DoD's $28.9M TUNNER LOADER contract awarded to DRS SUSTAINMENT SYSTEMS, INC. shows mixed value and competition

Contract Overview

Contract Amount: $28,895,708 ($28.9M)

Contractor: DRS Sustainment Systems, Inc

Awarding Agency: Department of Defense

Start Date: 2017-12-28

End Date: 2019-10-31

Contract Duration: 672 days

Daily Burn Rate: $43.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: TUNNER LOADER

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63121

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $28.9 million to DRS SUSTAINMENT SYSTEMS, INC for work described as: TUNNER LOADER Key points: 1. The contract's fixed-price incentive structure aims to align contractor and government interests, but requires careful monitoring of cost overruns. 2. Competition was robust, suggesting potential for favorable pricing, though the final price relative to market benchmarks needs further analysis. 3. Performance risk appears moderate given the fixed-price incentive type, but the duration of the contract warrants attention to ongoing execution. 4. This contract falls within the industrial machinery manufacturing sector, supporting specialized equipment for defense logistics. 5. The absence of small business set-asides or subcontracting goals may limit opportunities for smaller firms in this procurement.

Value Assessment

Rating: fair

The total award value of $28.9 million for the TUNNER LOADER contract appears within a reasonable range for specialized industrial equipment. However, without specific details on the unit quantities and technical specifications, a precise value-for-money assessment is challenging. Benchmarking against similar defense logistics equipment procurements would be necessary to determine if the pricing is competitive. The fixed-price incentive (FPI) contract type suggests an effort to control costs, but the final price is subject to performance and cost targets.

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 offers. This generally promotes a competitive environment, which can lead to better pricing and innovation. The number of bidders is not specified, but the 'full and open' designation suggests a potentially broad field of interested parties. The effectiveness of this competition in driving down costs depends on the number of actual bids received and the level of technical differentiation among them.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it increases the likelihood of obtaining goods and services at the most favorable prices. It ensures that the government is not limited to a single provider, fostering a market-driven approach to procurement.

Public Impact

The primary beneficiaries are the Department of Defense, which receives specialized loading equipment essential for its logistical operations. The contract delivers industrial truck, tractor, trailer, and stacker machinery, crucial for material handling in military settings. The geographic impact is primarily within the United States, where the contractor operates and potentially where the equipment will be deployed. Workforce implications include employment opportunities at DRS SUSTAINMENT SYSTEMS, INC. and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific small business subcontracting goals could limit opportunities for smaller enterprises.
The fixed-price incentive structure requires diligent oversight to ensure cost targets are met and prevent excessive overruns.
Limited transparency on the number of bidders in the 'full and open' competition makes it harder to fully assess competitive intensity.

Positive Signals

Awarded under full and open competition, suggesting a broad market engagement.
The fixed-price incentive contract type is designed to incentivize cost control and performance.
The contract supports critical defense logistics capabilities.

Sector Analysis

This contract falls within the Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing sector (NAICS 333924). This sector is characterized by the production of specialized equipment used for material handling and logistics across various industries, including defense. Spending in this area is often driven by the need for robust and reliable equipment capable of operating in demanding environments. Comparable spending benchmarks would involve analyzing other procurements for similar heavy-duty material handling equipment by government agencies.

Small Business Impact

The contract indicates that small business participation was not a primary focus, as it is not designated as a small business set-aside and no specific subcontracting goals are mentioned. This suggests that the procurement was likely awarded to a large business capable of meeting the complex requirements. Consequently, the direct impact on the small business ecosystem may be limited unless the prime contractor voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The fixed-price incentive structure necessitates close monitoring of cost and performance metrics to ensure accountability. Transparency regarding the contract's execution and any potential modifications would be subject to standard government reporting requirements, though specific details on Inspector General involvement are not provided.

Related Government Programs

Defense Logistics Agency (DLA) Equipment Procurements
Tactical Wheeled Vehicle Contracts
Heavy Equipment Manufacturing Contracts
Industrial Machinery and Equipment Procurement

Risk Flags

Potential for cost overruns due to FPI structure
Limited visibility into specific number of bidders
Absence of explicit small business subcontracting goals

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.9 million to DRS SUSTAINMENT SYSTEMS, INC. TUNNER LOADER

Who is the contractor on this award?

The obligated recipient is DRS SUSTAINMENT SYSTEMS, 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 $28.9 million.

What is the period of performance?

Start: 2017-12-28. End: 2019-10-31.

What is the track record of DRS SUSTAINMENT SYSTEMS, INC. with similar defense contracts?

DRS SUSTAINMENT SYSTEMS, INC. has a history of performing defense contracts, often related to sustainment and specialized equipment. Analyzing their past performance on similar fixed-price incentive contracts would provide insight into their ability to manage costs and meet delivery schedules effectively. A review of their contract history, including any past performance issues or awards for exceptional performance, is crucial. This includes examining their financial stability and capacity to handle large-scale production and sustainment requirements. Understanding their experience with the specific type of equipment (TUNNER LOADER) and its operational environment is also key to assessing their suitability and the potential risks associated with this contract.

How does the pricing of this TUNNER LOADER contract compare to market rates for similar equipment?

A comprehensive comparison of the pricing for this TUNNER LOADER contract against market rates requires detailed information on the specific technical specifications, quantity, and performance requirements of the equipment. Without these specifics, it is difficult to provide a precise benchmark. However, the 'full and open competition' award suggests that the market was engaged. To assess value, one would typically compare the per-unit cost or total contract value against quotes from other manufacturers for comparable equipment, factoring in differences in features, durability, and support. Government cost-analysts would have performed such comparisons during the procurement process, but external validation would necessitate access to detailed market research and competitive bids.

What are the primary risks associated with the fixed-price incentive (FPI) contract type for this procurement?

The primary risks associated with a Fixed-Price Incentive (FPI) contract for the TUNNER LOADER procurement revolve around cost control and potential for cost overruns. While the FPI structure incentivizes the contractor to control costs by sharing savings below a target cost and sharing cost increases above a target cost up to a ceiling, it still places the government at risk for cost increases. Key risks include the contractor potentially not meeting cost targets, leading to higher prices for the government than initially anticipated. There's also a risk that the contractor might prioritize meeting cost targets over quality or performance if not adequately monitored. Effective government oversight is crucial to ensure realistic target costs are set and that the contractor's cost accounting practices are sound.

How effective is the competition level in ensuring optimal value for taxpayers on this contract?

The contract was awarded under 'full and open competition,' which theoretically maximizes the potential for optimal value by allowing all eligible sources to bid. However, the actual effectiveness hinges on the number of bids received and the degree of differentiation among them. If only a few bids were submitted, or if the bids were significantly varied in technical approach or price, the competitive pressure might have been less intense. For taxpayers, optimal value is achieved when competition drives prices down to the lowest feasible level while ensuring the required quality and performance. Without knowing the number of bidders and the spread of their proposals, it's challenging to definitively state how effective this competition was in securing the best value.

What are the implications of the contract duration (672 days) on performance and cost management?

A contract duration of 672 days (approximately 22 months) for the TUNNER LOADER procurement implies a significant production and delivery schedule. This duration allows for a more measured production ramp-up and potentially incorporates testing and quality assurance phases. For performance, it provides the contractor with adequate time to execute, but also increases the window for potential delays or unforeseen issues. From a cost management perspective, a longer duration can introduce risks related to inflation, material cost fluctuations, and changes in labor costs, especially under an incentive structure. It necessitates robust contract management to track progress, manage risks, and ensure adherence to the incentive targets throughout the extended period.

Industry Classification

NAICS: Manufacturing › Other General Purpose Machinery Manufacturing › Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA (UEI: 428869465)

Address: 4201 INNOVATION WAY, BRIDGETON, MO, 63044

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: $28,901,078

Exercised Options: $28,901,078

Current Obligation: $28,895,708

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA851914D0001

IDV Type: IDC

Timeline