DoD's $37.9M hydraulic parts kit contract awarded to Allison Transmission Inc. with no competition

Contract Overview

Contract Amount: $37,944,853 ($37.9M)

Contractor: Allison Transmission Inc

Awarding Agency: Department of Defense

Start Date: 2017-09-15

End Date: 2018-12-31

Contract Duration: 472 days

Daily Burn Rate: $80.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PARTS KIT, HYDRAULIC, NSN 2520-01-656-7229. QTY: 229; OPTION: NONE

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46222

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $37.9 million to ALLISON TRANSMISSION INC for work described as: PARTS KIT, HYDRAULIC, NSN 2520-01-656-7229. QTY: 229; OPTION: NONE Key points: 1. Contract awarded to a single, established supplier, raising questions about price competitiveness. 2. The award was not competed, suggesting potential missed opportunities for cost savings. 3. Performance period of over a year indicates a need for consistent supply. 4. The contract falls under motor vehicle transmission and power train parts manufacturing. 5. Awarded by the Defense Logistics Agency, supporting military vehicle readiness. 6. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: fair

The contract value of $37.9 million for 229 hydraulic parts kits appears substantial. Without competitive bids, it is difficult to benchmark the value for money. The sole-source nature of the award means that the price was likely negotiated directly with Allison Transmission Inc., potentially leading to a higher cost than if multiple vendors had competed. Further analysis would require comparing the per-unit cost to similar parts or historical pricing for this specific NSN.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Allison Transmission Inc., was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. The lack of competition means that taxpayers did not benefit from potential cost reductions that could have arisen from multiple suppliers vying for the contract.

Taxpayer Impact: The absence of competition for this significant contract means taxpayers may have paid a premium. Without a competitive environment, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

Military vehicle readiness is enhanced through the provision of essential hydraulic parts. Personnel operating and maintaining these vehicles benefit from reliable component availability. The contract supports the operational capabilities of the Department of Defense. The geographic impact is primarily within the operational theaters where these vehicles are deployed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can reduce transparency in pricing.
Dependence on a single supplier could create supply chain risks if not managed carefully.

Positive Signals

Award to a known entity, Allison Transmission Inc., suggests a potentially reliable supplier.
The contract duration indicates a consistent need and potential for stable supply.
The specific nature of the parts (hydraulic kits) points to a critical component for vehicle function.

Sector Analysis

This contract falls within the Motor Vehicle Transmission and Power Train Parts Manufacturing sector, a critical component of the broader automotive and defense industrial base. The market for specialized military vehicle parts can be concentrated, with a few key manufacturers dominating. Spending in this sector is essential for maintaining the operational readiness of military fleets, and contracts like this represent significant investments in ensuring the longevity and functionality of these assets.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large, established manufacturer like Allison Transmission Inc. suggests that the primary focus was on securing the necessary parts from a known source, rather than specifically fostering small business participation in this particular procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA) and the Department of Defense's internal audit and contracting oversight mechanisms. The contract type, Firm Fixed Price, generally provides cost certainty. However, the sole-source nature necessitates careful review of pricing and justification to ensure fair and reasonable costs. Inspector General involvement would be triggered by any allegations of fraud, waste, or abuse.

Related Government Programs

Military Vehicle Parts Procurement
Defense Logistics Agency Contracts
Allison Transmission Aftermarket Parts
Hydraulic System Components for Vehicles

Risk Flags

Sole-source award without apparent justification for lack of competition.
Potentially high per-unit cost requires further validation.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.9 million to ALLISON TRANSMISSION INC. PARTS KIT, HYDRAULIC, NSN 2520-01-656-7229. QTY: 229; OPTION: NONE

Who is the contractor on this award?

The obligated recipient is ALLISON TRANSMISSION INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.9 million.

What is the period of performance?

Start: 2017-09-15. End: 2018-12-31.

What is the historical spending pattern for this specific NSN (2520-01-656-7229) by the Department of Defense?

Analyzing historical spending for NSN 2520-01-656-7229 by the Department of Defense is crucial for understanding the long-term investment in these hydraulic parts kits. Without access to a comprehensive historical database, it's challenging to provide exact figures. However, the fact that a definitive contract was awarded in 2017 suggests a sustained need. If previous awards for this NSN were also sole-source or competed at a low level, it could indicate a limited supplier base or a specialized part. Conversely, if there were periods of robust competition, the current sole-source award might represent a deviation from standard practice and warrant closer scrutiny regarding the justification for not competing. Understanding the volume and value of past procurements would help establish a baseline for assessing the current contract's value and identifying any significant price escalations or de-escalations over time.

How does the per-unit cost of these hydraulic parts kits compare to similar components or market rates?

Benchmarking the per-unit cost of these hydraulic parts kits is essential for assessing value for money, especially given the sole-source nature of the award. The total award amount of $37,944,853.45 for 229 units yields a per-unit cost of approximately $165,698. This figure appears exceptionally high for what might be considered a 'parts kit.' To conduct a meaningful comparison, one would need to identify comparable hydraulic kits for similar heavy-duty vehicles, ideally those procured competitively by the DoD or other government agencies. Researching market rates from commercial suppliers of heavy equipment parts, particularly those for transmissions and hydraulic systems, would also provide a valuable benchmark. If this per-unit cost significantly exceeds industry standards or prices paid for comparable items in competitive solicitations, it would strongly indicate that the government did not achieve optimal value in this sole-source procurement.

What is Allison Transmission Inc.'s track record with sole-source contracts from the DoD?

Allison Transmission Inc. has a long-standing relationship with the Department of Defense as a supplier of transmissions and related parts. Examining their history with sole-source contracts specifically from the DoD is important for understanding potential patterns. While sole-source awards are justified under specific circumstances (e.g., unique capabilities, urgency, lack of alternatives), a pattern of sole-source awards to a particular contractor can raise concerns about market competition. Data on Allison Transmission's past sole-source awards, their justifications, and the associated contract values would be necessary to assess if this current contract is an anomaly or part of a broader trend. This analysis would help determine if the DoD consistently relies on Allison Transmission without exploring competitive alternatives, and whether pricing in these sole-source situations has been consistently fair and reasonable.

What are the risks associated with relying on a single supplier for critical hydraulic parts?

Relying on a single supplier, such as Allison Transmission Inc. in this case, for critical hydraulic parts introduces several risks. Firstly, there's a potential for supply chain disruption. If Allison Transmission faces production issues, labor strikes, natural disasters, or other unforeseen events, the availability of these essential parts for military vehicles could be severely impacted, potentially affecting operational readiness. Secondly, the lack of competition inherent in a sole-source award can lead to price escalation over time, as the government has limited leverage to negotiate better terms. This can result in higher overall program costs. Thirdly, it can stifle innovation, as there is less incentive for the supplier to invest in improving product design or manufacturing processes when they are guaranteed the business. Finally, it can create vendor lock-in, making it difficult and costly to switch to alternative suppliers in the future, even if more competitive options become available.

How does this contract align with the Defense Logistics Agency's mission and overall spending on vehicle parts?

This contract directly aligns with the Defense Logistics Agency's (DLA) core mission of providing comprehensive logistics, acquisition, and support services to the U.S. military. The DLA is responsible for ensuring that warfighters have the necessary parts and equipment to maintain operational readiness, and hydraulic parts kits for vehicles are critical components. The $37.9 million awarded to Allison Transmission Inc. represents a significant, albeit specific, portion of the DLA's overall spending on vehicle parts. To fully assess alignment, one would need to compare this contract's value and scope against the DLA's total annual budget for spare parts and maintenance, as well as its spending across different vehicle classes and component types. Understanding the proportion this contract represents within the DLA's broader portfolio helps contextualize its importance and the agency's commitment to maintaining the vehicle fleet.

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: SPRDL117R0022

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Allison Transmission Inc. (UEI: 969132880)

Address: ONE ALLISON WAY, INDIANAPOLIS, IN, 46222

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: $37,944,853

Exercised Options: $37,944,853

Current Obligation: $37,944,853

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline