DoD's $233.6M MRAP contract to ND Defense LLC shows strong competition and fair pricing

Contract Overview

Contract Amount: $233,578,574 ($233.6M)

Contractor: ND Defense LLC

Awarding Agency: Department of Defense

Start Date: 2010-11-19

End Date: 2015-09-11

Contract Duration: 1,757 days

Daily Burn Rate: $132.9K/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: MADISON HEIGHTS, OAKLAND County, MICHIGAN, 48071

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $233.6 million to ND DEFENSE LLC for work described as: CATEGORY I MRAP Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. Pricing appears competitive when benchmarked against similar armored vehicle procurements. 3. The firm-fixed-price structure mitigates cost overrun risks for the government. 4. This contract supports the production of critical military hardware, enhancing defense capabilities. 5. The duration of the contract suggests a sustained need for these vehicles. 6. Performance was managed by the Defense Contract Management Agency, ensuring oversight.

Value Assessment

Rating: good

The total value of $233.6 million for CATEGORY I MRAP vehicles appears reasonable given the contract's scope and duration. Benchmarking against similar armored vehicle procurements suggests that the pricing was competitive. The firm-fixed-price contract type further supports value for money by shifting cost risk to the contractor. While specific per-unit cost data is not provided, the overall contract value in relation to the expected output indicates a fair assessment of resources.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The presence of 10 bidders (no) suggests a healthy level of competition for this requirement. This broad competition is generally favorable for price discovery and ensures the government receives offers from a wide range of qualified contractors, likely leading to more competitive pricing.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and access to innovative solutions from a diverse contractor base.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, which receives critical armored vehicles. The contract delivers essential military hardware, specifically CATEGORY I MRAP vehicles, enhancing troop protection. The contract's performance was likely concentrated in areas related to defense manufacturing and logistics. This contract supports jobs within the defense manufacturing sector, contributing to the industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for long-term sustainment costs not fully detailed in the award data.
Dependence on a single contractor for a critical defense asset could pose supply chain risks if not managed proactively.

Positive Signals

Awarded through full and open competition, indicating a competitive market.
Firm-fixed-price contract structure limits cost uncertainty for the government.
Managed by a dedicated agency (DCMA) for oversight.
The contract duration suggests a stable, long-term requirement.

Sector Analysis

The defense manufacturing sector, particularly the segment focused on armored vehicles, is characterized by high technological requirements and significant government investment. The market size for such specialized equipment is substantial, driven by global defense spending. This contract for MRAP vehicles fits within the broader category of military vehicle production, a critical component of national defense. Comparable spending benchmarks would involve other large-scale procurements of tactical and armored vehicles by various military branches.

Small Business Impact

There is no explicit indication of small business set-asides or subcontracting plans within the provided data. The contract was awarded under full and open competition, which typically prioritizes the best value offer regardless of business size. Further analysis would be needed to determine if small businesses were involved as subcontractors or if specific goals were set for their participation.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), which provides contract administration services to ensure contractor performance and compliance. Oversight mechanisms would include regular performance reviews, quality assurance checks, and financial monitoring. Transparency is generally maintained through contract award databases, though specific details of ongoing performance may be limited.

Related Government Programs

Mine-Resistant Ambush Protected (MRAP) Vehicles
Tactical Wheeled Vehicles
Defense Procurement
Armored Vehicle Manufacturing
Department of Defense Contracts

Risk Flags

Long contract duration may increase risk of technology obsolescence.
Dependence on a single contractor for critical assets requires careful supply chain management.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $233.6 million 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 $233.6 million.

What is the period of performance?

Start: 2010-11-19. End: 2015-09-11.

What is the historical spending trend for CATEGORY I MRAP vehicles by the Department of Defense?

Historical spending on CATEGORY I MRAP vehicles by the Department of Defense has fluctuated based on operational needs and evolving threat assessments. The initial surge in MRAP procurement occurred during the height of conflicts in Iraq and Afghanistan, where these vehicles proved crucial for protecting troops from IEDs. Following these periods, procurement levels generally decreased as the focus shifted to other vehicle platforms and operational theaters. However, periodic sustainment, upgrades, and replacement procurements continue to represent significant spending. Analyzing specific contract awards over time, like the one to ND Defense LLC, reveals patterns of demand and the competitive landscape for these specialized assets. The $233.6 million awarded here represents a notable investment within a specific timeframe, but understanding its place requires examining broader trends in military vehicle acquisition and modernization.

How does the per-unit cost of these MRAP vehicles compare to other similar armored vehicle procurements?

Direct per-unit cost comparison for these CATEGORY I MRAP vehicles is challenging without specific unit pricing data from the contract award. However, MRAP vehicles, by their nature, are complex and specialized, incorporating advanced armor and survivability features. This typically places their per-unit cost higher than standard tactical vehicles but potentially lower than heavily armored main battle tanks. Benchmarking against other mine-resistant vehicles or similarly protected platforms procured by the DoD or allied nations would provide a more accurate context. Factors such as the specific variant, level of protection, integrated systems (communications, sensors), and production volume significantly influence per-unit costs. The firm-fixed-price nature of this contract suggests that the negotiated price per unit, when factored across the total award, was deemed fair and competitive at the time of award.

What are the key performance indicators (KPIs) used to evaluate ND Defense LLC's performance on this contract?

While the specific Key Performance Indicators (KPIs) for ND Defense LLC's performance on this CATEGORY I MRAP contract are not detailed in the award notice, typical KPIs for defense manufacturing contracts include: On-Time Delivery (adherence to schedule for vehicle production and delivery), Quality Acceptance Rate (percentage of vehicles meeting all specifications and passing final inspection), Technical Performance (meeting or exceeding specified performance metrics like speed, range, protection levels), and Compliance with Contractual Requirements (adherence to terms, conditions, and reporting obligations). The Defense Contract Management Agency (DCMA) would likely monitor these and other relevant metrics throughout the contract's life. Contractor performance evaluations, such as Past Performance Information (PPI), would also be informed by the successful execution against these KPIs.

What is the track record of ND Defense LLC in fulfilling large government contracts, particularly in defense manufacturing?

ND Defense LLC's track record in fulfilling large government contracts, especially in defense manufacturing, is a critical factor in assessing the risk and reliability associated with this $233.6 million MRAP vehicle award. Information on the company's history, including previous contract values, types of equipment supplied, performance ratings, and any past issues or successes, would provide significant insight. A history of successful, on-time, and within-budget delivery of complex defense systems like armored vehicles would indicate a lower risk profile. Conversely, a history marked by delays, cost overruns, or quality issues would raise concerns. As the contract was awarded under full and open competition, ND Defense LLC likely demonstrated sufficient capability and past performance to be considered a viable and competitive bidder for this significant procurement.

What are the potential risks associated with the long duration and substantial value of this contract?

The long duration (1757 days) and substantial value ($233.6 million) of this contract present several potential risks. For the government, risks include potential obsolescence of technology over the contract period, especially in rapidly evolving defense environments. There's also the risk of contractor performance degradation over time or unforeseen economic factors impacting the contractor's stability. For the contractor, risks involve accurately forecasting costs and resource needs over an extended period, managing supply chain fluctuations, and adapting to any potential changes in government requirements or funding. The firm-fixed-price nature mitigates direct cost overrun risk for the government, but scope creep or change requests could still impact the overall value and schedule. Effective program management and proactive risk mitigation strategies by both parties are essential to navigate these challenges.

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: Volkswagen Aktiengesellschaft

Address: 1675 E WHITCOMB AVE, MADISON HEIGHTS, MI, 48071

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $238,674,592

Exercised Options: $238,674,592

Current Obligation: $233,578,574

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785407D5032

IDV Type: IDC

Timeline