The Department of Defense awarded Sweden's Volvo AB (NASDAQOTH:VOLVY) -- or more specifically, Volvo's Mack Trucks subsidiary -- a $177.5 million contract Friday for the purchase of tractor trailers.

The contract, designated "fixed-price with economic-price-adjustment/indefinite-delivery," is what is commonly known as an "IDIQ" contract. This means that while the price paid per item purchased may be fixed, there is no obligation incumbent upon the Pentagon to buy any particular number of trucks -- although the size of the contract certainly suggests their intention to buy a lot of them.

With your average Mack truck ranging in price from just under $100,000 to as high as $200,000, this contract could easily encompass the sale and purchase of 1,000 or more trucks and trailers from Mack's several product lines, with sales stretching from now through April 9, 2017. Purchases will be made for the U.S. Army, Navy, Air Force, Marine Corps, and federal civilian agencies.


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