Fort Belvoir, Virginia –
It only comes in tan, olive drab
or woodland camouflage.
It gets about 12 miles per gallon
Zero to 60: it’s about 30 seconds.
Yet a lot of people may want to buy one.
It’s the High Mobility Multipurpose Wheeled Vehicle, slowly being phased out of service by the Department of Defense.
As the Defense Logistics Agency continues to dispose of thousands of Humvees every year, it’s been looking at ways to recoup more money for the taxpayer. DLA recently began auctioning some unarmored Humvees for off-road use only, and private resale of ex-DoD vehicles has happened on and off the last few decades. And someday soon, direct DoD sale of three particular models — whether for scrap, parts, or legal road use — may become a reality.
That’s the takeaway from a rec
ent project, said Manny Vengua, program manager for the Strategic Distribution and Disposition unit at DLA Distribution.
The SDD team’s business case analysis looked at the pros, cons and risks of selling to the public any of the roughly 55,000 Humvees scheduled for demilitarization, all of which require a “DEMIL code C” designation. DEMIL Code C applies to items that the U.S. Munitions List requires be removed before sale. Removing these components — such as radio mounts, weapons sights, armor and cryptographic gear — is required for a demilitarization to comply with law and regulation.
According to Vengua, most Humvees are sold for scrap at a price of under 10 cents per pound. At the same time, there is consumer demand for these vehicles — even though they cannot legally be taken on the public roads. Before 2006, AM General and, later, General Motors sold a civilian variant of the Humvee, the Hummer. But the Humvee, though outwardly similar, is not a model registered with and tested by the Department of Transportation.
Because of this and because the military variant lacks the safety and comfort of the civilian vehicle, demilitarized Humvees can legally be used only as off-road vehicles or, rarely, under the DOT “show or display” exemption. They therefore command a far lower selling price than the used civilian Hummer vehicles, of which low-mileage examples in the best condition can sell for nearly $100,000.
The SDD group’s analysis looked at each major component of the Humvee, identifying the parts that would need to be removed before the vehicle could be sold to the public. Some parts pose a danger, some were designed using classified or sensitive systems, and others are just not relevant to civilian use, Vengua said.
His team’s analysis showed that three models might eventually be salable: the M1037 Shelter Carrier, the M1097 Tall Cargo/Troop Carrier and the M1113 Shelter Carrier. If these models were saved from the crusher, the military service that owns the vehicle or a contractor would be asked to demilitarize the vehicle. Then, DLA Disposition Services would be asked to confirm the demilitarization.
One option the SDD team explored was to continue the status quo — having DLA Disposition Services demilitarize all Humvees it receives. This option poses no additional costs or risks, Vengua said. Demilitarization would be done by a vendor who would pay DLA for salvage rights to the vehicle under a DEMIL as a “condition of sale” contract in return for ownership of the scrap. The average Humvee nets around $900 in scrap value to DLA. But then, after demilitarization of what remains, little of value is left.
A second option is to have the military services or a contractor perform “key point” demilitarization and then have DLA Disposition Services sell the trucks through a contractor. This would return $4,500 to $5,300 to DLA for each Humvee sold, depending on whether the labor is done by the services on site or at a central contractor facility. The potential profit ranges from $134 million to $156 million, Vengua said. However, this option would require approval from the Department of Commerce and the Department of State as to the classification of Munitions List items.
A final alternative would authorize salvage dealers to sell parts that don’t need to be demilitarized on the aftermarket, motivating these dealers to bid higher for the salvage rights. Because of the existing GM Hummer models already in civilian garages, items such as engine parts, seats and even tires command enough of a profit that resellers are interested, said Vengua. Through a combination of demilitarizing some vehicles (when practical and legal) and removing salable parts from the remaining models, DLA could recoup almost $156 million on the nearly 55,000 vehicles, at minimal risk, Vengua said.
One problem is that the original equipment manufacturer — meaning AM General — officially opposes the sale of surplus Humvees because they weren’t designed to meet DOT’s Federal Motor Vehicle Safety Standards.
In addition, the Army Tank Automotive Command adamantly opposes these sales because of safety and security concerns if unauthorized material is inadvertently released to the public. In addition, the existing mutilation contracts guarantee contractors a minimum amount of scrap — and an increase in sales of these vehicles could potentially reduce that amount.
Whichever eventual path DLA takes, DoD will work with the agency to ensure compliance with DEMIL regulations, said Jeff Garrett, the DoD DEMIL program manager, who worked with Vengua’s team on the analysis. “The key is to balance and maintain policy compliance with proper procedures and execution for disposition of excess property,” Garrett said.
Vengua agreed. “DLA is always seeking ways to increase the revenues it can recoup for the U.S. taxpayer,” he said. “This one example of how our team continually works to find innovative approaches to problems that could beneficial the agency. It may not be as glamorous as other research we do, but it’s just as important.”