DoD's $26.2M Propulsion Systems Contract with Detroit Diesel Corporation Raises Concerns Over Competition and Value
Contract Overview
Contract Amount: $26,196,584 ($26.2M)
Contractor: Detroit Diesel Corporation
Awarding Agency: Department of Defense
Start Date: 2007-06-05
End Date: 2013-12-31
Contract Duration: 2,401 days
Daily Burn Rate: $10.9K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: PROPULSION SYSTEMS
Place of Performance
Location: REDFORD, WAYNE County, MICHIGAN, 48239
State: Michigan Government Spending
Plain-Language Summary
Department of Defense obligated $26.2 million to DETROIT DIESEL CORPORATION for work described as: PROPULSION SYSTEMS Key points: 1. Significant spending on propulsion systems highlights critical defense infrastructure needs. 2. Sole-source award to Detroit Diesel Corporation limits competitive pricing and innovation. 3. Long contract duration and fixed-price structure may obscure potential cost efficiencies. 4. Lack of competition raises questions about the overall value for taxpayer dollars.
Value Assessment
Rating: questionable
The contract value of $26.2 million for propulsion systems is substantial. Without competitive bids, it's difficult to assess if this price reflects fair market value compared to similar systems procured through competitive means.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, Detroit Diesel Corporation, was considered. This significantly limits price discovery and potentially leads to higher costs than if multiple vendors had competed.
Taxpayer Impact: The lack of competition in this sole-source award means taxpayers may be paying a premium for these propulsion systems, as there was no market pressure to drive down prices.
Public Impact
Naval operations rely heavily on robust propulsion systems, making this a critical procurement. The long contract period suggests a sustained need for these specific systems. Potential for higher costs due to the absence of competitive bidding impacts overall defense budget efficiency.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Fixed-price contract
- Long contract duration
Positive Signals
- Essential defense procurement
- Established vendor
Sector Analysis
The Department of Defense frequently procures complex systems like propulsion, with spending often influenced by technological requirements and national security needs. Benchmarks for such specialized equipment can vary widely based on customization and scale.
Small Business Impact
The data indicates this contract was not awarded to small businesses, suggesting a focus on large, established prime contractors for this specific procurement. Further analysis would be needed to determine if small businesses were subcontracted.
Oversight & Accountability
The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the government received the best possible value and that the justification for sole-sourcing was robust.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award limits competition.
- Potential for inflated pricing due to lack of competition.
- Fixed-price contract may not incentivize cost savings.
- Long contract duration could obscure cost efficiencies.
- Limited transparency on value for money.
Tags
ship-building-and-repairing, department-of-defense, mi, dca, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $26.2 million to DETROIT DIESEL CORPORATION. PROPULSION SYSTEMS
Who is the contractor on this award?
The obligated recipient is DETROIT DIESEL CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $26.2 million.
What is the period of performance?
Start: 2007-06-05. End: 2013-12-31.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies explored?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without further details, it's impossible to confirm if alternative competitive strategies were thoroughly explored. A review of the contract file and justification documents would be necessary to assess the validity of the sole-source determination and ensure it served the government's best interest.
How does the per-unit cost of these propulsion systems compare to industry benchmarks for similar equipment, especially considering the lack of competition?
Directly comparing the per-unit cost is challenging without a competitive benchmark. However, sole-source contracts often result in higher prices than competitively awarded ones. An independent cost analysis or benchmarking against systems with similar specifications procured competitively would be necessary to determine if the price paid was reasonable and represented good value for the taxpayer.
What are the long-term implications of relying on a single vendor for critical propulsion systems, particularly regarding maintenance, upgrades, and future supply chain risks?
Long-term reliance on a single vendor can create significant risks, including potential price increases for future support, limited access to technological advancements from competitors, and vulnerability if the vendor faces financial or operational difficulties. This dependency could impact the Navy's ability to maintain fleet readiness and adapt to evolving requirements, necessitating careful vendor relationship management and contingency planning.
Industry Classification
NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing
Product/Service Code: SHIP AND MARINE EQUIPMENT
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0010407RK033
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Daimlerchrysler AG (UEI: 498999044)
Address: 13400 OUTER DRIVE WEST, DETROIT, MI, 90
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $26,288,334
Exercised Options: $26,288,334
Current Obligation: $26,196,584
Contract Characteristics
Cost or Pricing Data: NO
Timeline
Start Date: 2007-06-05
Current End Date: 2013-12-31
Potential End Date: 2013-12-31 00:00:00
Last Modified: 2012-09-07
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