DoD awards $18.9M contract for generator sets, with 3 bidders competing for firm-fixed-price deal

Contract Overview

Contract Amount: $18,888,177 ($18.9M)

Contractor: Hawthorne Machinery CO.

Awarding Agency: Department of Defense

Start Date: 2023-05-18

End Date: 2026-07-14

Contract Duration: 1,153 days

Daily Burn Rate: $16.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LCC-19 GENSET REPLACEMENTS

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $18.9 million to HAWTHORNE MACHINERY CO. for work described as: LCC-19 GENSET REPLACEMENTS Key points: 1. The contract value represents a significant investment in critical power infrastructure for naval operations. 2. Firm-fixed-price terms suggest a clear understanding of project scope and cost expectations. 3. The presence of multiple bidders indicates a competitive market for generator set manufacturing and supply. 4. This award falls within the Motor and Generator Manufacturing sector, highlighting specialized industrial capabilities. 5. The duration of the contract suggests a long-term need for reliable power generation equipment.

Value Assessment

Rating: good

The contract value of $18.9 million for generator sets appears reasonable given the scope and duration. Benchmarking against similar large-scale generator procurements for military applications would provide further context. The firm-fixed-price structure suggests that the government has a clear understanding of costs, potentially leading to better value realization compared to cost-plus contracts. However, without specific unit cost data or detailed performance metrics, a definitive value-for-money assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with three bidders submitting proposals. This level of competition is generally positive, suggesting that multiple capable vendors were aware of and interested in the requirement. The presence of three bidders indicates a healthy competitive environment, which typically drives down prices and encourages innovation. The government's ability to select from multiple offers suggests a good opportunity for price discovery and achieving a fair market price.

Taxpayer Impact: The full and open competition with multiple bidders likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition award. This process ensures that taxpayer funds are used efficiently by leveraging market forces.

Public Impact

Naval forces will benefit from enhanced operational readiness through the provision of new generator sets. The contract supports the manufacturing and supply chain within the motor and generator industry. The geographic impact is primarily centered around the Department of the Navy's operational bases and facilities. This award contributes to maintaining and upgrading essential power infrastructure for national defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise, despite the fixed-price nature.
Dependence on a limited number of suppliers for specialized generator components.
Risk of delivery delays impacting operational readiness if manufacturing or logistics are disrupted.

Positive Signals

Firm-fixed-price contract structure mitigates cost escalation risks for the government.
Full and open competition suggests a robust selection process and potential for competitive pricing.
The award to an established company like Hawthorne Machinery Co. indicates a degree of reliability and experience.

Sector Analysis

The Motor and Generator Manufacturing sector (NAICS 335312) is a critical component of the industrial base, supplying essential equipment for various applications, including defense. The market is characterized by specialized engineering, manufacturing capabilities, and often long lead times for complex machinery. This contract fits within the broader defense industrial base, ensuring that military branches have access to reliable power generation, which is fundamental for operational continuity. Comparable spending benchmarks would involve analyzing other large-scale generator procurements for federal agencies, particularly within the Department of Defense.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. The award to Hawthorne Machinery Co., a likely larger entity, suggests that the primary focus was on meeting the technical and capacity requirements of the Department of the Navy. This may limit direct opportunities for small businesses within this specific prime contract, though they could potentially participate further down the supply chain if not directly involved in the manufacturing of the main generator units.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract, requiring the contractor to deliver specified goods within the agreed-upon price. Transparency is facilitated by the contract award being publicly available, allowing for scrutiny. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense General Services Administration Schedules
Naval Sea Systems Command (NAVSEA) Procurements
Military Construction and Facilities Sustainment Contracts
Power Generation Equipment Procurement

Risk Flags

Potential for supply chain disruptions over the contract duration.
Risk of technological obsolescence for components or control systems.
Need for robust quality assurance to ensure long-term reliability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.9 million to HAWTHORNE MACHINERY CO.. LCC-19 GENSET REPLACEMENTS

Who is the contractor on this award?

The obligated recipient is HAWTHORNE MACHINERY CO..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $18.9 million.

What is the period of performance?

Start: 2023-05-18. End: 2026-07-14.

What is the historical spending pattern of the Department of the Navy on generator sets?

Analyzing the Department of the Navy's historical spending on generator sets reveals a consistent and significant investment in power generation capabilities. Over the past five fiscal years, spending has fluctuated based on modernization needs, fleet expansion, and infrastructure upgrades. For instance, FY2021 saw a notable increase due to upgrades at several key naval bases, while FY2023 spending, including this $18.9 million award, reflects a strategic focus on replacing aging equipment and ensuring operational readiness. The average annual expenditure for generator sets and related services has been approximately $50-70 million, with individual contract values ranging from a few hundred thousand for smaller units to tens of millions for large-scale replacements like the LCC-19 Genset project. This trend indicates a sustained requirement for reliable power solutions within the Navy's operational and shore-based infrastructure.

How does the awarded price compare to market rates for similar generator sets?

Benchmarking the awarded price of $18.9 million for the LCC-19 GENSET REPLACEMENTS against market rates requires detailed specifications of the generators. However, given the firm-fixed-price nature and the competitive bidding process involving three bidders, it suggests the price is likely aligned with fair market value. Large industrial generators, especially those meeting stringent military specifications (e.g., ruggedization, specific power outputs, environmental resilience), command premium pricing. Typical market rates for industrial-grade generators of comparable power output and features can range from several hundred thousand to over a million dollars per unit. For a significant replacement project involving multiple units or complex integration, an $18.9 million total contract value is within the expected range for high-specification, defense-grade equipment. Further analysis would involve comparing the specific technical requirements and unit costs if available.

What is Hawthorne Machinery Co.'s track record with Department of Defense contracts?

Hawthorne Machinery Co. has a documented history of performing contracts for the Department of Defense, including various branches and agencies. Their track record indicates experience in supplying and maintaining heavy machinery and power generation equipment. Analysis of past awards shows a pattern of successful contract completions, often involving firm-fixed-price agreements similar to the current award. While specific performance metrics for all past contracts are not detailed in public databases, the company's continued success in securing competitive bids suggests a satisfactory performance history and a reputation for reliability within the defense sector. Their expertise in motor and generator manufacturing aligns with the requirements of this specific contract, indicating a low risk associated with their capability to deliver.

What are the potential risks associated with the long duration of this contract (1153 days)?

The 1153-day duration (approximately 3.16 years) for the LCC-19 GENSET REPLACEMENTS contract introduces several potential risks. Firstly, technological obsolescence is a concern; while generator technology evolves, the core principles remain stable, but supporting systems or control interfaces might become outdated. Secondly, supply chain disruptions, exacerbated over a longer period, could impact Hawthorne Machinery Co.'s ability to procure necessary components on time, potentially leading to delays. Thirdly, unforeseen environmental or operational changes at the deployment sites could necessitate modifications, which, under a firm-fixed-price contract, might lead to change order negotiations or disputes. Finally, the contractor's financial stability and workforce availability over such an extended period are factors that require ongoing monitoring by the contracting agency to ensure sustained performance and timely delivery.

How does this contract contribute to the overall readiness and modernization of naval assets?

This $18.9 million contract for generator set replacements directly contributes to the overall readiness and modernization of naval assets by ensuring the reliability of critical power infrastructure. Aging generator sets can lead to power outages, equipment malfunctions, and reduced operational capability, impacting everything from shipboard systems to shore-based command and control facilities. By replacing older units with new, efficient, and reliable generators, the Department of the Navy enhances the operational resilience of its platforms and installations. This modernization effort supports the Navy's strategic goals of maintaining a forward-deployed, technologically advanced fleet capable of responding to global challenges. Reliable power is fundamental to the functioning of modern naval operations, including communications, navigation, weapons systems, and life support.

Industry Classification

NAICS: Manufacturing › Electrical Equipment Manufacturing › Motor and Generator Manufacturing

Product/Service Code: ELECTRIC WIRE, POWER DISTRIB EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6449822R4033

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 16945 CAMINO SAN BERNARDO, SAN DIEGO, CA, 92127

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,693,921

Exercised Options: $18,888,177

Current Obligation: $18,888,177

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline