Department of the Army awards $423M for HEMTT and PLS trucks to Oshkosh Defense, a sole-source contract

Contract Overview

Contract Amount: $422,942,030 ($422.9M)

Contractor: Oshkosh Defense LLC

Awarding Agency: Department of Defense

Start Date: 2015-06-25

End Date: 2017-08-31

Contract Duration: 798 days

Daily Burn Rate: $530.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: RECAPITALIZED (RECAP) HEAVY EXPANDED MOBILITY TACTICAL TRUCKS (HEMTTS), RECAP PALLETIZED LOAD SYSTEMS (PLS) AND SELF RECOVERY WINCHES.

Place of Performance

Location: OSHKOSH, WINNEBAGO County, WISCONSIN, 54902

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $422.9 million to OSHKOSH DEFENSE LLC for work described as: RECAPITALIZED (RECAP) HEAVY EXPANDED MOBILITY TACTICAL TRUCKS (HEMTTS), RECAP PALLETIZED LOAD SYSTEMS (PLS) AND SELF RECOVERY WINCHES. Key points: 1. Contract awarded to Oshkosh Defense LLC for recapitalization of Heavy Expanded Mobility Tactical Trucks (HEMTT) and Palletized Load Systems (PLS). 2. The contract includes self-recovery winches, indicating a focus on operational readiness and survivability. 3. This is a sole-source award, raising questions about potential price competition and value for money. 4. The fixed-price incentive contract type suggests an attempt to balance cost control with contractor performance. 5. The duration of the contract (798 days) indicates a significant, long-term commitment to fleet modernization. 6. The award falls under the Truck Trailer Manufacturing industry, specifically NAICS 336212.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to definitively assess the value for money. The fixed-price incentive structure aims to control costs, but the absence of competing offers means there's no direct market benchmark for pricing. Further analysis would require comparing unit costs to similar procurements or industry standards for heavy tactical vehicles, which are not readily available in this data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Oshkosh Defense LLC, was solicited. This approach bypasses the typical competitive bidding process, which can limit price discovery and potentially lead to higher costs for the government. The rationale for a sole-source award would need to be justified by specific circumstances, such as unique capabilities or existing sole-source production lines.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no opportunity for multiple companies to bid and drive down costs through competition.

Public Impact

The primary beneficiaries are the U.S. Army units that will receive modernized and recapitalized tactical trucks, enhancing their operational capabilities. The services delivered include the refurbishment and upgrade of existing HEMTT and PLS vehicles, along with the integration of self-recovery winches. The geographic impact is national, supporting the readiness of Army forces across various deployments and training exercises. Workforce implications include continued employment at Oshkosh Defense and its supply chain partners involved in the recapitalization process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of competitive benchmarking makes it difficult to assess true value for money.
Fixed-price incentive contracts can still lead to cost overruns if not managed carefully.
Reliance on a single supplier for critical vehicle recapitalization could pose supply chain risks.

Positive Signals

Awarding to Oshkosh Defense leverages existing expertise with HEMTT and PLS platforms.
Recapitalization extends the service life of existing assets, potentially more cost-effective than new procurement.
Inclusion of self-recovery winches enhances vehicle survivability and operational flexibility.
Fixed-price incentive contract structure aligns contractor incentives with performance goals.

Sector Analysis

This contract falls within the heavy truck and trailer manufacturing sector, specifically related to military tactical vehicles. The market for such specialized vehicles is relatively concentrated, often dominated by a few key defense contractors. Oshkosh Defense is a major player in this space. Benchmarking would involve comparing the cost per vehicle recapitalized against historical Army procurements of similar vehicles or against the cost of new vehicle acquisitions.

Small Business Impact

The data indicates that small business participation (sb) was not a stated factor in this award (sb: false). There is no information on small business set-asides or subcontracting plans. This sole-source award to a large prime contractor may limit opportunities for small businesses that could have participated in a competitive bidding environment or through subcontracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The fixed-price incentive contract type requires monitoring of performance against established targets and cost ceilings. Inspector General (IG) investigations could be initiated if performance issues or allegations of impropriety arise. Transparency is limited by the sole-source nature of the award.

Related Government Programs

Tactical Wheeled Vehicles
Heavy Mobility Trucks
Army Fleet Modernization
Logistics Support Vehicles
Defense Vehicle Manufacturing

Risk Flags

Sole-source award
Lack of competitive benchmarking
Potential for cost overruns in FPI contracts
Limited transparency due to sole-source nature

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $422.9 million to OSHKOSH DEFENSE LLC. RECAPITALIZED (RECAP) HEAVY EXPANDED MOBILITY TACTICAL TRUCKS (HEMTTS), RECAP PALLETIZED LOAD SYSTEMS (PLS) AND SELF RECOVERY WINCHES.

Who is the contractor on this award?

The obligated recipient is OSHKOSH DEFENSE LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $422.9 million.

What is the period of performance?

Start: 2015-06-25. End: 2017-08-31.

What is the historical spending pattern for HEMTT and PLS vehicles by the Department of Defense?

Historical spending on HEMTT (Heavy Expanded Mobility Tactical Trucks) and PLS (Palletized Load Systems) by the Department of Defense has been substantial over the years, reflecting their critical role in military logistics and operations. These vehicles are workhorses for transporting troops, equipment, and supplies in various theaters. Oshkosh Defense has been the primary manufacturer and sustainment provider for these platforms for an extended period. Annual spending can fluctuate based on modernization cycles, operational tempo, and specific program requirements, often ranging in the hundreds of millions of dollars across different contract actions for procurement, sustainment, and upgrades. The total DoD investment in these truck families likely runs into the billions over their lifecycle.

How does the unit cost of this recapitalization compare to the cost of new HEMTT or PLS vehicles?

Directly comparing the unit cost of this recapitalization to new vehicles is challenging without specific cost breakdowns per unit within the $423 million award. However, recapitalization is generally intended to be more cost-effective than purchasing entirely new platforms. It leverages existing chassis and components, reducing material and manufacturing costs. The 'Fixed Price Incentive' (FPI) contract type suggests that Oshkosh Defense has a target cost, and deviations trigger adjustments in profit, aiming to incentivize cost control. If the cost per vehicle recapitalized significantly exceeds a substantial fraction of a new vehicle's cost, it would raise value-for-money concerns, especially given the sole-source nature of this award.

What are the specific performance metrics tied to the 'Fixed Price Incentive' contract type for this award?

The 'Fixed Price Incentive' (FPI) contract type implies that the final price is determined by the contractor's performance against negotiated targets, typically related to cost, schedule, and performance. For this award concerning HEMTT and PLS recapitalization, specific metrics could include the number of vehicles successfully recapitalized within a certain timeframe, adherence to quality standards during the refurbishment process, meeting specific technical upgrade requirements (e.g., enhanced payload capacity, improved fuel efficiency, integration of new electronics), and timely delivery of the modernized vehicles. The 'incentive' aspect means that if the contractor achieves or exceeds these targets, they may earn a higher profit, but if costs exceed the target, their profit is reduced, potentially down to a minimum level. Conversely, if costs are below target, profit can increase up to a ceiling.

What is Oshkosh Defense's track record with the HEMTT and PLS platforms?

Oshkosh Defense has an extensive and well-established track record with both the HEMTT (Heavy Expanded Mobility Tactical Truck) and PLS (Palletized Load System) platforms. They have been the original manufacturer and primary sustainment provider for these vehicles for many years, dating back to their initial fielding. This includes numerous contracts for new production, upgrades, and reset/recapitalization efforts. Their long-standing relationship and deep familiarity with these specific truck systems are likely key factors contributing to the sole-source nature of this award, as they possess the proprietary knowledge, tooling, and established supply chains necessary for their continued support and modernization.

Are there any known risks associated with the sole-source award of this magnitude for tactical vehicle recapitalization?

Yes, there are several risks associated with a sole-source award of this magnitude ($423 million) for tactical vehicle recapitalization. The primary risk is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved through a competitive process. This reduces the government's leverage in negotiating favorable terms and pricing. Another risk is potential complacency from the sole provider; without the threat of losing future business to competitors, the contractor might be less motivated to innovate or optimize costs. Furthermore, reliance on a single source can create vulnerabilities in the supply chain or production capacity, especially if unforeseen issues arise with the contractor's operations. Finally, it can set a precedent for future sole-source awards, potentially eroding the overall competitiveness within the defense industrial base for these types of vehicles.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Body and Trailer Manufacturing › Truck Trailer Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Oshkosh Corp (UEI: 006070445)

Address: 2307 OREGON ST, OSHKOSH, WI, 54903

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $422,942,030

Exercised Options: $422,942,030

Current Obligation: $422,942,030

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV15D0031

IDV Type: IDC

Timeline