DoD's $16.3M contract for vehicular power transmission components awarded to Allison Transmission, Inc. shows potential value concerns

Contract Overview

Contract Amount: $16,355,959 ($16.4M)

Contractor: Allison Transmission, Inc.

Awarding Agency: Department of Defense

Start Date: 2002-03-14

End Date: 2013-09-30

Contract Duration: 4,218 days

Daily Burn Rate: $3.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: 200207!002266!2100!AE07 !TACOM - WARREN !DAAE0702EN001 !A!N! !N!P00001 !20020430!20060930!132572843!006413348!005356613!N!ALLISON TRANSMISSION DIVISION !4700 WEST 10TH STREET !INDIANAPOLIS !IN!46222!36000!097!18!INDIANAPOLIS !MARION !INDIANA !+000001140550!N!N!000000000000!2520!VEHICULAR POWER TRANSMISSION COMPONENTS !A4A!COMBAT VEHICLES !1DJN!ABRAMS SERIES (M1/M1A1/M1A2) !561210!E! !3! ! !C! ! !99990909!B! ! !N!Z!D!N!S!1!001!N!1A!Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46222

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $16.4 million to ALLISON TRANSMISSION, INC. for work described as: 200207!002266!2100!AE07 !TACOM - WARREN !DAAE0702EN001 !A!N! !N!P00001 !20020430!20060930!132572843!006413348!005356613!N!ALLISON TRANSMISSION DIVISION !4700 WEST 10TH STREET !INDIANAPOLIS !IN!46222!36000!097!18!INDIANAPOLIS !MARIO… Key points: 1. The contract's value appears high relative to the limited scope of vehicular power transmission components. 2. A lack of competition raises questions about price discovery and potential overpayment. 3. The long duration and cost-plus nature of the contract may indicate increased risk. 4. This contract is part of broader DoD spending on combat vehicles, specifically the Abrams series. 5. The award to a single, established supplier suggests a mature market with limited new entrants. 6. Oversight of cost-plus contracts is crucial to ensure efficient use of taxpayer funds.

Value Assessment

Rating: questionable

The total award of $16.3 million for vehicular power transmission components, awarded on a cost-no-fee basis, warrants scrutiny. Without detailed breakdowns of the components and services provided, it is difficult to benchmark against similar procurements. However, the cost-plus nature of the contract, combined with a lack of competitive bidding, suggests a potential for inflated costs. Further analysis of the specific components and their market prices would be necessary for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities or intellectual property, or in cases of urgent need. The absence of multiple bidders means that the government did not benefit from the price competition that would normally drive down costs and encourage innovation.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as the government lacks leverage to negotiate the best possible price. It also limits opportunities for other businesses to compete for and win government contracts.

Public Impact

The primary beneficiaries of this contract are the U.S. Army's combat vehicle programs, specifically those utilizing the Abrams series. The contract ensures the continued supply of critical vehicular power transmission components, essential for the operational readiness of these vehicles. The contract's geographic impact is centered around Allison Transmission's facilities in Indianapolis, Indiana, supporting local employment and economic activity. Workforce implications include the potential for continued employment at Allison Transmission and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus contract type can incentivize higher spending without guaranteed efficiency.
Sole-source award limits price negotiation and potential for cost savings.
Long contract duration (over 11 years) increases exposure to cost overruns and changing market conditions.
Lack of competition may stifle innovation and prevent the adoption of newer, potentially more cost-effective technologies.

Positive Signals

Award to a known entity (Allison Transmission) suggests a degree of reliability and established performance.
Focus on critical components for Abrams series vehicles ensures support for essential defense assets.
Contract completion within the specified period (though long) indicates a commitment to fulfilling defense needs.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing and supply of critical components for military vehicles. The market for vehicular power transmission systems is specialized, with a few key players dominating. Allison Transmission is a well-established leader in this niche. Comparable spending benchmarks would involve analyzing other large-scale contracts for military vehicle parts and systems, which often represent significant investments due to the demanding specifications and long lifecycles of military equipment.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to a large corporation, Allison Transmission, Inc. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The lack of set-aside suggests that opportunities for small businesses may be limited to direct supply chain roles, rather than prime contracting.

Oversight & Accountability

The contract was awarded by the Department of Defense, likely subject to oversight from the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA). As a cost-plus contract, it would typically involve rigorous auditing and monitoring to ensure costs are reasonable and allowable. The Inspector General for the Department of Defense would also have jurisdiction for investigating any potential fraud, waste, or abuse.

Related Government Programs

Abrams Series Tank Modernization Programs
Department of Defense Vehicle Procurement
Military Powertrain Components
Defense Logistics Agency Supply Chain Management

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of detailed component breakdown

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.4 million to ALLISON TRANSMISSION, INC.. 200207!002266!2100!AE07 !TACOM - WARREN !DAAE0702EN001 !A!N! !N!P00001 !20020430!20060930!132572843!006413348!005356613!N!ALLISON TRANSMISSION DIVISION !4700 WEST 10TH STREET !INDIANAPOLIS !IN!46222!36000!097!18!INDIANAPOLIS !MARION !INDIANA !+000001140550!N!N!000000000000!2520!VEHICULAR POWER TRANSMISSION COMPONENTS !A4A!COMBAT VEHICLES !1DJN!ABRAMS SERIES (M1/M1A1/M1A2) !561210!E! !3! ! !C! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is ALLISON TRANSMISSION, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $16.4 million.

What is the period of performance?

Start: 2002-03-14. End: 2013-09-30.

What specific vehicular power transmission components were procured under this contract, and what is their unit cost?

The provided data indicates the contract is for 'VEHICULAR POWER TRANSMISSION COMPONENTS' and specifies the North American Industry Classification System (NAICS) code 561210, which typically relates to facilities support services, though the description here points to components. The data does not break down the specific components or provide unit costs. The total award value is $16,355,958.96. Without a detailed breakdown of the items purchased and their quantities, it is impossible to determine the unit cost for individual components. The contract type is 'COST NO FEE' (pt: 'COST NO FEE'), which means the contractor is reimbursed for allowable costs but receives no fee. This suggests the focus is on covering the expenses incurred in producing or supplying these components.

How does the $16.3 million contract value compare to historical spending on similar components for the Abrams series?

Direct comparison of the $16.3 million contract value to historical spending on similar components for the Abrams series is challenging without more granular data on the specific components procured and their historical pricing. The contract duration is over 11 years (from March 2002 to September 2013), meaning the $16.3 million represents the total potential value over this extended period, not an annual expenditure. Historical spending would need to account for inflation, technological upgrades, and varying quantities of components purchased over different fiscal years. Given the sole-source nature and cost-plus structure, it is difficult to ascertain if this represents a competitive market price without further benchmarking against other defense contracts for similar, albeit not identical, powertrain systems.

What are the key risks associated with a sole-source, cost-no-fee contract for critical military components?

The primary risks associated with a sole-source, cost-no-fee contract for critical military components include a lack of price competition, which can lead to higher costs for the government. The cost-no-fee structure, while not providing profit, still requires the government to reimburse the contractor for all allowable costs, potentially leading to cost overruns if not managed tightly. The sole-source aspect means the government is reliant on a single supplier, creating vulnerability if that supplier faces production issues, financial instability, or decides to discontinue the product line. Furthermore, the absence of competition can reduce incentives for the contractor to innovate or improve efficiency beyond what is contractually required.

What is Allison Transmission's track record with Department of Defense contracts, particularly for Abrams series vehicles?

Allison Transmission, Inc. has a long-standing relationship with the Department of Defense, particularly in supplying powertrain components for various military vehicles, including the Abrams series. Their expertise in heavy-duty transmissions is well-established. While this specific contract (DAAE0702EN001) was sole-source, Allison has likely been a key supplier for these components over many years, potentially through competitive contracts in the past or as a sole provider for specific upgrades or legacy systems. Their continued role as a supplier suggests a history of meeting the demanding performance requirements of military vehicles.

How does the contract's duration of over 11 years impact its overall risk and value proposition?

The contract's duration of over 11 years (from March 14, 2002, to September 30, 2013) significantly impacts its risk and value. A long duration can provide stability and ensure a consistent supply of critical components for the Abrams series vehicles over an extended period. However, it also increases the risk of cost escalation due to inflation, potential changes in material costs, and the contractor's potential to become complacent without ongoing competitive pressure. For the government, a long-term commitment ties up significant resources and reduces flexibility to adopt newer technologies or switch suppliers if better options emerge. The cost-no-fee structure over such a long period necessitates robust oversight to manage costs effectively.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Allison Transmission Inc

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

Financial Breakdown

Contract Ceiling: $1,856,392

Exercised Options: $1,856,392

Current Obligation: $16,355,959

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline