DoD's $8.1M repair contract for industrial machinery awarded to Eaton Corporation without competition

Contract Overview

Contract Amount: $8,099,075 ($8.1M)

Contractor: Eaton Corporation

Awarding Agency: Department of Defense

Start Date: 2024-01-31

End Date: 2026-06-30

Contract Duration: 881 days

Daily Burn Rate: $9.2K/day

Competition Type: NOT COMPETED UNDER SAP

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FIRM FIXED PRICE - RECURRING SERVICES

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92132

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $8.1 million to EATON CORPORATION for work described as: FIRM FIXED PRICE - RECURRING SERVICES Key points: 1. Contract awarded on a firm-fixed-price basis for recurring services, indicating predictable costs. 2. The contract's duration of 881 days suggests a long-term need for these repair services. 3. Awarded by the Department of the Navy, this contract supports critical industrial equipment maintenance. 4. The lack of competition raises questions about potential overpricing and limited value for money. 5. Eaton Corporation, the sole awardee, is a significant player in the industrial sector. 6. The contract's value of over $8 million warrants scrutiny for cost-effectiveness and market alignment.

Value Assessment

Rating: questionable

The contract's firm-fixed-price structure for recurring services provides cost predictability. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The value for money is questionable due to the sole-source nature of the award, which may have led to a higher price than could have been achieved through open competition. Further analysis would require access to detailed cost breakdowns and comparable service agreements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed under the simplified acquisition procedures, indicating it was likely awarded through a sole-source justification. The absence of multiple bidders means there was no direct price comparison or negotiation leverage, potentially limiting the government's ability to secure the best possible price. The lack of competition suggests potential barriers to entry for other qualified vendors or a specific justification for awarding to a single provider.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the lack of competitive pressure to drive down costs. Without a competitive process, there is a reduced assurance that the government obtained the most economical solution available in the market.

Public Impact

The Department of the Navy benefits from the continued operational readiness of its commercial and industrial machinery. This contract ensures the availability of essential repair and maintenance services for critical equipment. The services are likely to be performed within California, where the contract is registered. The contract supports specialized technical expertise in machinery repair, potentially sustaining skilled jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Sole-source award limits opportunities for other businesses to compete for government contracts.
Absence of competitive benchmarking makes it difficult to assess true value for money.

Positive Signals

Firm-fixed-price contract provides cost certainty for recurring services.
Award to an established firm like Eaton Corporation suggests a focus on reliability and expertise.
Long contract duration indicates a stable and ongoing need for these services.

Sector Analysis

The industrial machinery repair and maintenance sector is crucial for supporting the operational readiness of various government agencies, particularly in defense and logistics. This contract falls under the Commercial and Industrial Machinery and Equipment Repair and Maintenance NAICS code (811310). The market for such services is competitive, with numerous firms offering specialized repair and maintenance. However, specific, long-term maintenance contracts for specialized government equipment can sometimes lead to sole-source awards if only one vendor possesses the necessary certifications, proprietary knowledge, or existing infrastructure.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'no' field being 0 suggests no specific subcontracting goals were mandated for small businesses. This means that opportunities for small businesses to participate in this contract, either as prime contractors or subcontractors, are likely limited unless Eaton Corporation voluntarily engages them. The absence of set-asides or subcontracting plans may reduce the direct economic benefit to the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a firm-fixed-price contract for recurring services, performance monitoring would focus on adherence to service level agreements and timely completion of repairs. Transparency is limited by the sole-source nature of the award, as detailed justifications and competitive analyses are not publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Maintenance and Repair Contracts
Industrial Equipment Maintenance Services
Naval Fleet Support Services
Commercial and Industrial Machinery Repair

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.1 million to EATON CORPORATION. FIRM FIXED PRICE - RECURRING SERVICES

Who is the contractor on this award?

The obligated recipient is EATON 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 $8.1 million.

What is the period of performance?

Start: 2024-01-31. End: 2026-06-30.

What is Eaton Corporation's track record with the Department of Defense for similar repair and maintenance services?

Eaton Corporation has a history of providing various products and services to the Department of Defense, including power management solutions, electrical components, and potentially related maintenance services. While specific details on their track record for this exact type of industrial machinery repair contract are not provided in the summary data, their established presence in the defense sector suggests familiarity with government procurement processes and requirements. Further investigation into their past performance ratings, contract history, and any reported issues with the DoD would be necessary to fully assess their suitability and reliability for this specific contract.

How does the $8.1 million contract value compare to industry benchmarks for similar machinery repair services?

Benchmarking this $8.1 million contract value is challenging without more specific details on the types of machinery, the scope of repair services, and the contract duration. However, given that this is a firm-fixed-price contract for recurring services over approximately two years (881 days), the annual value is roughly $4 million. For specialized industrial machinery repair and maintenance, especially for critical defense assets, this figure could be within a reasonable range if the machinery is complex and requires highly skilled technicians. The lack of competition, however, prevents a definitive assessment of whether this represents optimal value compared to what could be achieved in a competitive market.

What are the primary risks associated with awarding this contract on a sole-source basis?

The primary risks associated with awarding this contract on a sole-source basis include potential overpricing, reduced incentive for the contractor to innovate or provide exceptional service, and a lack of transparency in the procurement process. Without competition, the government loses the opportunity to explore alternative solutions or negotiate better terms. There's also a risk that the chosen contractor may not be the most capable or cost-effective provider available in the market. Furthermore, sole-source awards can create a perception of favoritism and may limit future competition by establishing a single vendor relationship.

What is the expected impact of this contract on the operational readiness of the Department of the Navy's equipment?

This contract is expected to significantly contribute to the operational readiness of the Department of the Navy's equipment by ensuring that critical commercial and industrial machinery receives timely and effective repair and maintenance services. By securing these services through a dedicated contract, the Navy can mitigate the risk of equipment downtime, which can disrupt operations and lead to increased costs. The recurring nature of the services suggests a proactive maintenance strategy, aiming to prevent major failures and extend the lifespan of the machinery, thereby maintaining a higher state of readiness for naval assets.

What has been the historical spending pattern for industrial machinery repair and maintenance by the Department of the Navy?

Historical spending patterns for industrial machinery repair and maintenance by the Department of the Navy are not detailed in the provided data. However, it is reasonable to assume that the Navy, operating a vast array of ships, aircraft, and shore facilities, requires substantial and consistent investment in maintaining its complex machinery. Spending in this category is likely influenced by factors such as fleet size, equipment age, operational tempo, and technological advancements. Analyzing past spending trends would reveal whether this $8.1 million contract represents an increase, decrease, or continuation of previous investment levels for similar services.

Industry Classification

NAICS: Other Services (except Public Administration) › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

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

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8609 SIX FORKS RD, RALEIGH, NC, 27615

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $16,649,200

Exercised Options: $15,599,582

Current Obligation: $8,099,075

Actual Outlays: $337,513

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6247323D3601

IDV Type: IDC

Timeline