DoD's $675.8M MRAP contract awarded to ND Defense LLC shows strong competition and fair pricing

Contract Overview

Contract Amount: $675,756,250 ($675.8M)

Contractor: ND Defense LLC

Awarding Agency: Department of Defense

Start Date: 2008-03-14

End Date: 2010-05-31

Contract Duration: 808 days

Daily Burn Rate: $836.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CATEGORY I MRAP (ARMY)

Place of Performance

Location: WARRENVILLE, DUPAGE County, ILLINOIS, 60555

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $675.8 million to ND DEFENSE LLC for work described as: CATEGORY I MRAP (ARMY) Key points: 1. Contract value of $675.8M over two years indicates significant investment in armored vehicle capabilities. 2. Full and open competition suggests a robust market for MRAP vehicles. 3. Firm Fixed Price contract type mitigates cost overrun risks for the government. 4. The contract was awarded to a single entity, ND Defense LLC, despite open competition. 5. Performance period of 808 days suggests a substantial production and delivery schedule. 6. The contract falls under the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' NAICS code.

Value Assessment

Rating: good

The contract's total value of $675.8M for MRAP vehicles appears reasonable given the scale and nature of military equipment. Benchmarking against similar large-scale defense procurements for armored vehicles would provide further context on value for money. The firm fixed-price structure is a positive indicator for cost control, though specific per-unit costs are not detailed here.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were eligible to bid. The fact that 10 bids were received suggests a healthy level of interest and a competitive marketplace for these specialized vehicles. This broad competition is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: A competitive bidding process for this significant contract helps ensure taxpayer dollars are used efficiently by driving down prices and encouraging innovation among defense contractors.

Public Impact

The primary beneficiaries are the U.S. Army, receiving crucial armored vehicles for personnel protection. The contract delivers Mine-Resistant Ambush Protected (MRAP) vehicles, enhancing soldier safety in combat zones. Geographic impact is national, with potential for deployment to various operational theaters. Workforce implications include employment opportunities within ND Defense LLC and its supply chain, particularly in Illinois.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed per-unit cost breakdown makes it difficult to assess true value for money.
Award to a single entity despite open competition warrants further investigation into bid evaluation.
The contract's duration and value could indicate potential for contractor lock-in if not managed carefully.

Positive Signals

Full and open competition signals a healthy market and potential for competitive pricing.
Firm Fixed Price contract type is a strong indicator of cost control and risk mitigation.
Awarding to ND Defense LLC, a known entity in defense manufacturing, suggests a degree of reliability.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on armored vehicles. The market for such specialized military hardware is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Comparable spending benchmarks would involve looking at other large-scale vehicle procurement contracts within the Department of Defense, which often run into hundreds of millions or billions of dollars.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the primary award went to a large business, and the impact on the small business ecosystem would depend on ND Defense LLC's subcontracting practices, which are not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting oversight mechanisms, including program management reviews and potentially the Defense Contract Audit Agency (DCAA) for financial audits. Transparency is facilitated by contract award databases, but detailed performance metrics and cost breakdowns may be less accessible to the public. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

MRAP Vehicle Program
Tactical Wheeled Vehicles
Armored Personnel Carriers
Department of Defense Procurement

Risk Flags

Potential for production delays
Supply chain vulnerability
Evolving threat landscape impacting vehicle relevance
Contractor financial stability risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $675.8 million to ND DEFENSE LLC. CATEGORY I MRAP (ARMY)

Who is the contractor on this award?

The obligated recipient is ND DEFENSE LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $675.8 million.

What is the period of performance?

Start: 2008-03-14. End: 2010-05-31.

What is the historical spending pattern for MRAP vehicles by the Department of Defense?

The Department of Defense has spent billions of dollars on MRAP vehicles, particularly following the surge in demand during the conflicts in Iraq and Afghanistan. Initial procurements were rapid and massive, with thousands of vehicles acquired. Over time, spending has shifted towards upgrades, sustainment, and newer vehicle platforms, but the MRAP program remains a significant category of expenditure. Analyzing historical data reveals fluctuations tied to operational needs, technological advancements, and budget allocations. For instance, peak spending occurred in the late 2000s and early 2010s, with subsequent years focusing on modernization and replacement strategies. This particular $675.8M contract represents a substantial, albeit not unprecedented, investment within this ongoing program.

How does the per-unit cost of these MRAP vehicles compare to similar contracts?

Without specific per-unit cost data for this $675.8M contract, a direct comparison is challenging. However, historical data for MRAP vehicles shows significant price variations depending on the specific model, configuration, and the volume ordered. Early MRAP variants, procured under urgent operational needs, sometimes had higher per-unit costs due to rapid development and production. As the program matured and competition increased, average per-unit costs generally decreased. To accurately benchmark, one would need to compare the specific MRAP variant, its features (e.g., protection levels, payload capacity), and the quantity purchased under this contract against similar procurements from other manufacturers or different contract awards for the same or comparable vehicles. The firm fixed-price nature suggests a negotiated price that aims to be competitive at the time of award.

What is ND Defense LLC's track record with similar defense contracts?

ND Defense LLC, as a contractor in the defense sector, likely has a history of producing or supplying military vehicles and components. A thorough assessment would require examining their past performance on contracts of similar size, scope, and complexity. Key indicators include on-time delivery, adherence to quality standards, and financial performance. Information on past contract awards, modifications, and any performance issues or disputes would be crucial. For a contract of this magnitude ($675.8M), the government would have conducted a review of ND Defense LLC's past performance and capabilities to ensure they could meet the demanding requirements of producing and delivering MRAP vehicles.

What are the primary risks associated with this MRAP contract?

Key risks include potential production delays, quality control issues, and supply chain disruptions, especially given the complexity of armored vehicle manufacturing. There's also a risk related to the evolving threat landscape, which might necessitate modifications or render certain MRAP capabilities less effective over time, potentially leading to future upgrade or replacement costs. Furthermore, reliance on a single contractor, even after open competition, can pose risks if that contractor faces financial instability or operational challenges. The firm fixed-price nature, while beneficial, can also create risk for the contractor if costs escalate unexpectedly, potentially impacting their motivation or ability to deliver.

How does the competition level (10 bidders) impact the value for taxpayers?

A high number of bidders, such as the 10 received for this contract, generally signifies robust competition. This increased competition typically drives down prices as contractors vie for the award, leading to better value for taxpayers. It also encourages innovation and efficiency among bidders. The government benefits from a wider range of technical solutions and pricing structures, allowing for a more informed selection process. While the award went to one entity, the initial competitive field suggests that the negotiated price is likely more favorable than it would have been in a sole-source or limited-competition scenario. This process helps ensure that taxpayer funds are utilized effectively.

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, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $675,756,250

Exercised Options: $675,756,250

Current Obligation: $675,756,250

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785407D5032

IDV Type: IDC

Timeline