Michelin Aircraft Tire Co, Receives $368.4M from US Military (updated)
Michelin Aircraft Tire Company LLC in Greenville, SC received a minimum $368.4 million fixed price with economic price adjustment contract for tires supplied to the US Army, Air Force, and Marine Corps. Locations of performance are Moorestown, NJ; Hebron, CT; Akron, OH; Nashville, TN; and Lawrence, NY. There were 23 proposals solicited and 2 responded. Date of performance completion is December 28, 2011. Contracting activity is the Defense Supply Center Columbus (DSCC) in Columbus, OH (SPM7L10-07-D-7001).
This contract will actually privatize the production and logistics for aircraft tires, and is valued at up to $700 million over 10 years if all options are exercised. See the US DLA’s January 10, 2007 release “First tire contracts to save taxpayers more than $172 million” for some descriptions of how the DLA/DSSC and the various military services reached this point.
Michelin will not be the only major player in this effort. Lockheed Martin will act as a subcontractor to Michelin to manage the logistics and warehousing for all tires used. This work is valued at approximately 15% of the contract value (calculates to $55.2 million now, up to $105 million over 10 years), and includes demand forecasting, inventory management, warehousing and transportation. Logistics analysts in the command center forecast requirements, process orders, monitor warehouse operations, track shipments and operate a 24/7 call center with Lockheed Martin’s SCM+(TM) supply chain management system. With SCM+(TM), management is performed on an exceptions basis with more than 95% of orders processed without human intervention. Lockheed Martin will manage the USAF’s global supply chain from its lifetime support command center in Moorestown, NJ; Michelin and Lockheed Martin have provided similar services to the U.S. Navy for its aircraft tires since 2001. See Lockheed Martin release | Follow on $1.7 billion contract for all US military services issued on January 25, 2007.