DoD's $156M Construction Machinery Contract Awarded to CNH Industrial America LLC

Contract Overview

Contract Amount: $15,559,669 ($15.6M)

Contractor: CNH Industrial America LLC

Awarding Agency: Department of Defense

Start Date: 2009-01-23

End Date: 2012-01-15

Contract Duration: 1,087 days

Daily Burn Rate: $14.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: PRODUCTION OF 150 BHLS AND TRANSPOTATION. NEW EQUIPMENT TRAINING (CONUS AND OCONUS).

Place of Performance

Location: RACINE, RACINE County, WISCONSIN, 53404

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $15.6 million to CNH INDUSTRIAL AMERICA LLC for work described as: PRODUCTION OF 150 BHLS AND TRANSPOTATION. NEW EQUIPMENT TRAINING (CONUS AND OCONUS). Key points: 1. Contract awarded under full and open competition, suggesting a competitive bidding process. 2. The contract's duration of 1087 days indicates a significant, long-term requirement. 3. The firm-fixed-price contract type shifts cost risk to the contractor. 4. The North American Industry Classification System (NAICS) code 333120 points to construction machinery manufacturing. 5. The award was made by the Department of the Army, a major component of the DoD. 6. The contract includes new equipment training, both CONUS and OCONUS, adding complexity and scope.

Value Assessment

Rating: fair

The total contract value of $155,596,690 for 150 units of construction machinery and training appears substantial. Without specific details on the type and capabilities of the machinery, a direct value-for-money assessment is challenging. However, the firm-fixed-price structure suggests the government sought to control costs. Benchmarking against similar large-scale military equipment procurements would be necessary for a more precise evaluation of its value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The presence of 3 bids suggests a moderate level of competition for this significant procurement. While three bidders participated, the specific details of the bidding process and the reasons for only three submissions are not provided, which could influence price discovery.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better terms for the government.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Army, receiving essential construction machinery. The contract supports military readiness by providing new equipment for construction and operational needs. New equipment training is delivered to military personnel, enhancing their ability to operate and maintain the machinery. The geographic impact includes both CONUS (Continental United States) and OCONUS (Outside the Continental United States) locations for training. The contract supports the manufacturing workforce within the construction machinery sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the firm-fixed-price contract does not adequately account for all potential expenses.
Risk of delivery delays impacting operational timelines for the Army.
Dependence on a single contractor for the production of 150 units could create supply chain vulnerabilities.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Award under full and open competition suggests a robust selection process.
Inclusion of training ensures effective utilization of the new equipment.

Sector Analysis

This contract falls within the Construction Machinery Manufacturing sector, a segment of the broader industrial manufacturing industry. This sector is characterized by the production of heavy equipment used in construction, mining, and infrastructure projects. The Department of Defense is a significant consumer of such equipment, often requiring specialized or ruggedized versions for military operations. Benchmarking this contract's value against other large-scale government procurements of similar machinery would provide further context on its scale within the sector.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The primary contractor, CNH Industrial America LLC, is a large entity, and any subcontracting would likely be at lower tiers and not driven by a small business set-aside requirement.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Army. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified goods and services at an agreed-upon price. Transparency is generally facilitated through contract award databases, though specific performance details may be less public.

Related Government Programs

Military Construction
Heavy Equipment Procurement
Defense Logistics Agency Contracts
Army Equipment Modernization Programs

Risk Flags

Potential for cost creep despite firm-fixed-price if scope changes.
Logistical challenges in OCONUS training delivery.
Dependence on a single supplier for a large quantity of critical equipment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.6 million to CNH INDUSTRIAL AMERICA LLC. PRODUCTION OF 150 BHLS AND TRANSPOTATION. NEW EQUIPMENT TRAINING (CONUS AND OCONUS).

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 $15.6 million.

What is the period of performance?

Start: 2009-01-23. End: 2012-01-15.

What specific types of construction machinery were procured under this contract, and what are their intended military applications?

The provided data specifies 'PRODUCTION OF 150 BHLS AND TRANSPOTATION' and identifies the NAICS code as 333120 (Construction Machinery Manufacturing). While 'BHLS' is not a standard military acronym, it likely refers to a type of heavy equipment. Given the context of construction machinery, these could be bulldozers, backhoe loaders, or similar heavy earthmoving equipment. The 'TRANSPOTATION' likely refers to transportation capabilities or perhaps a specific vehicle type. These machines are typically used by military engineers for base construction, infrastructure repair, route clearance, and logistical support in both garrison and deployed environments. The exact models and their specific roles would require access to the detailed contract statement of work.

How does the per-unit cost of the machinery compare to commercial off-the-shelf (COTS) equivalents or other government procurements?

The total contract value is approximately $155.6 million for 150 units, yielding an average per-unit cost of roughly $1.04 million. Without knowing the exact specifications of the 'BHLS and TRANSPOTATION,' a direct comparison is difficult. Military-grade equipment often includes enhanced durability, specialized features, and logistical support packages that can increase costs compared to standard commercial versions. If these are highly specialized or armored variants, the cost might be justified. However, if they are relatively standard construction vehicles, this per-unit cost could be on the higher side, warranting further investigation into the specific requirements and any unique government-mandated modifications or support included in the price.

What is the track record of CNH Industrial America LLC in fulfilling large defense contracts, particularly for construction equipment?

CNH Industrial America LLC, a subsidiary of CNH Industrial N.V., is a major global manufacturer of agricultural and construction equipment. They produce well-known brands like Case Construction Equipment and New Holland Construction. While their primary market is commercial, they do have experience supplying equipment to government entities. Assessing their track record specifically for large Department of Defense contracts would involve reviewing past awards, delivery performance, and any reported issues or successes in fulfilling similar large-scale procurements. A review of contract databases and performance reports would be necessary to determine their historical reliability and performance in the defense sector.

What are the potential risks associated with the 'NEW EQUIPMENT TRAINING (CONUS and OCONUS)' component of this contract?

The training component introduces several potential risks. Logistically, coordinating and executing training across both CONUS and OCONUS locations is complex and costly, involving travel, billeting, instructor deployment, and scheduling across different time zones and operational tempos. OCONUS training can be particularly susceptible to geopolitical instability, security concerns, and varying host-nation regulations. Furthermore, ensuring the quality and effectiveness of training delivered in diverse environments requires robust oversight. There's also a risk of training delays due to equipment availability or operational commitments of the personnel being trained, potentially impacting the overall readiness timeline.

How does the $155.6 million contract value compare to historical Army spending on construction machinery over similar periods?

The $155.6 million contract represents a significant investment in construction machinery. To contextualize this, one would need to analyze the Army's historical spending patterns for construction equipment over comparable periods (e.g., 3-year contract duration). This would involve examining annual budgets allocated for equipment procurement, specific line items for construction machinery, and the number and value of previous contracts awarded for similar equipment. If the Army typically spends hundreds of millions annually on such equipment, this contract might represent a standard procurement cycle. If it's substantially higher or lower than historical averages, it could indicate a shift in modernization strategy, a surge in demand, or a particularly large single-source acquisition.

What oversight mechanisms are in place to ensure the quality and timely delivery of the 150 units of construction machinery?

Oversight for this contract would likely involve a multi-layered approach. The Contracting Officer's Representative (COR) or a designated government quality assurance representative would be responsible for monitoring contractor performance, inspecting deliverables, and ensuring compliance with contract specifications. Milestones within the contract schedule would be tracked, and performance metrics likely established. Given the firm-fixed-price nature, the contractor bears the primary responsibility for meeting quality standards and delivery timelines to avoid penalties or breach of contract. The Department of the Army's program management office would also provide programmatic oversight, ensuring the equipment aligns with operational requirements and modernization plans.

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: Fiat Industrial SPA (UEI: 338471507)

Address: 700 STATE ST, RACINE, WI, 01

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $15,559,669

Exercised Options: $15,559,669

Current Obligation: $15,559,669

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV05D0285

IDV Type: IDC

Timeline