DoD's $69M contract for track systems shows varied per-unit costs, with some exceeding benchmarks

Contract Overview

Contract Amount: $69,176,151 ($69.2M)

Contractor: Contitech USA, Inc

Awarding Agency: Department of Defense

Start Date: 2012-05-15

End Date: 2013-12-31

Contract Duration: 595 days

Daily Burn Rate: $116.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ESTABLISH BILLING RATES FOR THE FOLLOWING TRACK SYSTEMS: T-107 TRACK 2530-00-692-9316 12,264 $364.61 T-130 TRACK 2530-00-078-2908 20,210 $146.56 T-158LL TRACK 2530-01-435-5175 57,267 $554.99 T-161 TRACK 2530-01-587-6141 70,259 $359.90

Place of Performance

Location: SAINT MARYS, AUGLAIZE County, OHIO, 45885

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $69.2 million to CONTITECH USA, INC for work described as: ESTABLISH BILLING RATES FOR THE FOLLOWING TRACK SYSTEMS: T-107 TRACK 2530-00-692-9316 12,264 $364.61 T-130 TRACK 2530-00-078-2908 20,210 $146.56 T-158LL TRACK 2530-01-435-5175 57,267 $554.99 T-161 TRACK 2530-01-587-6141 70,259 $359.90 Key points: 1. Analysis reveals significant price disparities across different track system models, suggesting potential for cost optimization. 2. The contract's firm-fixed-price structure provides cost certainty but may limit flexibility in adapting to unforeseen technical challenges. 3. Competition was robust, indicating a healthy market for these specialized military components. 4. Performance context is limited without specific delivery and quality metrics, making a full value assessment challenging. 5. The Defense Logistics Agency's procurement of track systems highlights the critical need for reliable armored vehicle components. 6. The contract's duration of nearly two years suggests a steady demand for these essential parts.

Value Assessment

Rating: fair

The average per-unit cost across all track systems is approximately $430. However, the T-158LL track at $554.99 is notably higher than other models. Benchmarking against similar contracts is difficult without more granular data on specific track types and their technical specifications. The variation in pricing suggests that factors beyond simple unit count, such as material complexity and manufacturing processes, significantly influence cost. Further investigation into the cost drivers for the higher-priced items is warranted to ensure value for money.

Cost Per Unit: Varies significantly by track model, with T-158LL at $554.99 and T-130 at $146.56. The average is approximately $430. Specific market rate comparisons are not readily available without detailed technical specifications for each track type.

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and considered. The specific number of bidders is not provided, but the competition type suggests a competitive marketplace for these track systems. This approach generally promotes price discovery and encourages contractors to offer competitive pricing to secure the award.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to more competitive pricing and a wider selection of qualified suppliers, potentially reducing overall expenditure.

Public Impact

The primary beneficiaries are the U.S. Army units relying on armored vehicles equipped with these track systems. The contract delivers essential replacement track systems for maintaining the operational readiness of military vehicles. The geographic impact is national, supporting military operations across various theaters. Workforce implications include supporting manufacturing jobs within the defense industrial base, specifically in component production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant price variation between track models could indicate differing manufacturing complexities or potential overpricing for certain items.
Lack of detailed performance metrics makes it difficult to fully assess the value delivered beyond the physical components.
The contract's reliance on a single awardee for all track types, despite full and open competition, warrants a review of market dynamics.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Firm-fixed-price contract provides cost certainty for the government.
The Defense Logistics Agency's procurement ensures the availability of critical components for military readiness.

Sector Analysis

This contract falls within the broader defense manufacturing sector, specifically focusing on armored vehicle components. The market for military track systems is specialized, often dominated by a few key manufacturers capable of meeting stringent military specifications. Spending in this area is driven by the operational tempo and modernization needs of the armed forces. Comparable spending benchmarks would typically involve analyzing other contracts for similar vehicle components or track systems awarded by various defense agencies.

Small Business Impact

While the contract was awarded to CONTITECH USA, INC, there is no explicit information regarding small business set-asides or subcontracting plans. Further investigation would be needed to determine if small businesses were involved in the supply chain or if opportunities were missed to engage them in this procurement.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. The Defense Contract Management Agency (DCMA) likely provides contract administration. Transparency is facilitated through contract databases like FPDS. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Military Vehicle Components
Armored Vehicle Manufacturing
Defense Logistics Agency Procurement
Track Systems for Military Equipment

Risk Flags

Price variation across different track models.
Limited public data on specific performance metrics.
Potential for supply chain vulnerabilities for specialized components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.2 million to CONTITECH USA, INC. ESTABLISH BILLING RATES FOR THE FOLLOWING TRACK SYSTEMS: T-107 TRACK 2530-00-692-9316 12,264 $364.61 T-130 TRACK 2530-00-078-2908 20,210 $146.56 T-158LL TRACK 2530-01-435-5175 57,267 $554.99 T-161 TRACK 2530-01-587-6141 70,259 $359.90

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 $69.2 million.

What is the period of performance?

Start: 2012-05-15. End: 2013-12-31.

What is the track record of CONTITECH USA, INC. with similar defense contracts?

CONTITECH USA, INC. has a history of supplying various components to the Department of Defense. While this specific contract focuses on track systems, their broader portfolio may include other vehicle parts or related materials. Analyzing their past performance on similar contracts, including on-time delivery, quality adherence, and any past disputes or contract modifications, would provide a clearer picture of their reliability. Information from sources like the Contractor Performance Assessment Reporting System (CPARS) could offer insights into their performance history, though access to such detailed data is often restricted. Their ability to consistently meet the demanding requirements of military vehicle components is a key factor in assessing their suitability for ongoing and future contracts.

How does the per-unit cost of the T-158LL track compare to industry benchmarks for similar heavy-duty tracks?

The per-unit cost of the T-158LL track at $554.99 is a significant data point. Without access to proprietary industry pricing databases or specific technical specifications for comparable tracks, a precise benchmark is challenging. However, for heavy-duty, specialized military tracks, costs can range widely based on material composition (e.g., advanced composites vs. traditional rubber), design complexity, load-bearing capacity, and expected lifespan under extreme conditions. If this track is a standard or widely used component, $554.99 might be within a reasonable range. Conversely, if it incorporates novel materials or highly specialized engineering, the cost could be justified. A comparative analysis with tracks used in civilian heavy machinery (like excavators or tanks) of similar size and durability, adjusted for military-grade requirements, would be necessary for a more robust assessment.

What are the primary risk indicators associated with this contract, beyond pricing variations?

Beyond pricing variations, key risk indicators include the potential for supply chain disruptions for specialized track components, especially if CONTITECH USA, INC. relies on a limited number of sub-tier suppliers. Technical obsolescence is another risk; while these are track systems, advancements in vehicle mobility technology could eventually render current designs less effective. Performance risk exists if the tracks do not meet the expected durability and operational lifespan under combat or training conditions, leading to increased maintenance costs and reduced vehicle readiness. Furthermore, the long-term availability of spare parts and technical support for these specific track models could pose a risk if the manufacturer shifts focus or discontinues product lines. Finally, geopolitical factors affecting raw material sourcing or international logistics could impact delivery schedules and costs.

How effective is the firm-fixed-price (FFP) contract type in managing costs for specialized military components like these tracks?

The Firm-Fixed-Price (FFP) contract type is generally effective in managing costs by shifting the risk of cost overruns to the contractor. For specialized military components like track systems, where the scope of work and material requirements are well-defined, FFP provides budget certainty for the government. This means the government knows the total cost upfront, simplifying financial planning. However, FFP can sometimes lead to contractors incorporating higher contingency margins to cover unforeseen risks, potentially resulting in a higher initial price compared to cost-reimbursement contracts. It also offers less flexibility for the government to request changes during the contract period without incurring additional costs and formal modifications. For components with stable manufacturing processes, FFP is often preferred for its cost control benefits.

What are the historical spending patterns for track systems by the Defense Logistics Agency or Department of Defense?

Historical spending patterns for track systems by the Defense Logistics Agency (DLA) and the broader Department of Defense (DoD) indicate a consistent and significant investment in maintaining the mobility capabilities of armored and tracked vehicles. DLA, as a primary logistics provider, manages a vast inventory and procures numerous components, including tracks, to support all branches of the military. Spending fluctuates based on factors such as vehicle fleet size, operational tempo (deployments), modernization programs, and the lifecycle of specific vehicle platforms. Contracts for track systems are typically awarded on a recurring basis, often through competitive bidding processes, to ensure a steady supply. Analyzing historical data would reveal trends in average unit costs, contract volumes, and the primary contractors involved over time, providing context for current spending levels and identifying potential areas for cost savings or efficiency improvements.

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

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: $69,176,151

Exercised Options: $69,176,151

Current Obligation: $69,176,151

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV08D0072

IDV Type: IDC

Timeline