DoD awards $310M+ for medium tactical vehicles, with limited competition and a firm fixed price structure

Contract Overview

Contract Amount: $310,128,424 ($310.1M)

Contractor: ND Defense LLC

Awarding Agency: Department of Defense

Start Date: 2015-08-31

End Date: 2022-10-31

Contract Duration: 2,618 days

Daily Burn Rate: $118.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MODIFICATION ISSUED TO PROVIDED TAC CODES FOR SHIPMENT OF MEDIUM TACTICAL VEHICLES.

Place of Performance

Location: LISLE, DUPAGE County, ILLINOIS, 60532

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $310.1 million to ND DEFENSE LLC for work described as: MODIFICATION ISSUED TO PROVIDED TAC CODES FOR SHIPMENT OF MEDIUM TACTICAL VEHICLES. Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing and potential cost efficiencies. 2. The firm fixed-price structure offers cost certainty for the government but may limit flexibility. 3. Long contract duration of over 2,000 days suggests a sustained need for these vehicles. 4. The primary contractor is based in Illinois, indicating a concentration of this defense manufacturing capability. 5. The contract's value places it as a significant procurement within the heavy-duty truck manufacturing sector. 6. Lack of small business participation noted, suggesting limited opportunities for smaller firms in this specific award.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the 'not available for competition' status. However, the total award of over $310 million for medium tactical vehicles over a multi-year period indicates a substantial investment. Without competitive bids, it's difficult to definitively assess if the pricing represents optimal value for money. The firm fixed-price nature provides budget predictability, but the absence of comparative pricing from other vendors makes a direct value-for-money assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed openly. This approach is typically used when only one vendor can meet the specific requirements, or for reasons of national security or urgency. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids had been solicited. The government likely engaged in direct negotiation to establish the terms and pricing.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the lowest possible price, potentially resulting in less efficient use of public funds.

Public Impact

The primary beneficiary is the Department of Defense, which receives critical medium tactical vehicles for its operations. These vehicles are essential for troop transport, logistics, and various operational support roles. The geographic impact is primarily within the United States, with the contractor located in Illinois. The contract supports jobs within the heavy-duty truck manufacturing sector, particularly at the awarded company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Long-term contract duration could lead to vendor lock-in and reduced flexibility for future procurements.
No indication of small business subcontracting goals, potentially limiting opportunities for smaller enterprises.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to a single, established vendor may ensure reliable delivery of specialized vehicles.
Long contract duration suggests a consistent and ongoing need for these critical assets.

Sector Analysis

The heavy-duty truck manufacturing sector is a critical component of the industrial base, supporting both commercial and government needs. This contract falls within the defense segment of this sector, focusing on specialized vehicles for military applications. The value of this single award is substantial, representing a significant portion of a company's output or a notable investment for the government. Comparable spending benchmarks in this area would typically involve other large-scale vehicle procurements for military or large fleet operators.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting to small businesses. The award to a single, likely large, entity suggests that opportunities for small businesses within this specific procurement might be limited. This could mean that the ecosystem of small businesses that typically support defense manufacturing may not be directly benefiting from this particular contract, unless they are part of the awarded contractor's established supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). The firm fixed-price nature provides a degree of accountability regarding the final cost. Transparency is limited due to the sole-source nature of the award. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance or award process.

Related Government Programs

Tactical Wheeled Vehicles
Heavy Duty Truck Manufacturing
Defense Logistics Support
Military Vehicle Procurement

Risk Flags

Sole-source award may indicate limited market availability or specific technical requirements.
Lack of competition raises concerns about potential overpricing.
Long contract duration could lead to vendor lock-in and reduced flexibility.
No explicit small business set-aside or subcontracting plan mentioned.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $310.1 million to ND DEFENSE LLC. MODIFICATION ISSUED TO PROVIDED TAC CODES FOR SHIPMENT OF MEDIUM TACTICAL VEHICLES.

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 $310.1 million.

What is the period of performance?

Start: 2015-08-31. End: 2022-10-31.

What is the track record of ND Defense LLC in fulfilling similar government contracts?

Information regarding ND Defense LLC's specific track record with similar government contracts is not detailed in the provided data. However, the award of a substantial contract valued at over $310 million suggests a level of capability and experience deemed sufficient by the Department of Defense to meet their requirements for medium tactical vehicles. Further investigation into past performance reviews, delivery history on previous contracts, and any documented issues or successes would be necessary for a comprehensive assessment of their track record. The duration of this contract (over 2,000 days) also implies a history of engagement or a long-term strategic need that the contractor is expected to fulfill.

How does the pricing of this contract compare to market rates for similar medium tactical vehicles?

Direct comparison of pricing is difficult due to the sole-source nature of this award. Without competitive bids, there is no market-driven benchmark established through this procurement process. To assess value, one would need to compare the per-unit cost (if derivable) to publicly available pricing for comparable vehicles from other manufacturers or to historical pricing data for similar government procurements. The firm fixed-price structure offers cost certainty but does not inherently guarantee the lowest possible price. Analysis would require access to detailed cost breakdowns or comparative data from the open market or other government contracts.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude include potential overpayment due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. Taxpayers may bear a higher cost than necessary. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, making it difficult to switch or negotiate better terms in the future. Furthermore, if the sole-source justification is weak, it could indicate potential inefficiencies or even impropriety in the acquisition process.

How effective is the firm fixed-price contract type in managing costs for this specific procurement?

The firm fixed-price (FFP) contract type is generally effective in providing cost certainty for the government, as the contractor assumes the risk of cost overruns. For this procurement of medium tactical vehicles, FFP means the Department of Defense knows the total cost upfront, simplifying budgeting and financial planning. However, the effectiveness in managing costs is somewhat diminished by the sole-source nature of the award. While the price is fixed, it may not be the most competitive price achievable. The contractor has less incentive to reduce costs below the agreed-upon price, as their profit is already determined. Therefore, while FFP provides budget predictability, it doesn't guarantee cost efficiency in the absence of competition.

What are the historical spending patterns for medium tactical vehicles within the Department of Defense?

Historical spending patterns for medium tactical vehicles within the Department of Defense are typically characterized by large, multi-year procurements aimed at maintaining and modernizing fleet capabilities. These patterns often involve significant investments due to the specialized nature and high cost of military-grade vehicles. Spending can fluctuate based on operational tempo, strategic needs, and budget allocations. Contracts are often awarded through competitive bidding processes, but sole-source awards do occur for specific requirements or when only one vendor can meet the need. Analyzing historical data would reveal trends in contract values, quantities procured, and the types of vehicles acquired over time.

What are the implications of the contract's duration (2618 days) on program management and future needs?

A contract duration of 2618 days (approximately 7 years) implies a long-term, sustained requirement for medium tactical vehicles. This extended period allows for stable production planning for the contractor and ensures a consistent supply for the DoD. However, it also presents challenges. Program management must effectively oversee performance over an extended timeframe, ensuring quality and adherence to specifications. From a future needs perspective, such a long duration might mean the vehicles procured are in service for a significant portion of their lifecycle, potentially leading to obsolescence issues if technology advances rapidly. It also reduces the government's flexibility to adapt to changing requirements or to take advantage of new technologies or more competitive pricing that might emerge during the contract period.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Manufacturing › Heavy Duty Truck Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV15R0122

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Navistar International Corporation

Address: 2701 NAVISTAR WAY, LISLE, IL, 60532

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $310,128,424

Exercised Options: $310,128,424

Current Obligation: $310,128,424

Subaward Activity

Number of Subawards: 35

Total Subaward Amount: $84,253,327

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline