Defense Logistics Agency awards $20.3M for axle assemblies, highlighting sole-source procurement for critical vehicle parts

Contract Overview

Contract Amount: $20,229,714 ($20.2M)

Contractor: Oshkosh Corp

Awarding Agency: Department of Defense

Start Date: 2009-12-23

End Date: 2011-09-17

Contract Duration: 633 days

Daily Burn Rate: $32.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AXLE ASSEMBLY,AUTOM

Place of Performance

Location: OSHKOSH, WINNEBAGO County, WISCONSIN, 54902

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $20.2 million to OSHKOSH CORP for work described as: AXLE ASSEMBLY,AUTOM Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies and market competition. 2. The contract duration of 633 days suggests a need for consistent supply of essential vehicle components. 3. Awarded to Oshkosh Corp, a significant player in defense vehicle manufacturing, indicating reliance on established suppliers. 4. The fixed-price contract type aims to provide cost certainty for the government. 5. The absence of small business set-asides suggests this contract may not directly benefit smaller enterprises. 6. The procurement falls under Motor Vehicle Transmission and Power Train Parts Manufacturing, a niche but critical sector for military readiness.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without comparable sole-source awards for similar axle assemblies. The raw dollar amount of $20.3 million for a two-year period for vehicle parts suggests a substantial investment. However, the lack of competition inherent in a sole-source award means there's no direct market comparison to assess if the pricing is optimal or if better value could have been achieved through a competitive process. Further analysis would require understanding the specific technical requirements and the uniqueness of the parts supplied by Oshkosh Corp.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Oshkosh Corp, was solicited. This approach is typically used when a unique product or service is required, or when only one responsible source is available. The lack of competition means there were no other bidders to compare against, and the government did not benefit from a competitive bidding process that could drive down prices. This raises concerns about whether the government secured the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the lowest possible price, potentially leading to higher overall expenditure.

Public Impact

Military vehicle readiness is enhanced through the supply of critical axle assemblies. The Department of Defense, specifically the Defense Logistics Agency, benefits from a reliable source of essential parts. The contract supports the operational capabilities of military vehicles, ensuring they are equipped with necessary components. The geographic impact is primarily national, supporting military operations across various theaters.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may reduce incentives for the contractor to innovate or offer cost-saving measures.
Dependence on a single supplier can create supply chain risks if the contractor faces production issues.

Positive Signals

Award to a known entity (Oshkosh Corp) suggests a degree of reliability and established performance.
Fixed-price contract provides budget certainty for the Defense Logistics Agency.
Procurement of essential vehicle parts directly supports military operational readiness.

Sector Analysis

The procurement of vehicle parts falls within the broader manufacturing sector, specifically focusing on motor vehicle transmission and power train parts. This is a critical sub-sector for defense logistics, ensuring the operational readiness of military fleets. The market for such specialized components can be concentrated, with a few key manufacturers dominating. Benchmarking spending in this area requires comparing similar sole-source awards for specialized defense vehicle components, which are often not publicly detailed.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb: false'. There is no information provided regarding subcontracting plans. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, with the primary beneficiary being the large prime contractor, Oshkosh Corp.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring compliance with contract terms and financial accountability. The Defense Logistics Agency's internal oversight mechanisms would also be in play. Transparency is limited due to the sole-source nature of the award, making detailed public scrutiny of pricing and performance more challenging.

Related Government Programs

Military Vehicle Parts Procurement
Defense Logistics Agency Contracts
Oshkosh Corporation Contracts
Sole-Source Defense Procurements
Motor Vehicle Parts Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.2 million to OSHKOSH CORP. AXLE ASSEMBLY,AUTOM

Who is the contractor on this award?

The obligated recipient is OSHKOSH CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $20.2 million.

What is the period of performance?

Start: 2009-12-23. End: 2011-09-17.

What is the track record of Oshkosh Corp in supplying axle assemblies to the Department of Defense?

Oshkosh Corporation is a well-established manufacturer of specialty trucks and defense vehicles. They have a long history of supplying various components and complete vehicles to the U.S. military. While specific data on their track record for axle assemblies in this exact configuration isn't detailed here, their extensive experience in the defense sector suggests a strong capability. The fact that the Defense Logistics Agency awarded them this contract, even on a sole-source basis, implies a level of confidence in their ability to meet the required specifications and delivery schedules. Further investigation into past performance reviews and other contracts awarded to Oshkosh for similar components would provide a more comprehensive understanding of their reliability and quality.

How does the $20.3 million award compare to similar contracts for axle assemblies?

Direct comparison of this $20.3 million award for axle assemblies is difficult without more specific details on the exact specifications, quantity, and duration of the contract, especially given its sole-source nature. Typically, competitive bids would provide a market benchmark. However, considering it's for military-grade components and awarded to a major defense contractor like Oshkosh Corp, the price point is likely reflective of specialized engineering, materials, and stringent quality control required for defense applications. Without comparable competitive awards or detailed cost breakdowns, it's hard to definitively state if this represents excellent or questionable value. The lack of competition inherently limits the ability to benchmark against market rates.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the absence of competitive bidding. Without multiple vendors vying for the contract, Oshkosh Corp may not have been incentivized to offer the lowest possible price. Another risk is supply chain vulnerability; reliance on a single supplier can lead to disruptions if Oshkosh faces production issues, quality control problems, or unforeseen business challenges. Furthermore, the lack of competition can reduce the government's leverage in negotiating terms and conditions, potentially leading to less favorable outcomes compared to a competitive procurement. Finally, there's a risk of 'vendor lock-in,' where the government becomes dependent on this specific supplier for critical parts.

How effective is the Defense Logistics Agency in procuring vehicle parts through sole-source awards?

The effectiveness of the Defense Logistics Agency (DLA) in procuring vehicle parts through sole-source awards is a complex issue. Sole-source awards are generally used when competition is not feasible or practical, such as for unique or highly specialized items where only one supplier can meet the requirements. While the DLA aims to ensure operational readiness by securing necessary parts, sole-source procurements inherently carry a higher risk of suboptimal pricing and reduced innovation compared to competitive processes. The DLA's effectiveness in these situations depends heavily on its ability to conduct thorough market research, justify the sole-source justification, and negotiate the best possible terms with the single available vendor. Without competitive pressure, the onus is on the DLA's contracting officers to rigorously assess the fairness of the price and the necessity of the sole-source approach.

What are the historical spending patterns for axle assemblies by the Department of Defense?

Historical spending patterns for axle assemblies by the Department of Defense are likely substantial and varied, given the vast size and operational scope of the U.S. military. Spending would fluctuate based on the types of vehicles in the fleet, their age, operational tempo, and modernization programs. Procurements could range from standard commercial off-the-shelf parts for light vehicles to highly specialized, custom-engineered assemblies for heavy-duty or tactical vehicles. The DLA, as the primary logistics provider, manages a significant portion of this spending. Analyzing historical data would reveal trends in contract types (competitive vs. sole-source), average prices per unit, and the key contractors involved. However, detailed historical spending data for specific components like axle assemblies, especially when procured sole-source, is often not readily available in public databases.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Parts Manufacturing › Motor Vehicle Transmission and Power Train Parts Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: SPRDL109R0110

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2307 OREGON ST, OSHKOSH, WI, 06

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

Financial Breakdown

Contract Ceiling: $20,229,714

Exercised Options: $20,229,714

Current Obligation: $20,229,714

Contract Characteristics

Cost or Pricing Data: NO

Timeline