DoD's $63.8M Allison Transmission contract for Egypt FMS lacks competition, raising value concerns

Contract Overview

Contract Amount: $63,872,290 ($63.9M)

Contractor: Allison Transmission, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-09-28

End Date: 2014-12-30

Contract Duration: 823 days

Daily Burn Rate: $77.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACQUISITION OF 125 X1100 NEW TRANSMISSIONS FOR FMS EGYPT FOR INC 11 PRODUCTION.

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46222

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $63.9 million to ALLISON TRANSMISSION, INC. for work described as: ACQUISITION OF 125 X1100 NEW TRANSMISSIONS FOR FMS EGYPT FOR INC 11 PRODUCTION. Key points: 1. The contract's value, while substantial, is difficult to benchmark due to its sole-source nature. 2. Lack of competition suggests potential for higher-than-market pricing. 3. The contract's duration and fixed-price nature may mitigate some cost overrun risks. 4. Performance context is limited, with no specific metrics provided for transmission quality or delivery timeliness. 5. This contract falls within the broader defense manufacturing sector, specifically vehicle components. 6. The absence of small business involvement is noted, with no set-aside requirements. 7. Oversight is likely managed through standard DoD procurement and contract management processes.

Value Assessment

Rating: questionable

Benchmarking the value of this $63.8 million contract is challenging due to its sole-source award. Without competitive bids, it's difficult to ascertain if the price reflects fair market value. The contract is for new transmissions, a critical component, but the lack of comparative pricing data from other potential suppliers makes a definitive value assessment difficult. The fixed-price nature provides some cost certainty, but the absence of competition raises questions about optimal resource utilization.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Allison Transmission, Inc., was solicited. This approach is typically used when a unique capability or product is required, or when only one source is capable of meeting the requirement. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to a higher price than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may have paid a premium for this acquisition due to the absence of competitive pressure to lower prices. The sole-source award limits the government's ability to leverage market forces for cost savings.

Public Impact

The primary beneficiaries are the Egyptian armed forces, receiving critical vehicle components. The contract delivers 125 new transmissions, essential for military vehicle operational readiness. Geographic impact is primarily in Indiana, where Allison Transmission, Inc. is based, potentially supporting local manufacturing jobs. Workforce implications are concentrated at the contractor's facility, supporting specialized manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential savings.
Lack of transparency in the justification for sole-source procurement.
No small business participation noted, potentially missing opportunities for economic inclusion.
Limited performance metrics make it hard to assess the true value and effectiveness.
Contract duration is significant, requiring sustained oversight.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
The contractor, Allison Transmission, Inc., is a known entity in its field.
The acquisition addresses a specific military need for operational readiness.
The contract is for new, not refurbished, equipment, implying higher quality.

Sector Analysis

This contract falls within the defense industrial base, specifically the manufacturing of vehicle components. The market for heavy-duty transmissions is dominated by a few key players, including Allison Transmission. While specific market size data for military transmissions is not readily available, the broader automotive and industrial equipment manufacturing sector is substantial. This contract represents a specific procurement within the Foreign Military Sales (FMS) program, which facilitates the sale of U.S. defense articles and services to allies.

Small Business Impact

This contract did not include any small business set-aside provisions, nor is there any indication of subcontracting to small businesses. The award was made directly to Allison Transmission, Inc., a large established manufacturer. This suggests that opportunities for small businesses within this specific procurement were either not identified or not pursued, potentially limiting their participation in the defense supply chain for this particular acquisition.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and oversight framework. This includes contract administration by the relevant Defense Contract Management Agency (DCMA) office and potential review by the Inspector General's office for issues related to fraud, waste, or abuse. Transparency is limited by the sole-source nature, but contract award data is publicly available through federal procurement databases.

Related Government Programs

Foreign Military Sales (FMS)
Defense Logistics Agency (DLA) - Vehicle Parts
Army陆军陆战队 (USMC) Vehicle Procurement
Tactical Wheeled Vehicle Fleet Modernization

Risk Flags

Sole Source Award
Lack of Competition
Potential for Overpricing
Limited Transparency
No Small Business Set-Aside

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.9 million to ALLISON TRANSMISSION, INC.. ACQUISITION OF 125 X1100 NEW TRANSMISSIONS FOR FMS EGYPT FOR INC 11 PRODUCTION.

Who is the contractor on this award?

The obligated recipient is ALLISON TRANSMISSION, 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 $63.9 million.

What is the period of performance?

Start: 2012-09-28. End: 2014-12-30.

What is the track record of Allison Transmission, Inc. in fulfilling defense contracts, particularly for foreign military sales?

Allison Transmission, Inc. has a long history of supplying transmissions for military vehicles, both domestically and internationally. They are a well-established manufacturer known for robust and reliable products. For Foreign Military Sales (FMS), Allison transmissions are commonly specified in various platforms sold to allied nations. While specific performance data for this particular contract is not detailed, the company's general reputation in the defense sector is strong. Their ability to meet stringent military specifications and delivery schedules is generally considered reliable, though individual contract performance can vary based on specific requirements and oversight.

How does the $63.8 million cost compare to similar acquisitions of vehicle transmissions by the DoD or other government agencies?

Direct comparison of the $63.8 million cost for 125 transmissions is difficult without knowing the specific model and technical specifications. However, the average cost per transmission would be approximately $510,978. This figure appears high for standard vehicle transmissions, suggesting these are specialized, heavy-duty units for military applications. Without competitive bidding, it's hard to establish a precise market rate. Similar large-scale acquisitions for specialized military components often involve unique requirements that drive up costs compared to commercial equivalents. Further analysis would require detailed technical specifications and a comparison against other sole-source or competitively bid FMS contracts for similar equipment.

What are the primary risks associated with a sole-source acquisition of this magnitude?

The primary risks associated with a sole-source acquisition of this magnitude include potential overpayment due to lack of price competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of alternative sources should the incumbent contractor face production issues or fail to meet contract terms. For taxpayers, the risk is paying a premium for goods or services that could potentially be acquired at a lower cost through a competitive process. There's also a strategic risk if the sole-source supplier becomes critical to national security or military readiness, creating dependency.

What does the 'INC 11 PRODUCTION' designation imply for the contract's scope and potential future needs?

The 'INC 11 PRODUCTION' designation likely refers to a specific production run or increment within a larger program or contract vehicle. In defense procurement, 'increments' often denote phases of development, production, or upgrades. This suggests that this acquisition is part of a broader, ongoing effort to equip Egypt with specific military hardware, and that 'INC 11' represents a particular batch or stage of that production. It implies that there may be subsequent increments (INC 12, INC 13, etc.) or related contracts anticipated in the future to fulfill the overall FMS requirement for Egypt, potentially involving further acquisitions of transmissions or other related components.

Are there any performance metrics or quality assurance standards specified in the contract that can be used to evaluate the contractor's performance?

The provided data does not include specific performance metrics or quality assurance standards for this contract. However, standard Department of Defense (DoD) procurement regulations and contract clauses would typically mandate certain quality assurance provisions and performance expectations. For a firm-fixed-price contract involving military hardware, these would likely include adherence to technical specifications, delivery schedules, and potentially warranty clauses. Without access to the full contract document, it's impossible to detail the exact metrics, but the DoD generally requires contractors to meet stringent quality standards for defense articles.

What is the historical spending pattern for vehicle transmissions under the FMS program, and how does this contract compare?

Historical spending on vehicle transmissions under the FMS program can vary significantly year-to-year and by recipient nation, depending on their specific modernization needs and the types of vehicles being procured. This $63.8 million contract for 125 transmissions (averaging over $500,000 each) appears to be a substantial single award, likely for specialized, heavy-duty military-grade transmissions rather than standard commercial ones. Without a comprehensive database of all FMS transmission procurements, a precise comparison is difficult. However, large sole-source awards for critical components like this are not uncommon within the FMS framework when specific capabilities are required and only one supplier can meet them, though they often draw scrutiny regarding value for money.

Industry Classification

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

Parent Company: Allison Transmission Inc (UEI: 804407463)

Address: 4700 W 10TH ST, INDIANAPOLIS, IN, 46222

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

Financial Breakdown

Contract Ceiling: $63,872,290

Exercised Options: $63,872,290

Current Obligation: $63,872,290

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV08D0159

IDV Type: IDC

Timeline