Tyre maker Michelin’s North American unit has won a big military supply deal.
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The US Defence Logistics Agency through its designated supply chain manager, Defence Supply Centre Columbus, has signed a contract worth more than $US852m for land vehicle tyres with Michelin North America Tire Company in Columbus, Ohio. The contract is for a base period of five years with an option period for five additional years with a value of more than $850m.
This contract, with a contract for aviation tyres announced in late December, is the result of the Base Realignment and Closure Act 2005 that mandated commodity management privatisation (CMP) of tyres. Previously managed by each of the armed services, tyres purchased under these two contracts using the CMP mandate and managed by DLA, will save taxpayers an estimated $172.8m, the agency said.
With the signing of these first-ever commodity management privatisation contracts, Michelin will supply aviation and land vehicle tyres to all the military services with oversight by DLA. The contract is the largest in monetary value ever signed by DSCC.
“Michelin will now be accomplishing all the tasks related to supply, storage and distribution of tyres,” said Matt Geary, DSCC project manager for DSCC’s CMP contracting efforts. “DSCC will have oversight of the contracts, but Michelin will be doing everything else,” he added.
Geary pointed out that the Navy has a similar contract with Michelin, which DLA will take over in fiscal 2009. Savings experienced by the Navy set the stage for the BRAC-mandated CMP effort.
