Coast Guard spends $2.86M on diesel engine parts, raising questions about competition and value

Contract Overview

Contract Amount: $2,859,848 ($2.9M)

Contractor: Fairbanks Morse, LLC

Awarding Agency: Department of Homeland Security

Start Date: 2026-01-22

End Date: 2027-03-10

Contract Duration: 412 days

Daily Burn Rate: $6.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PURCHASE OF CENTER SECTION OVERHAUL PARTS KITS TO SUPPORT MAIN DIESEL ENGINES ONBOARD USCG CUTTERS AS DESIGNATED.

Place of Performance

Location: BELOIT, ROCK County, WISCONSIN, 53511

State: Wisconsin Government Spending

Plain-Language Summary

Department of Homeland Security obligated $2.9 million to FAIRBANKS MORSE, LLC for work described as: PURCHASE OF CENTER SECTION OVERHAUL PARTS KITS TO SUPPORT MAIN DIESEL ENGINES ONBOARD USCG CUTTERS AS DESIGNATED. Key points: 1. The contract for center section overhaul parts kits for USCG cutters was awarded on a non-competitive basis. 2. Fairbanks Morse, LLC, the sole awardee, is a significant player in marine diesel engine manufacturing. 3. The contract duration is 412 days, with an estimated completion date in March 2027. 4. The contract type is Firm Fixed Price, which shifts some risk to the contractor. 5. The specific parts are for main diesel engines, critical for cutter operations. 6. The award value of $2.86 million represents a significant investment in maintaining the USCG fleet.

Value Assessment

Rating: fair

Benchmarking the value for this specific contract is challenging due to its non-competitive nature and the specialized nature of the parts. However, the award value of $2.86 million for overhaul parts kits suggests a substantial procurement. Without competitive bids, it is difficult to definitively assess if this represents fair market value. Further analysis would require comparing pricing for similar overhaul kits from other manufacturers or historical data for the same parts if available through other channels.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Fairbanks Morse, LLC. This means that the US Coast Guard did not solicit bids from other potential suppliers. While sole-source awards can be justified for unique or proprietary parts, they limit price discovery and potentially lead to higher costs for the government. The absence of competition means that taxpayers do not benefit from the cost savings that can arise from a competitive bidding process.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these essential engine parts, as there was no opportunity for multiple vendors to bid and drive down the price.

Public Impact

The primary beneficiaries are the U.S. Coast Guard cutters that will receive the necessary parts for their main diesel engines, ensuring operational readiness. The services delivered include the provision of critical overhaul parts kits, essential for maintaining the functionality and longevity of the vessels. The geographic impact is national, as USCG cutters operate across various maritime regions. Workforce implications include ensuring that maintenance crews have the necessary components to perform repairs and overhauls, supporting skilled labor within the Coast Guard and potentially at contractor facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Dependence on a single supplier for critical engine components could pose supply chain risks.

Positive Signals

Firm Fixed Price contract shifts some cost risk to the contractor.
Award supports a key component of the U.S. Coast Guard's operational capability.
Parts are for main diesel engines, indicating a focus on essential fleet maintenance.

Sector Analysis

This contract falls within the 'Other Engine Equipment Manufacturing' sector, a niche but vital part of the industrial base supporting critical infrastructure and defense. The market for specialized marine diesel engine parts is often dominated by a few key manufacturers due to proprietary designs and extensive testing requirements. Spending in this sector is directly tied to the maintenance and operational readiness of fleets, whether commercial or governmental. Benchmarking this specific procurement against broader industry spending is difficult without more granular data on comparable overhaul kits.

Small Business Impact

This contract does not appear to involve a small business set-aside, as the awardee is Fairbanks Morse, LLC, a known large business entity. There is no indication of subcontracting requirements for small businesses within the provided data. Therefore, this specific procurement is unlikely to have a direct positive impact on the small business ecosystem. Future contracts for similar parts or services could potentially include set-aside provisions to encourage small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Coast Guard's contracting and program management offices. As a Department of Homeland Security agency, the Coast Guard is subject to internal Inspector General oversight. Transparency regarding the justification for the sole-source award and the pricing structure would be key areas for scrutiny. The firm-fixed-price nature of the contract provides some level of cost accountability, but the absence of competition limits the government's ability to verify cost reasonableness through market comparison.

Related Government Programs

USCG Cutter Maintenance
Marine Diesel Engine Parts
Homeland Security Procurement
Defense Logistics Agency (DLA) - Maritime Support
Naval Sea Systems Command (NAVSEA) - Ship Parts

Risk Flags

Sole-source award
Potential lack of price competition
Limited transparency in procurement justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $2.9 million to FAIRBANKS MORSE, LLC. PURCHASE OF CENTER SECTION OVERHAUL PARTS KITS TO SUPPORT MAIN DIESEL ENGINES ONBOARD USCG CUTTERS AS DESIGNATED.

Who is the contractor on this award?

The obligated recipient is FAIRBANKS MORSE, LLC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $2.9 million.

What is the period of performance?

Start: 2026-01-22. End: 2027-03-10.

What is the track record of Fairbanks Morse, LLC in supplying parts to the U.S. Coast Guard or similar maritime agencies?

Fairbanks Morse, LLC has a long-standing history as a manufacturer of large diesel engines and associated parts, particularly for marine applications. They are known to supply engines and components to various branches of the U.S. military and Coast Guard. Their expertise in this specialized field is a likely factor in the sole-source award. Historical data on their performance, delivery times, and product quality with government contracts would be crucial for a comprehensive assessment. Without specific contract performance data for this award, it's assumed their selection is based on their established role as a primary supplier and OEM for these critical engine systems.

How does the $2.86 million award compare to historical spending on similar engine overhaul parts kits by the U.S. Coast Guard?

Direct comparison of the $2.86 million award to historical spending on identical overhaul parts kits is difficult without access to detailed historical procurement data for the U.S. Coast Guard's specific engine models. However, given the specialized nature of these components and the sole-source award, this figure represents a significant investment. If the Coast Guard has previously procured similar kits competitively, a comparison of those award values could reveal potential cost differences. Analyzing trends in spending on engine maintenance and parts over the past 5-10 years for the relevant cutter classes would provide context on the scale and frequency of such procurements.

What are the primary risks associated with a sole-source procurement for critical engine parts?

The primary risks associated with a sole-source procurement for critical engine parts include a lack of price competition, which can lead to inflated costs for the government and taxpayers. There is also a reduced incentive for the sole provider to innovate or improve efficiency, as they face no direct market pressure. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; any disruption in the supplier's operations could significantly impact the operational readiness of the U.S. Coast Guard fleet. The absence of competitive bidding also limits transparency and makes it harder to independently verify the reasonableness of the price.

What is the expected impact of these parts on the operational effectiveness of the USCG cutters?

These center section overhaul parts kits are critical for the maintenance and repair of the main diesel engines onboard U.S. Coast Guard cutters. The diesel engines are the primary propulsion and power generation systems for these vessels. Ensuring these engines are in optimal working condition through timely overhauls and part replacements is essential for maintaining the operational readiness and effectiveness of the fleet. Without these parts, cutters could face extended downtime, reduced operational range, or even complete mission capability loss, impacting the Coast Guard's ability to perform its diverse missions, including maritime law enforcement, search and rescue, and national security.

Are there alternative suppliers or aftermarket options for these specific engine parts, and why were they not considered?

The decision for a sole-source award to Fairbanks Morse, LLC suggests that alternative suppliers or aftermarket options were either not available, not certified, or not deemed suitable by the U.S. Coast Guard for these specific center section overhaul parts kits. Fairbanks Morse is likely the original equipment manufacturer (OEM) for these components, and using non-OEM parts could potentially void warranties, compromise engine performance, or violate technical specifications. The justification for sole-source procurement would typically detail why competition was not feasible, often citing proprietary technology, unique compatibility requirements, or the need to maintain specific performance standards best met by the OEM.

What is the breakdown of the $2.86 million award by specific part types or services, if available?

The provided data does not include a detailed breakdown of the $2.86 million award by specific part types or services within the overhaul kits. The description refers generally to 'CENTER SECTION OVERHAUL PARTS KITS'. A comprehensive understanding of the value would require access to the contract's line-item details, which would specify the quantity and cost of each individual component or sub-assembly included in the kits. This level of detail is typically found in the contract award documents or associated technical specifications, which are not included in the summary data.

Industry Classification

NAICS: Manufacturing › Engine, Turbine, and Power Transmission Equipment Manufacturing › Other Engine Equipment Manufacturing

Product/Service Code: HARDWARE AND ABRASIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Cooper Machinery Services LLC

Address: 701 WHITE AVE, BELOIT, WI, 53511

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: $2,859,848

Exercised Options: $2,859,848

Current Obligation: $2,859,848

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 70Z08025D21179B00

IDV Type: IDC

Timeline