DoD spent $10M on 87 backhoe loaders, averaging $115K each, under a full and open competition

Contract Overview

Contract Amount: $10,013,122 ($10.0M)

Contractor: CNH Industrial America LLC

Awarding Agency: Department of Defense

Start Date: 2007-04-18

End Date: 2010-12-31

Contract Duration: 1,353 days

Daily Burn Rate: $7.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: PRODUCTION AND TRANSPORTATION COST FOR 87 BACKHOE LOADERS.

Place of Performance

Location: RACINE, RACINE County, WISCONSIN, 53404

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $10.0 million to CNH INDUSTRIAL AMERICA LLC for work described as: PRODUCTION AND TRANSPORTATION COST FOR 87 BACKHOE LOADERS. Key points: 1. The contract secured 87 backhoe loaders for $10 million, indicating a unit cost of approximately $115,000. 2. Full and open competition was utilized, suggesting a robust bidding process. 3. The contract was awarded to CNH Industrial America LLC, a significant player in construction machinery. 4. The duration of the contract was 1353 days, spanning over three years. 5. The award type was 'DO', which typically signifies a priority rating for defense-related procurements. 6. The fixed-price contract structure likely provided cost certainty for the government.

Value Assessment

Rating: good

The average unit cost of $115,000 per backhoe loader appears reasonable when benchmarked against similar heavy equipment procurements. While specific market data for this exact model and time period is not provided, the price falls within expected ranges for new, industrial-grade construction machinery. The firm fixed-price nature of the contract also suggests that the government secured predictable costs, which is a positive indicator of value.

Cost Per Unit: Approximately $115,000 per unit.

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The presence of 3 bids indicates a competitive environment, though the exact number of potential bidders is unknown. A higher number of bidders generally leads to more competitive pricing and better value for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces, ensuring the government receives the best possible value for its expenditure.

Public Impact

The primary beneficiaries are the Department of the Army, receiving essential construction equipment. The services delivered include the production and transportation of 87 backhoe loaders. The geographic impact is primarily within Wisconsin, where the contractor is based, and wherever the Army deploys the equipment. Workforce implications include employment within CNH Industrial America LLC and potentially its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases on future procurements if market conditions change significantly.
Dependence on a single contractor for the entire quantity could pose supply chain risks if not managed.

Positive Signals

Awarded under full and open competition, suggesting competitive pricing.
Firm fixed-price contract provides cost certainty.
Contract awarded to a known manufacturer in the construction machinery sector.

Sector Analysis

The construction machinery manufacturing sector is a vital part of the industrial base, supplying essential equipment for infrastructure projects and military operations. This contract for backhoe loaders falls within the heavy equipment segment of this market. Comparable spending benchmarks would involve analyzing other government procurements of similar heavy machinery, as well as private sector acquisition trends for construction equipment.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). There is no explicit information on subcontracting plans. Therefore, the direct impact on the small business ecosystem from this particular award is likely minimal, unless CNH Industrial America LLC engaged small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in the firm fixed-price contract, requiring delivery of specified goods. Transparency is provided through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Heavy Equipment Procurement
Construction Machinery
Department of Defense Equipment Acquisition
Tactical Vehicle Procurement

Risk Flags

Potential for price escalation in future procurements.
Supply chain dependency on a single manufacturer.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.0 million to CNH INDUSTRIAL AMERICA LLC. PRODUCTION AND TRANSPORTATION COST FOR 87 BACKHOE LOADERS.

Who is the contractor on this award?

The obligated recipient is CNH INDUSTRIAL AMERICA 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 $10.0 million.

What is the period of performance?

Start: 2007-04-18. End: 2010-12-31.

What is the track record of CNH Industrial America LLC with the federal government?

CNH Industrial America LLC has a history of federal contracts, primarily with the Department of Defense and other agencies requiring heavy machinery. Analyzing their past performance, including contract awards, delivery history, and any reported issues, would provide further insight into their reliability as a contractor. Their presence in the construction machinery sector suggests a capacity to fulfill large-scale equipment orders. However, a detailed review of their specific contract history, including any past disputes or performance failures, would be necessary for a comprehensive assessment.

How does the $115,000 average unit cost compare to other similar federal procurements?

Benchmarking the $115,000 average unit cost requires comparing it to similar federal procurements of backhoe loaders or comparable heavy construction equipment during the contract period (2007-2010). Without access to a detailed database of historical federal contract prices for identical or very similar equipment, a precise comparison is difficult. However, general market knowledge suggests this price point is within a reasonable range for industrial-grade backhoe loaders. Factors such as specific model features, attachments, warranty, and delivery terms significantly influence unit cost. A more granular analysis would involve identifying contracts for equipment with comparable specifications and award dates.

What are the primary risks associated with this type of contract?

The primary risks associated with this firm fixed-price contract for heavy equipment include potential overpricing if competition was insufficient, although it was full and open. There's also a risk of delivery delays, though the contract duration suggests a planned production and delivery schedule. For the contractor, the risk lies in underestimating production costs, which could lead to reduced profit margins. For the government, the main risk is acquiring equipment that may become obsolete quickly or require extensive maintenance, impacting long-term operational costs. Supply chain disruptions for specialized parts could also pose a risk.

How effective was this contract in meeting the Department of the Army's needs for backhoe loaders?

The effectiveness of this contract in meeting the Department of the Army's needs can be inferred from its successful completion, indicated by the award and scheduled end date. The procurement of 87 backhoe loaders suggests a significant requirement for earthmoving and construction capabilities. The 'DO' award type indicates a priority rating, suggesting these machines were needed for critical operations. Without specific operational reports or feedback from the end-users, it's challenging to definitively assess the equipment's performance in the field. However, the acquisition of a substantial quantity under a competitive process implies an effort to fulfill a recognized operational requirement.

What were historical spending patterns for backhoe loaders by the Department of Defense prior to this contract?

Historical spending patterns for backhoe loaders by the Department of Defense prior to this contract (awarded in 2007) would likely show a consistent need for such equipment, driven by military construction, base operations, and deployment support. Spending would fluctuate based on global security needs, infrastructure projects, and budget allocations. Analyzing prior years' data from contract databases would reveal the volume of procurements, average unit costs, and the primary contractors. It's probable that the DoD has procured similar equipment for decades, with variations in models and specifications reflecting technological advancements and evolving military requirements.

Industry Classification

NAICS: Manufacturing › Agriculture, Construction, and Mining Machinery Manufacturing › Construction Machinery Manufacturing

Product/Service Code: CONSTRUCT/MINE/EXCAVATE/HIGHWY EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: CNH Global N.V. (UEI: 419699392)

Address: 700 STATE ST, RACINE, WI, 01

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $10,013,122

Exercised Options: $10,013,122

Current Obligation: $10,013,122

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV05D0285

IDV Type: IDC

Timeline