DoD's $82.2M armored vehicle contract awarded to CONTITECH USA, INC. lacked competition

Contract Overview

Contract Amount: $82,217,653 ($82.2M)

Contractor: Contitech USA, Inc

Awarding Agency: Department of Defense

Start Date: 2007-08-30

End Date: 2009-03-31

Contract Duration: 579 days

Daily Burn Rate: $142.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: T-158LL TRACK

Place of Performance

Location: FAIRLAWN, SUMMIT County, OHIO, 44333

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $82.2 million to CONTITECH USA, INC for work described as: T-158LL TRACK Key points: 1. The contract was awarded on a sole-source basis, raising concerns about potential overpayment and lack of market-driven pricing. 2. Limited competition suggests taxpayers may not have received the best possible value for the armored vehicle components. 3. The contract duration of 579 days indicates a significant period where alternative, potentially more cost-effective solutions were not explored. 4. The firm-fixed-price contract type offers some cost certainty but does not mitigate the risks associated with a non-competitive award. 5. The absence of small business subcontracting requirements warrants further investigation into potential impacts on smaller enterprises. 6. The contract's focus on military armored vehicle manufacturing places it within a critical but often high-cost defense sector.

Value Assessment

Rating: questionable

The contract's value of $82.2 million for military armored vehicle components, awarded without competition, raises significant value-for-money concerns. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The firm-fixed-price nature provides some cost control, but the lack of competition means the government may have paid a premium. Further analysis would require comparing the specific components and their pricing to industry standards or other sole-source awards for similar items.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. This approach is typically reserved for situations where only one responsible source can provide the required supplies or services. The lack of competition means that multiple bidders were not considered, and the government did not benefit from the price discovery mechanisms inherent in a competitive process. This can lead to higher prices and reduced innovation.

Taxpayer Impact: The absence of competition means taxpayers likely paid more than they would have in a fully competed scenario. Without bids from multiple vendors, the government had limited leverage to negotiate the best possible price.

Public Impact

The primary beneficiaries are the Department of Defense and its armored vehicle programs, ensuring the supply of critical components. The services delivered involve the manufacturing and supply of components for military armored vehicles, essential for national defense. The geographic impact is primarily within Ohio, where CONTITECH USA, INC. is located, potentially supporting local employment and economic activity. Workforce implications include specialized manufacturing jobs related to defense production within the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source award limits opportunities for other qualified vendors, including small businesses.
Potential for vendor lock-in if specialized knowledge or tooling is required.
Limited transparency in pricing due to absence of competitive bids.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established contractor may ensure timely delivery of critical components.
Contract supports a vital national defense capability.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of military armored vehicle components. This sector is characterized by high technological requirements, stringent quality standards, and often involves specialized manufacturing processes. Spending in this area is critical for national security but can be subject to significant cost fluctuations due to the specialized nature of the products and the limited number of qualified suppliers. Benchmarking is challenging due to the unique specifications of military hardware.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and the prime contractor is not a small business. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. This suggests that opportunities for small businesses to participate in this contract may have been limited, potentially impacting the broader small business defense industrial ecosystem. Further review of subcontracting plans would be necessary to fully assess the impact.

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 places cost risk on the contractor. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Military Vehicle Manufacturing
Defense Procurement
Armored Vehicle Components
Sole-Source Defense Contracts
Department of the Army Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.2 million to CONTITECH USA, INC. T-158LL TRACK

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 $82.2 million.

What is the period of performance?

Start: 2007-08-30. End: 2009-03-31.

What is the track record of CONTITECH USA, INC. with the federal government, particularly in defense contracts?

CONTITECH USA, INC. has a history of federal contracts, primarily with the Department of Defense. While specific details on past performance quality and on-time delivery for this particular contractor would require a deeper dive into contract performance reports and award histories, the fact that they were awarded this significant sole-source contract suggests a level of established capability and prior government trust. However, the sole-source nature of this specific award means it was not vetted against other potential suppliers, making it difficult to assess their competitiveness relative to the broader market based solely on this award.

How does the $82.2 million contract value compare to similar armored vehicle component contracts awarded competitively?

Direct comparison of the $82.2 million contract value to competitively awarded contracts for similar armored vehicle components is challenging without specific details on the exact components, quantities, and specifications. Sole-source awards, by their nature, are not subject to the price discovery of a competitive bidding process, often resulting in higher costs. To benchmark effectively, one would need to identify comparable contracts awarded through full and open competition for similar items, analyze their unit prices and total values, and account for differences in contract duration, scope, and inflation. The absence of such competitive data for this specific award makes a precise value comparison difficult.

What are the primary risks associated with awarding an $82.2 million contract on a sole-source basis for military hardware?

The primary risks associated with a sole-source award of this magnitude for military hardware include: 1. **Cost Overruns:** Without competitive pressure, the contractor may not be incentivized to offer the lowest possible price, potentially leading to taxpayers paying a premium. 2. **Lack of Innovation:** The absence of multiple bidders can stifle innovation, as there is less pressure to develop more efficient or advanced solutions. 3. **Limited Vendor Pool:** Reliance on a single source can create vulnerabilities if the contractor faces production issues, financial instability, or supply chain disruptions. 4. **Reduced Transparency:** The justification for a sole-source award needs to be robust, and without competitive bids, assessing the fairness and reasonableness of the price becomes more difficult.

What is the historical spending pattern for military armored vehicle components by the Department of Defense, and how does this contract fit in?

Historical spending on military armored vehicle components by the Department of Defense is substantial, reflecting the ongoing need for modernization and maintenance of ground vehicle fleets. This $82.2 million contract, awarded in 2007 for delivery through 2009, represents a specific procurement action within a broader, continuous spending trend. While this single contract's value might seem significant, it needs to be viewed in the context of the overall defense budget allocated to vehicle procurement and sustainment, which can run into billions of dollars annually. Understanding its place requires analyzing trends in vehicle platform upgrades, component obsolescence, and strategic force structure changes over time.

What are the implications of the 'NOT COMPETED' status for future procurements of similar armored vehicle components?

The 'NOT COMPETED' status for this contract signifies that the Department of the Army did not solicit bids from multiple sources. This could be due to specific justifications like urgency, unique capabilities, or lack of market research indicating other sources. For future procurements, this status raises a flag for the Government Accountability Office (GAO) and contract oversight bodies. It suggests a need for thorough market research to identify potential sources and explore competitive strategies to ensure best value for the government. If similar components are needed, agencies should strive for competition unless a valid sole-source justification can be strongly documented and defended.

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

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: $82,217,653

Exercised Options: $82,217,653

Current Obligation: $82,217,653

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: DAAE0703DN080

IDV Type: IDC

Timeline