Department of Defense awards $94.7M contract for military vehicle manufacturing, with 10 offers received

Contract Overview

Contract Amount: $94,679,743 ($94.7M)

Contractor: ND Defense LLC

Awarding Agency: Department of Defense

Start Date: 2009-11-20

End Date: 2011-12-31

Contract Duration: 771 days

Daily Burn Rate: $122.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: OTHER DIRECT COSTS

Place of Performance

Location: WARRENVILLE, DUPAGE County, ILLINOIS, 60555

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $94.7 million to ND DEFENSE LLC for work described as: OTHER DIRECT COSTS Key points: 1. Contract value represents a significant investment in armored vehicle production. 2. The firm-fixed-price structure shifts cost risk to the contractor. 3. A high number of offers suggests a competitive market for this type of manufacturing. 4. The contract duration of over two years indicates a substantial production run. 5. The award was made by the Department of the Navy, a major defense consumer. 6. The specific product line falls under military armored vehicle manufacturing.

Value Assessment

Rating: good

The contract value of $94.7 million for military vehicle manufacturing appears reasonable given the scope and duration. Benchmarking against similar large-scale defense manufacturing contracts would provide more precise value-for-money assessment. The firm-fixed-price type suggests the contractor bears cost overruns, which is generally favorable for the government. However, without detailed cost breakdowns or comparisons to industry standards for similar armored vehicles, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The receipt of 10 offers suggests a healthy level of competition within the defense manufacturing sector for this specific requirement. A robust competitive environment typically leads to better pricing and innovation as contractors vie for the award.

Taxpayer Impact: The high number of bidders in this full and open competition is beneficial for taxpayers, as it likely drove down prices and ensured the government received competitive proposals. This process helps prevent inflated costs and promotes efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. military forces requiring armored vehicles. The contract supports the production of military armored vehicles and their components. The geographic impact is likely concentrated in Illinois, where the contractor is based. This contract will support jobs in the defense manufacturing sector, particularly in Illinois.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the firm-fixed-price contract does not adequately account for all production complexities.
Dependence on a single contractor for a critical defense component could pose supply chain risks.
Ensuring the delivered vehicles meet stringent military specifications and performance requirements.

Positive Signals

The award was made under full and open competition, indicating a competitive process.
The firm-fixed-price contract shifts cost risk to the contractor.
The contractor is based in Illinois, potentially supporting regional economic activity.
The contract duration suggests a stable production schedule.

Sector Analysis

The defense manufacturing sector is characterized by high barriers to entry, complex supply chains, and significant government oversight. This contract falls within the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' sub-sector. Spending in this area is driven by modernization efforts and operational readiness requirements. Comparable spending benchmarks would involve analyzing other large-scale contracts for vehicle production or major defense system components.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of armored vehicle manufacturing, it is likely that the prime contractor is a large business. Subcontracting opportunities for small businesses may exist within the supply chain for components or specialized services, but this is not explicitly detailed in the award information.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified goods. Transparency is generally maintained through contract award databases, though detailed cost and performance data may be considered sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Tactical Wheeled Vehicle Programs
Combat Vehicle Modernization
Armored Personnel Carrier Production
Defense Industrial Base Manufacturing

Risk Flags

Potential for cost overruns
Supply chain dependency
Quality assurance challenges

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.7 million to ND DEFENSE LLC. OTHER DIRECT COSTS

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 $94.7 million.

What is the period of performance?

Start: 2009-11-20. End: 2011-12-31.

What is the track record of ND Defense LLC in fulfilling defense manufacturing contracts?

Information regarding ND Defense LLC's specific track record is not provided in the given data. A comprehensive assessment would require reviewing past performance evaluations, contract completion history, and any instances of disputes or contract modifications for this entity. Federal procurement databases and contractor performance systems (like the Contractor Performance Assessment Reporting System - CPARS) would be the primary sources for such information. Without this data, it's difficult to gauge their reliability and past success in delivering similar defense products on time and within budget.

How does the awarded amount compare to similar contracts for armored vehicle manufacturing?

The awarded amount of $94.7 million for military armored vehicles needs to be benchmarked against comparable contracts. Factors such as the type of vehicle (e.g., tank, personnel carrier, reconnaissance vehicle), the quantity ordered, the specific technological capabilities, and the contract duration are crucial for a fair comparison. For instance, a contract for a few highly advanced main battle tanks would naturally differ significantly from one for hundreds of lighter armored personnel carriers. Analyzing historical data for similar procurements by the Department of Defense or other military branches would reveal if this price point is within the expected range for the specified military hardware.

What are the primary risks associated with this firm-fixed-price contract?

The primary risk with a firm-fixed-price (FFP) contract, while generally favorable to the government by capping costs, lies in the contractor's ability to accurately estimate all production expenses. If ND Defense LLC underestimated material costs, labor, or unforeseen production challenges, they could face financial losses, potentially impacting their ability to deliver or their willingness to bid on future contracts. Conversely, if their estimate was overly conservative, the government might have overpaid. Another risk is the potential for the contractor to cut corners on quality to maintain profitability, necessitating robust government quality assurance and inspection processes.

How effective is the 'full and open competition' process in ensuring value for this type of defense contract?

The 'full and open competition' process is generally considered highly effective in ensuring value for defense contracts, especially for established manufacturing categories like armored vehicles. By allowing all responsible sources to compete, it fosters a competitive environment that drives down prices and encourages innovation. The receipt of 10 offers in this instance suggests the market is robust enough for meaningful competition. This process helps the government secure the best possible combination of price, quality, and delivery schedule, thereby maximizing taxpayer value. However, the effectiveness is contingent on clear requirement definition and fair evaluation criteria.

What are the historical spending patterns for military armored vehicle manufacturing by the Department of Defense?

Historical spending patterns for military armored vehicle manufacturing by the Department of Defense are typically substantial and cyclical, driven by modernization programs, wartime needs, and fleet replacement schedules. Major spending often occurs during periods of increased geopolitical tension or when new vehicle platforms are introduced. The DoD procures a wide range of armored vehicles, from main battle tanks to infantry fighting vehicles and specialized support vehicles. Analyzing past budgets and contract awards within this specific North American Industry Classification System (NAICS) code (336992) would reveal trends in annual spending, key contractors, and the average value and duration of such contracts over time.

What is the significance of the contract being awarded to a firm in Illinois?

The significance of the contract being awarded to a firm in Illinois relates primarily to economic impact and potentially regional defense industrial base support. Awarding contracts to domestic manufacturers, including those in Illinois, contributes to job creation, technological development, and economic activity within that state. It also helps maintain a skilled workforce and manufacturing capabilities within the U.S. defense industrial base. From a strategic perspective, geographic distribution of defense contractors can sometimes be considered to ensure broader industrial capacity, though the primary driver for award is typically best value based on technical merit and 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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: M6785407R5000

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: $94,679,743

Exercised Options: $94,679,743

Current Obligation: $94,679,743

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785407D5032

IDV Type: IDC

Timeline