DoD's $1.45B MRAP Contract with ND Defense LLC: High Cost, Limited Competition
Contract Overview
Contract Amount: $1,449,726,578 ($1.4B)
Contractor: ND Defense LLC
Awarding Agency: Department of Defense
Start Date: 2007-12-18
End Date: 2009-12-31
Contract Duration: 744 days
Daily Burn Rate: $1.9M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 10
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: CATEGORY I MRAP
Place of Performance
Location: LISLE, DUPAGE County, ILLINOIS, 60532
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $1.45 billion to ND DEFENSE LLC for work described as: CATEGORY I MRAP Key points: 1. Significant spending of $1.45 billion on MRAP vehicles. 2. ND Defense LLC is the sole awardee, raising competition concerns. 3. High per-unit cost suggests potential for cost savings. 4. The contract falls within the Defense sector, specifically armored vehicle manufacturing.
Value Assessment
Rating: questionable
The total award of $1.45 billion for 10 vehicles results in an extremely high per-unit cost. This suggests a potential lack of price negotiation or market research efficiency.
Cost Per Unit: $144,972,657.77
Competition Analysis
Competition Level: sole-source
The contract was awarded under a sole-source basis, indicating a lack of competitive bidding. This significantly limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The sole-source nature of this large contract likely resulted in higher prices than if full and open competition had been pursued, impacting taxpayer value.
Public Impact
Taxpayers funded a substantial $1.45 billion for military armored vehicles. The absence of competition raises questions about the fairness and efficiency of the procurement process. The high per-unit cost could divert funds from other critical defense needs. Lack of transparency in sole-source awards can erode public trust in government spending.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Extremely high per-unit cost
- Lack of competition
Positive Signals
- Awarded to a specific company for critical defense needs
Sector Analysis
This contract is within the Defense sector, specifically the manufacturing of military armored vehicles. Spending benchmarks for such specialized equipment can vary widely, but the per-unit cost here appears exceptionally high compared to typical vehicle procurements.
Small Business Impact
The data indicates this contract was not awarded to small businesses. The sole-source nature further limits opportunities for small businesses to participate in this significant defense procurement.
Oversight & Accountability
The sole-source award mechanism warrants scrutiny to ensure proper justification and that taxpayer funds were used efficiently. Further review of the procurement process and cost analysis is recommended.
Related Government Programs
- Military Armored Vehicle, Tank, and Tank Component Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- High per-unit cost
- Sole-source award
- Lack of competition
- Potential for cost overruns
- Limited small business participation
Tags
military-armored-vehicle-tank-and-tank-c, department-of-defense, il, delivery-order, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.45 billion to ND DEFENSE LLC. CATEGORY I MRAP
Who is the contractor on this award?
The obligated recipient is ND DEFENSE LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $1.45 billion.
What is the period of performance?
Start: 2007-12-18. End: 2009-12-31.
What was the justification for the sole-source award of this substantial contract, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. For this $1.45 billion MRAP contract, the Department of Defense would need to demonstrate why only ND Defense LLC could fulfill the requirement. Without this justification, the lack of competition raises concerns about potential overpayment and missed opportunities for better pricing through competitive bidding.
How does the per-unit cost of $144.9 million for these MRAP vehicles compare to industry benchmarks for similar armored vehicles?
A per-unit cost of $144.9 million for MRAP vehicles is exceptionally high and significantly exceeds typical benchmarks for armored vehicles, even specialized ones. Standard MRAP variants historically cost in the range of $500,000 to $1 million. This vast discrepancy suggests either a highly specialized, custom configuration, or a severe lack of cost efficiency and competitive pressure in the procurement process.
What measures were in place to ensure effective oversight and accountability given the sole-source nature and large value of this contract?
Oversight for sole-source contracts of this magnitude should involve rigorous justification reviews, independent cost analyses, and stringent performance monitoring. The Defense Contract Management Agency's involvement suggests some level of oversight. However, the lack of competition inherently reduces accountability through market forces, placing greater emphasis on the agency's internal controls and justification validation to ensure responsible spending.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 10
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Navistar International Corporation (UEI: 161984646)
Address: 4201 WINFIELD RD, WARRENVILLE, IL, 60555
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $1,451,172,603
Exercised Options: $1,451,172,603
Current Obligation: $1,449,726,578
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: M6785407D5032
IDV Type: IDC
Timeline
Start Date: 2007-12-18
Current End Date: 2009-12-31
Potential End Date: 2009-12-31 00:00:00
Last Modified: 2016-09-22
More Contracts from ND Defense LLC
- Accelerated Category I Mrap — $900.3M (Department of Defense)
- Category I Mrap — $760.1M (Department of Defense)
- 1200 Category I Mrap — $736.7M (Department of Defense)
- Long Wheel Base Rolling Chassis — $702.9M (Department of Defense)
- Category I Mrap — $702.0M (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)