DoD's $38.8M T-158 Track Shoe contract awarded to CONTITECH USA, INC. shows potential value concerns

Contract Overview

Contract Amount: $38,861,885 ($38.9M)

Contractor: Contitech USA, Inc

Awarding Agency: Department of Defense

Start Date: 2016-01-11

End Date: 2017-04-28

Contract Duration: 473 days

Daily Burn Rate: $82.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: T-158 TRACK SHOE 2530-01-435-5175 12387880-1 64,776

Place of Performance

Location: FAIRLAWN, SUMMIT County, OHIO, 44333

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $38.9 million to CONTITECH USA, INC for work described as: T-158 TRACK SHOE 2530-01-435-5175 12387880-1 64,776 Key points: 1. The contract's value appears high relative to the quantity of items procured, suggesting a potentially elevated per-unit cost. 2. Full and open competition was utilized, which typically fosters competitive pricing, but the final price warrants scrutiny. 3. The contract duration of 473 days is relatively short for a procurement of this magnitude, potentially impacting long-term cost-effectiveness. 4. The sole awardee, CONTITECH USA, INC., suggests a focused market for this specific track shoe component. 5. The procurement falls under the Defense Logistics Agency's purview, indicating a critical need for military vehicle sustainment. 6. The firm fixed-price contract type offers cost certainty but shifts risk to the contractor, which can be reflected in the price.

Value Assessment

Rating: questionable

The total award amount of $38,861,885.20 for 123,878 units of T-158 track shoes suggests a per-unit cost of approximately $313.77. Benchmarking this against similar military track shoe procurements or commercial equivalents is crucial. Without direct comparable data, the price appears high, especially considering the contract was awarded in 2016. Further analysis into the specific technical requirements and material costs associated with these track shoes is needed to definitively assess value for money.

Cost Per Unit: Approximately $313.77 per unit (based on total award and quantity).

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of only one awardee, CONTITECH USA, INC., despite the open competition, could suggest a specialized market or that only one bidder met all the stringent requirements. While open competition is generally positive for price discovery, the single award might limit the full benefits of competitive pressure.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it aims to secure the best possible prices through a wide range of offers. However, the single award in this instance warrants further investigation to ensure that the price achieved truly reflects competitive market conditions.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches utilizing armored vehicles requiring T-158 track shoes. The services delivered include the supply of critical components for military vehicle maintenance and operational readiness. The geographic impact is national, supporting military readiness across various operational theaters. Workforce implications include supporting manufacturing jobs within CONTITECH USA, INC. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for overpayment due to high per-unit cost.
Limited competition despite 'full and open' designation raises questions about market dynamics.
Contract duration may not align with long-term sustainment needs, potentially leading to future contract fragmentation.
Lack of detailed cost breakdowns makes independent value assessment difficult.

Positive Signals

Awarded under full and open competition, theoretically maximizing bidder participation.
Firm fixed-price contract provides budget certainty for the government.
CONTITECH USA, INC. is a known supplier in the defense sector, suggesting some level of established capability.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing and supply of critical components for military vehicles. The market for specialized track shoes is likely concentrated among a few key suppliers capable of meeting stringent military specifications. Spending benchmarks for similar components can vary widely based on material, design complexity, and volume. The Defense Logistics Agency (DLA) plays a crucial role in managing the supply chain for a vast array of military equipment, ensuring readiness across all branches.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). There is no explicit information regarding subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem appears minimal for this specific contract, though larger prime contractors often engage small businesses in their broader supply chains.

Oversight & Accountability

Oversight for this contract would primarily 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 (DLA) Contracting Command would also have oversight responsibilities. Transparency is facilitated through contract award databases, but detailed cost breakdowns and performance metrics may not always be publicly available.

Related Government Programs

Military Vehicle Components
Defense Logistics Agency Procurement
Armored Vehicle Sustainment
Track Systems Manufacturing

Risk Flags

High Per-Unit Cost Concern
Single Award Despite Open Competition
Limited Public Cost Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.9 million to CONTITECH USA, INC. T-158 TRACK SHOE 2530-01-435-5175 12387880-1 64,776

Who is the contractor on this award?

The obligated recipient is CONTITECH USA, INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $38.9 million.

What is the period of performance?

Start: 2016-01-11. End: 2017-04-28.

What is the track record of CONTITECH USA, INC. with the Department of Defense and other government agencies?

CONTITECH USA, INC., part of the Continental AG group, has a history of supplying various components to the U.S. military. Their involvement typically spans across different vehicle platforms and includes a range of rubber and polymer-based products, such as hoses, belts, and specialized parts like track systems. Publicly available data indicates multiple contract awards from various agencies, including the Department of Defense, primarily through the Defense Logistics Agency. While specific performance metrics for individual contracts are not always detailed in public records, their continued awards suggest a capacity to meet contractual obligations. A deeper dive into contract performance databases and any reported issues or successes would provide a more comprehensive view of their track record.

How does the per-unit cost of $313.77 for the T-158 track shoe compare to similar military procurements?

Directly comparing the per-unit cost of $313.77 for the T-158 track shoe requires access to detailed specifications and market data for comparable items. Military track shoes can vary significantly in price based on material composition (e.g., rubber vs. steel), design complexity, durability requirements, and the specific vehicle platform they are intended for. Without knowing the exact specifications of the T-158 track shoe and comparing it to other track systems procured by the DoD for similar vehicle classes (e.g., Abrams tanks, Bradley Fighting Vehicles), it is difficult to definitively state whether $313.77 is high or low. However, for context, some commercial heavy equipment track systems can range from a few hundred to over a thousand dollars per unit, depending on size and material. The DoD often procures specialized, high-durability components that may command premium pricing.

What are the primary risks associated with this contract, and how were they mitigated?

The primary risks associated with this contract include potential cost overruns if the firm fixed-price model did not adequately account for unforeseen material or labor increases, supply chain disruptions affecting delivery timelines, and performance issues where the track shoes might not meet durability or operational standards. Mitigation strategies typically involve robust contract language, including detailed specifications, quality assurance clauses, and delivery schedules. The firm fixed-price nature shifts cost risk to the contractor, CONTITECH USA, INC. The use of full and open competition also aims to mitigate risks by ensuring a competitive environment that theoretically drives down prices and encourages quality. However, the effectiveness of these mitigations depends on the thoroughness of the initial solicitation and the oversight applied during contract performance.

What is the historical spending pattern for T-158 track shoes or similar components by the Defense Logistics Agency?

Analyzing historical spending patterns for T-158 track shoes or similar components by the Defense Logistics Agency (DLA) is crucial for understanding cost trends and procurement strategies. While this specific award data is from 2016-2017, the DLA procures vast quantities of spare parts and components for military vehicles. Historical data might reveal if this was a one-time large procurement, a recurring need, or if spending on such items has increased or decreased over time. Examining prior solicitations and awards for the same or functionally equivalent track shoes could indicate price fluctuations, changes in competition levels, and the average contract values. Such analysis helps in assessing whether the $38.8 million awarded in this instance aligns with historical norms or represents a significant deviation.

What are the implications of the contract duration (473 days) on the overall program effectiveness and cost?

A contract duration of 473 days (approximately 15.5 months) for the delivery of 123,878 track shoes suggests a relatively steady production and delivery schedule. This duration is neither exceptionally short nor excessively long for a procurement of this scale. For program effectiveness, a well-managed schedule ensures that military units receive the necessary components in a timely manner to maintain vehicle readiness. From a cost perspective, a defined duration helps in managing program funds and forecasting expenditures. However, if the demand for these track shoes is ongoing or cyclical, a contract of this length might necessitate follow-on procurements, potentially leading to administrative costs associated with repeated solicitations and award processes. It also means that pricing is fixed for this period, and if market conditions change significantly, the government might be locked into a less favorable price for the remainder of the term.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SPRDL115R0103

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Continental Aktiengesellschaft (UEI: 315674267)

Address: 703 S CLEVELAND MASSILLON RD, FAIRLAWN, OH, 44333

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: $38,861,885

Exercised Options: $38,861,885

Current Obligation: $38,861,885

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline