DoD's $36.3M contract for tank components awarded to CONTITECH USA, INC. with no competition

Contract Overview

Contract Amount: $36,297,572 ($36.3M)

Contractor: Contitech USA, Inc

Awarding Agency: Department of Defense

Start Date: 2008-03-28

End Date: 2009-01-31

Contract Duration: 309 days

Daily Burn Rate: $117.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: VARIOUS TRACK CONFIGURATIONS

Place of Performance

Location: FAIRLAWN, SUMMIT County, OHIO, 44333

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $36.3 million to CONTITECH USA, INC for work described as: VARIOUS TRACK CONFIGURATIONS Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential value. 2. Limited competition may have led to higher costs for taxpayers. 3. The contract duration was relatively short, suggesting a specific, potentially urgent need. 4. Awarded under the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' NAICS code. 5. The firm fixed-price contract type aims to control costs but relies on accurate initial estimates. 6. No small business set-aside was applied, indicating potential missed opportunities for smaller firms.

Value Assessment

Rating: questionable

Benchmarking the value of this specific contract is challenging due to the lack of competitive bids. The $36.3 million award for tank components, while a significant sum, cannot be definitively assessed for value-for-money without comparable offers. The firm fixed-price structure suggests an attempt to cap costs, but the absence of competition means there's no market-driven validation of the pricing. Further analysis would require understanding the specific components and their market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, CONTITECH USA, INC., was solicited. The data does not provide a justification for this limited competition, such as a specific technological requirement or an emergency situation. The lack of multiple bidders prevents a robust price discovery process, potentially leading to less favorable terms for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall spending for the same goods or services.

Public Impact

The primary beneficiaries are the Department of Defense and potentially military personnel relying on armored vehicles. The contract delivers essential components for military armored vehicles, contributing to national defense readiness. The geographic impact is primarily within the United States, supporting domestic manufacturing and defense supply chains. Workforce implications include employment at CONTITECH USA, INC. and its suppliers within the defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
Absence of small business participation may limit opportunities for smaller, innovative firms in the defense sector.
The sole-source nature requires strong justification to ensure it was truly necessary and not a missed opportunity for competition.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government, assuming accurate initial estimates.
Award to an established entity (CONTITECH USA, INC.) suggests a known supplier for critical components.
The contract addresses a specific need within military vehicle manufacturing, contributing to defense capabilities.

Sector Analysis

This contract falls within the broader defense industrial base, specifically the manufacturing of armored vehicle components. The market for such specialized parts is often concentrated among a few key suppliers due to high technical barriers and stringent quality requirements. While specific market size data for tank components is not readily available, the overall defense manufacturing sector is substantial, with significant government spending allocated annually to maintain and upgrade military hardware. This contract represents a portion of that larger spending.

Small Business Impact

The contract was not set aside for small businesses, nor does it indicate any subcontracting requirements for small businesses. This suggests that the primary awardee, CONTITECH USA, INC., was expected to fulfill the contract requirements directly or through larger, non-small business partners. This could represent a missed opportunity to engage the small business defense industrial base, which often plays a crucial role in specialized manufacturing and innovation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited by the sole-source nature of the award; public disclosure of the justification for sole-sourcing would be a key transparency indicator. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Armored Vehicle Manufacturing
Defense Supply Chain Management
Tank Component Procurement
Department of Defense Contracts
Firm Fixed Price Contracts

Risk Flags

Sole-source award without apparent justification
Potential for overpricing due to lack of competition
Limited transparency regarding the procurement process

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.3 million to CONTITECH USA, INC. VARIOUS TRACK CONFIGURATIONS

Who is the contractor on this award?

The obligated recipient is CONTITECH USA, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $36.3 million.

What is the period of performance?

Start: 2008-03-28. End: 2009-01-31.

What specific tank components were procured under this contract?

The provided data indicates the contract was for 'VARIOUS TRACK CONFIGURATIONS' and falls under the NAICS code 'Military Armored Vehicle, Tank, and Tank Component Manufacturing'. While the exact list of components is not detailed, 'various track configurations' suggests items related to the mobility systems of armored vehicles, such as tracks, rollers, sprockets, or related sub-assemblies. These are critical for the operational effectiveness of tanks and other heavy armored personnel carriers. The specific nature of these components would influence their cost and the availability of alternative suppliers.

What is the justification for the sole-source award to CONTITECH USA, INC.?

The provided data explicitly states the contract was 'NOT COMPETED' and lists '1' for the number of offers received, confirming a sole-source award. However, the specific justification for this sole-source determination is not included in the abbreviated data. Typically, sole-source awards require a formal justification, such as the unique capability of the contractor, a critical need arising from an emergency, or the unavailability of other sources. Without this justification, it is impossible to assess whether the sole-source award was appropriate or if it represented a missed opportunity for competition.

How does the $36.3 million contract value compare to similar procurements for tank components?

Direct comparison of the $36.3 million contract value for 'VARIOUS TRACK CONFIGURATIONS' is difficult without more specific details on the exact components and quantities, as well as the contract's duration (309 days). However, the absence of competition means this value cannot be benchmarked against market rates derived from competitive bidding. To assess value, one would need to identify comparable contracts for similar track systems or components awarded competitively, or obtain independent cost estimates for the specified items. The firm fixed-price nature suggests an attempt to control costs, but the lack of competitive pressure makes it hard to ascertain if this price represents good value.

What is CONTITECH USA, INC.'s track record with the Department of Defense for similar contracts?

The provided data indicates CONTITECH USA, INC. was the sole awardee for this $36.3 million contract. While this specific award suggests they are a supplier of military vehicle components, the abbreviated data does not offer details on their broader track record with the DoD, such as past performance ratings, previous contract values, or history of sole-source versus competitive awards. A comprehensive assessment would require reviewing their contract history, performance evaluations, and any past issues or successes in fulfilling defense contracts.

What are the potential risks associated with a sole-source award for critical defense components?

Sole-source awards for critical defense components carry several risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures inherent in a bidding process. Secondly, it can limit innovation, as contractors may have less incentive to develop more efficient or advanced solutions when they are the only option. Thirdly, it can create dependency on a single supplier, making the supply chain vulnerable to disruptions if that supplier faces financial difficulties, production issues, or geopolitical challenges. Finally, it raises concerns about fairness and transparency in government procurement.

What is the historical spending pattern for 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' by the Department of Defense?

The provided data focuses on a single contract and does not offer historical spending patterns for the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' sector. To analyze historical spending, one would need access to broader contract databases and procurement reports from the Department of Defense. This would involve examining spending trends over several fiscal years, identifying major contractors, understanding the mix of competitive versus sole-source awards, and tracking the evolution of spending on different types of armored vehicles and their components. Such analysis would reveal the overall investment in this area and how it has changed over time.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 703 S CLEVELAND MASSILLON RD, FAIRLAWN, OH, 13

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $36,297,572

Exercised Options: $36,297,572

Current Obligation: $36,297,572

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV08D0072

IDV Type: IDC

Timeline