicles procured under comparable conditions (e.g., armor, specific payload capacities, technological features) would be needed. Commercial heavy-duty trucks typically range from $100,000 to $180,000, depending on specifications. The premium here likely reflects military-grade enhancements, survivability features, and potentially specialized support packages. However, without a benchmark against other sole-source or competed military truck contracts of similar capability, it's challenging to definitively state if this represents good or poor value.

What are the potential risks associated with a sole-source procurement of this magnitude?

The primary risk of a sole-source procurement is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or optimize costs. There's also a risk that the government may not be aware of or have access to the best available technology or solutions if alternatives were not explored. Furthermore, sole-source awards can sometimes face scrutiny regarding fairness and transparency, potentially leading to protests or public perception issues. For this specific contract, the risk is that the Department of the Army may have overpaid for the 191 M915A5 vehicles due to the absence of competing bids.

What is the track record of Daimler Truck North America in fulfilling government contracts, particularly for military vehicles?

Daimler Truck North America, as a major manufacturer of commercial vehicles, has a significant track record. While specific details on their past performance for military vehicle contracts are not provided in this data snippet, their established presence in the heavy-duty truck market suggests a capacity for large-scale production and adherence to quality standards. Government contracts often involve rigorous performance metrics, delivery schedules, and quality assurance protocols. A deeper dive into their contract history with the Department of Defense or other government agencies would reveal their specific performance trends, including on-time delivery, defect rates, and overall customer satisfaction in fulfilling similar requirements.

What are the implications of the firm-fixed-price contract type for this sole-source award?

A firm-fixed-price (FFP) contract type is generally favorable to the government as it places the risk of cost overruns on the contractor. This means Daimler Truck North America is obligated to deliver the 191 M915A5 vehicles for the agreed-upon price of $43.7 million, regardless of their actual costs. However, in a sole-source scenario, the effectiveness of FFP in driving down costs is diminished because there was no competitive process to establish a baseline price. While the government has cost certainty, the initial price negotiated might be higher than it would have been in a competitive environment. The contractor still has an incentive to manage costs efficiently to maximize profit, but the government lacks the leverage of multiple bids to ensure that price.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Daimlerchrysler AG (UEI: 498999044)

Address: 4747 N CHANNEL AVE, PORTLAND, OR, 90

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

Financial Breakdown

Contract Ceiling: $43,669,680

Exercised Options: $43,669,680

Current Obligation: $43,669,680

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV11D0107

IDV Type: IDC

Timeline