DoD awards $58M for engine procurement, raising questions about competition and value

Contract Overview

Contract Amount: $57,989,530 ($58.0M)

Contractor: Oshkosh Defense LLC

Awarding Agency: Department of Defense

Start Date: 2020-04-24

End Date: 2022-12-30

Contract Duration: 980 days

Daily Burn Rate: $59.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FINAL LOT BUY OF ENGINES WITH CONTAINERS

Place of Performance

Location: OSHKOSH, WINNEBAGO County, WISCONSIN, 54902

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $58.0 million to OSHKOSH DEFENSE LLC for work described as: FINAL LOT BUY OF ENGINES WITH CONTAINERS Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value for engine procurement suggests a critical need within the Defense Logistics Agency. 3. Lack of competition is a key risk indicator for potential overpayment and reduced innovation. 4. The firm-fixed-price contract type shifts risk to the contractor, but without competition, its effectiveness is diminished. 5. This award represents a substantial investment in engine equipment, impacting readiness and operational capabilities.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source award and lack of publicly available comparable data. The $57.99 million awarded for engine procurement suggests a significant investment. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers received the best possible deal. Further analysis of the specific engine type and quantity would be needed for a more precise value assessment.

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 Defense LLC, was solicited. This approach bypasses the competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not have benefited from the cost savings and innovation that a competitive bidding process could have generated. This could translate to a less efficient use of public funds.

Public Impact

The primary beneficiaries are likely military units requiring new or replacement engines for their equipment. The contract delivers essential engine components, crucial for maintaining the operational readiness of defense assets. The geographic impact is primarily within the United States, supporting defense logistics and maintenance operations. Workforce implications may include direct employment at Oshkosh Defense LLC and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher prices.
Lack of transparency in the justification for sole-sourcing.
Limited opportunity for small businesses to participate in subcontracting without a competitive solicitation.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Award to a known entity (Oshkosh Defense) may indicate a reliance on established supply chains.
Contract duration provides a degree of planning stability for the supplier.

Sector Analysis

This contract falls within the 'Other Engine Equipment Manufacturing' sector, a niche but critical part of the broader industrial base supporting defense. The market for specialized defense vehicle engines is often characterized by a limited number of qualified suppliers due to high technical barriers and stringent military specifications. Spending in this sector is directly tied to military modernization, sustainment, and readiness requirements.

Small Business Impact

The sole-source nature of this award significantly limits opportunities for small businesses, both as prime contractors and potentially as subcontractors, unless specifically included by the prime. Without a competitive solicitation, there's no explicit requirement or incentive for Oshkosh Defense LLC to engage in subcontracting with small businesses. This contract does not appear to be a small business set-aside.

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 Inspector General of the Department of Defense also has jurisdiction to investigate potential fraud, waste, or abuse. Transparency is limited due to the sole-source nature, making public oversight more challenging.

Related Government Programs

Defense Logistics Agency Engine Procurement
Oshkosh Defense Vehicle Contracts
Military Vehicle Component Manufacturing
Sole-Source Defense Procurements

Risk Flags

Sole-source award lacks competitive justification.
Potential for overpayment due to lack of competition.
Limited transparency in procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.0 million to OSHKOSH DEFENSE LLC. FINAL LOT BUY OF ENGINES WITH CONTAINERS

Who is the contractor on this award?

The obligated recipient is OSHKOSH DEFENSE LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $58.0 million.

What is the period of performance?

Start: 2020-04-24. End: 2022-12-30.

What specific types of engines are being procured under this contract, and what is their intended application?

The data provided indicates a 'FINAL LOT BUY OF ENGINES WITH CONTAINERS' under NAICS code 333618 (Other Engine Equipment Manufacturing). While the specific engine model or its application is not detailed, the context of the Defense Logistics Agency (DLA) and Oshkosh Defense LLC suggests these are likely engines for military vehicles or equipment. Oshkosh Defense is known for producing tactical wheeled vehicles, so these engines could be for trucks, armored personnel carriers, or other specialized platforms. The 'containers' mentioned might refer to shipping or specialized storage containers for the engines. Further details on the engine specifications and intended platforms would be necessary for a complete understanding of their role in defense operations.

What is the justification for awarding this contract on a sole-source basis?

The provided data explicitly states the contract type as 'NOT COMPETED,' indicating a sole-source award. The specific justification for this sole-source determination is not included in the abbreviated data. Typically, sole-source awards require a formal justification from the agency, often citing reasons such as the existence of only one responsible source, urgent and compelling needs that preclude full and open competition, or specific follow-on requirements where only the original contractor can meet the needs. Without the agency's official justification document, it's impossible to definitively state why competition was bypassed for this $57.99 million engine procurement.

How does the awarded price compare to market rates for similar engine procurements?

Directly comparing the awarded price to market rates is difficult without knowing the exact specifications of the engines procured. The contract is for 'ENGINES WITH CONTAINERS' and awarded to Oshkosh Defense LLC. If these are highly specialized, custom-built engines for military applications, their price may not be directly comparable to commercially available engines. Furthermore, the sole-source nature of the award means there was no competitive bidding to establish a market-driven price. To benchmark effectively, one would need to identify comparable military engine contracts or obtain detailed specifications and request quotes from multiple potential suppliers, which was not done in this instance.

What is Oshkosh Defense LLC's track record with the Defense Logistics Agency and similar contracts?

Oshkosh Defense LLC has a significant and long-standing relationship with the Department of Defense, including the Defense Logistics Agency (DLA). They are a major manufacturer of tactical wheeled vehicles, including the Family of Heavy Tactical Vehicles (FHTV) and the Joint Light Tactical Vehicle (JLTV). Their track record involves numerous large-scale contracts for vehicle production, sustainment, and component supply. Given their established role in providing military vehicles, it is plausible they are a primary or sole source for certain specialized engines or components integrated into their platforms, which could explain the sole-source award in some cases.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude ($57.99 million) is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may overpay for the engines and containers. Other risks include reduced innovation, as the contractor has less incentive to develop cost-saving efficiencies or improved designs. There's also a risk of vendor lock-in, making it difficult and costly to switch suppliers in the future. Furthermore, the lack of transparency in the procurement process can raise concerns about fairness and the efficient use of taxpayer funds.

What is the historical spending pattern for engine procurement by the Defense Logistics Agency?

Analyzing the historical spending patterns for engine procurement by the Defense Logistics Agency (DLA) would require access to comprehensive contract databases and spending reports. The abbreviated data provided focuses on a single contract. However, DLA's mission involves providing logistics support to the U.S. military, which includes procuring and managing a vast array of parts and equipment, including engines for various platforms. Spending in this category can fluctuate based on military readiness needs, equipment modernization programs, and the lifecycle of existing fleets. Without specific historical data, it's difficult to place this $57.99 million award in a broader trend context, but DLA consistently manages significant budgets for parts and equipment sustainment.

Industry Classification

NAICS: Manufacturing › Engine, Turbine, and Power Transmission Equipment Manufacturing › Other Engine Equipment Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: SPRDL120R0033

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Oshkosh Corp

Address: 2307 OREGON ST, OSHKOSH, WI, 54902

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $57,989,530

Exercised Options: $57,989,530

Current Obligation: $57,989,530

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: YES

Timeline