Oshkosh Defense awarded $6.1B contract for military vehicles, with FFP and CPFF line items

Contract Overview

Contract Amount: $6,104,259,193 ($6.1B)

Contractor: Oshkosh Defense LLC

Awarding Agency: Department of Defense

Start Date: 2015-08-25

End Date: 2025-09-25

Contract Duration: 3,684 days

Daily Burn Rate: $1.7M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE CONTRACT INCLUDES FIRM FIXED PRICE (FFP) CONTACT LINE ITEM NUMBERS (CLIN) FOR VEHICLES, TRAILERS, KITS (PACKAGED AND INSTALLED), TEST HARDWARE AND SUPPORT, VEHICLE REFURBISHMENT, SYSTEMS ENGINEERING/ PROGRAM MANAGEMENT (SEPM), STORAGE AND MAINTENANCE OF VEHICLES, VEHICLE REFURBISHMENT, INTEGRATED PRODUCT SUPPORT (IPS), AND A TECHNICAL DATA PACKAGE (TDP). THE CONTRACT ALSO INCLUDES COST PLUS FIXED FEE (CPFF) CLINS FOR SYSTEM TECHNICAL SUPPORT (STS), TOTAL PACKAGE FIELDING (TPF), AND INTERIM CONTRACTOR SUPPORT (ICS). THE CONTRACT CONTAINS PROVISIONS FOR AN ECONOMIC PRICE ADJUSTMENT (EPA) FOR MATERIAL FLUCTUATIONS FOR THE VEHICLES PROCURED IN OPTION PERIODS SIX, SEVEN, AND EIGHT.

Place of Performance

Location: OSHKOSH, WINNEBAGO County, WISCONSIN, 54902

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $6.10 billion to OSHKOSH DEFENSE LLC for work described as: THE CONTRACT INCLUDES FIRM FIXED PRICE (FFP) CONTACT LINE ITEM NUMBERS (CLIN) FOR VEHICLES, TRAILERS, KITS (PACKAGED AND INSTALLED), TEST HARDWARE AND SUPPORT, VEHICLE REFURBISHMENT, SYSTEMS ENGINEERING/ PROGRAM MANAGEMENT (SEPM), STORAGE AND MAINTENANCE OF VEHICLES, VEHICLE REFU… Key points: 1. Contract utilizes a mix of Firm Fixed Price (FFP) and Cost Plus Fixed Fee (CPFF) CLINs, indicating varied risk allocation. 2. Economic Price Adjustment (EPA) provisions for material fluctuations in later option periods suggest potential cost volatility. 3. The contract's duration of over 10 years (3684 days) implies a long-term strategic need for these vehicles. 4. Includes comprehensive support services such as systems engineering, program management, and integrated product support. 5. The presence of vehicle refurbishment and test hardware suggests a focus on maintaining and upgrading existing fleets. 6. Oshkosh Defense LLC is the sole awardee, highlighting a significant sole-source or limited competition scenario for these specific capabilities.

Value Assessment

Rating: good

The total contract value of $6.1 billion over approximately 10 years represents a substantial investment in military vehicle procurement and support. While specific unit costs are not provided, the mix of FFP and CPFF CLINs suggests a deliberate approach to managing costs based on the nature of the services. The inclusion of Economic Price Adjustments for materials in later years indicates an awareness of market volatility, which could impact the final cost. Benchmarking against similar large-scale military vehicle contracts would be necessary for a more precise value assessment, but the breadth of services covered (from manufacturing to refurbishment and support) suggests a comprehensive approach to fleet management.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. However, the data provided does not specify the number of bidders or the details of the competitive process. A full and open competition is generally expected to yield competitive pricing and a wide range of technical solutions. The specific details of how this competition was structured and evaluated would be crucial to understanding the extent of price discovery achieved.

Taxpayer Impact: A full and open competition is favorable for taxpayers as it theoretically drives down prices through market forces and encourages innovation from a broader base of potential suppliers.

Public Impact

The primary beneficiaries are the U.S. Army, receiving advanced military vehicles and associated support services. Services delivered include the manufacturing of vehicles, kits, and test hardware, alongside crucial support functions like refurbishment, systems engineering, and maintenance. The geographic impact is primarily within the United States, with Oshkosh Defense LLC based in Wisconsin, though deployed vehicles will have a global operational impact. Workforce implications include job creation and sustainment within Oshkosh Defense LLC and its supply chain, particularly in manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to CPFF CLINs and Economic Price Adjustments for materials.
Long contract duration increases the risk of technological obsolescence or changing military requirements.
Reliance on a single contractor (Oshkosh Defense LLC) for a critical capability could pose supply chain risks.
Lack of specific unit cost data makes it difficult to assess true value-for-money on individual items.
The broad scope of services could lead to complexities in oversight and performance management.

Positive Signals

Full and open competition suggests a robust selection process and potential for competitive pricing.
The mix of FFP and CPFF CLINs allows for flexibility in managing risk across different service types.
Inclusion of comprehensive support services (SEPM, IPS) indicates a focus on long-term fleet readiness and sustainability.
Economic Price Adjustments can protect the contractor from unforeseen material cost increases, ensuring supply continuity.
The contract's long duration allows for economies of scale and predictable planning for the Army.

Sector Analysis

This contract falls within the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' sector, a specialized segment of the broader defense industrial base. This sector is characterized by high barriers to entry due to complex engineering requirements, stringent quality standards, and significant capital investment. Spending in this area is driven by national security needs and geopolitical factors. Comparable spending benchmarks would involve analyzing other major vehicle procurement programs within the Department of Defense, such as those for tactical trucks, armored personnel carriers, or other combat vehicles, to understand the scale and pricing trends within this niche.

Small Business Impact

The provided data indicates that small business participation (sb) is false, and there is no mention of small business set-asides. This suggests that the contract was not specifically targeted towards small businesses, and large prime contractors like Oshkosh Defense LLC are likely managing the program. Subcontracting opportunities for small businesses may exist within Oshkosh's supply chain, but this contract does not appear to have a direct small business set-aside component. The impact on the small business ecosystem is likely indirect, through potential subcontracting relationships rather than direct award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be embedded within the contract's performance standards, delivery schedules, and quality assurance provisions. Transparency is facilitated through contract awards databases like FPDS, though detailed performance metrics are often not publicly disclosed. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Family of Medium Tactical Vehicles (FMTV)
Joint Light Tactical Vehicle (JLTV)
Heavy Expanded Mobility Tactical Truck (HEMTT)
Paladin Integrated Management (PIM)
Armored Multi-Purpose Vehicle (AMPV)

Risk Flags

Potential for cost escalation due to EPA clauses.
Long-term nature of the contract may lead to technology obsolescence.
Dependence on a single contractor for critical military hardware.
Lack of detailed unit cost transparency hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.10 billion to OSHKOSH DEFENSE LLC. THE CONTRACT INCLUDES FIRM FIXED PRICE (FFP) CONTACT LINE ITEM NUMBERS (CLIN) FOR VEHICLES, TRAILERS, KITS (PACKAGED AND INSTALLED), TEST HARDWARE AND SUPPORT, VEHICLE REFURBISHMENT, SYSTEMS ENGINEERING/ PROGRAM MANAGEMENT (SEPM), STORAGE AND MAINTENANCE OF VEHICLES, VEHICLE REFURBISHMENT, INTEGRATED PRODUCT SUPPORT (IPS), AND A TECHNICAL DATA PACKAGE (TDP). THE CONTRACT ALSO INCLUDES COST PLUS FIXED FEE (CPFF) CLINS FOR SYSTEM TECHNICAL SUPPORT (STS), TOTAL PACKAGE FIELDING (TPF), AND INTERIM

Who is the contractor on this award?

The obligated recipient is OSHKOSH DEFENSE LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $6.10 billion.

What is the period of performance?

Start: 2015-08-25. End: 2025-09-25.

What is Oshkosh Defense LLC's track record with similar large-scale military vehicle contracts?

Oshkosh Defense LLC has a significant track record in producing military vehicles for the U.S. Department of Defense and allied nations. They are well-known for programs such as the Family of Medium Tactical Vehicles (FMTV), the Joint Light Tactical Vehicle (JLTV), and the Heavy Expanded Mobility Tactical Truck (HEMTT). Their experience spans design, manufacturing, integration, and lifecycle support for a wide range of tactical wheeled vehicles. This extensive history suggests a deep understanding of military requirements, production capabilities, and logistical challenges associated with large defense contracts. Their performance on previous programs, including delivery timelines, quality, and cost management, would be a key factor in assessing their capability to execute this current $6.1 billion contract successfully.

How does the pricing structure (FFP and CPFF) compare to industry standards for similar defense contracts?

The contract's use of both Firm Fixed Price (FFP) and Cost Plus Fixed Fee (CPFF) CLINs is a common practice in large defense procurements, reflecting a strategic allocation of risk. FFP CLINs, typically used for well-defined products like vehicles and kits, shift most of the cost risk to the contractor, encouraging efficiency. CPFF CLINs, often applied to less defined services like System Technical Support (STS) or Total Package Fielding (TPF), allow the government to pay for actual costs plus a fixed fee, providing flexibility when scope is uncertain or R&D is involved. This hybrid approach is standard for balancing cost control with the need for flexibility in complex, long-duration programs. Benchmarking specific FFP unit prices against historical data for similar vehicles and comparing the fixed fees on CPFF CLINs against industry averages for support services would provide a clearer picture of value for money.

What are the primary risks associated with the Economic Price Adjustment (EPA) provisions in this contract?

The Economic Price Adjustment (EPA) provisions for material fluctuations in option periods six, seven, and eight introduce a degree of cost uncertainty for the government. While EPAs are designed to protect contractors from significant, unforeseen increases in material costs (e.g., steel, rare earth metals), they can also lead to higher final contract prices than initially anticipated if market prices rise substantially. The primary risk for the government is paying more than projected if material costs escalate beyond normal inflationary trends. Effective oversight requires robust mechanisms to verify the legitimacy and extent of material cost increases claimed by the contractor, ensuring that the EPA is applied fairly and only to genuine market shifts, not to inefficiencies in the contractor's procurement or inventory management.

How does the $6.1 billion total value compare to historical spending on military vehicle procurement?

A total contract value of $6.1 billion over approximately ten years is a significant but not unprecedented figure for major military vehicle programs. Large-scale procurements for tactical vehicles, armored platforms, and associated support often reach into the billions of dollars, reflecting the high cost of advanced technology, complex manufacturing, and long-term sustainment requirements. For context, programs like the Joint Light Tactical Vehicle (JLTV) have seen total contract values well into the tens of billions over their lifecycles. This $6.1 billion award for Oshkosh Defense appears to be a substantial, multi-year commitment for a critical capability, likely representing a significant portion of the Army's spending in this specific vehicle category during the contract's performance period. Historical spending patterns show consistent, high-dollar investment in modernizing ground vehicle fleets.

What are the implications of having 'full and open competition' if the awardee is Oshkosh Defense LLC, and are there other similar contracts awarded via sole-source?

The designation of 'full and open competition' indicates that the solicitation was open to all responsible sources, and the contract was awarded based on competitive proposals. However, the data does not specify the number of bidders. It's possible that while competition was open, only one or a few entities possessed the specialized capabilities required for this specific type of military vehicle and its associated support, leading to Oshkosh Defense LLC being the selected awardee. In contrast, sole-source contracts are awarded without competition, typically when only one source can provide the required item or service due to unique capabilities, urgency, or lack of alternatives. Large defense procurements can sometimes involve both competitive and sole-source elements depending on the specific system or phase of development. For instance, initial development might be competitive, while later sustainment or upgrades for highly specialized platforms could become sole-source if only the original manufacturer has the necessary technical data and expertise.

What is the significance of the 'Definitive Contract' award type in this context?

A 'Definitive Contract' is a standard, fixed-price contract type used for procurements where the scope of work and price are clearly defined. In this case, it signifies that the agreement with Oshkosh Defense LLC is a formal, legally binding contract with specific terms and conditions, rather than a preliminary agreement like a letter contract or a basic ordering agreement. Definitive contracts are common for large, complex acquisitions like this one, providing a solid framework for the delivery of goods and services over an extended period. The use of a definitive contract implies that the government and the contractor have reached a mutual understanding on the requirements, specifications, delivery schedules, and payment terms, establishing a clear basis for performance and accountability throughout the contract's duration.

Industry Classification

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

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W56HZV14R0039

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Oshkosh Corporation

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: $23,506,260,882

Exercised Options: $6,104,259,193

Current Obligation: $6,104,259,193

Actual Outlays: $605,122,591

Subaward Activity

Number of Subawards: 23143

Total Subaward Amount: $2,790,613,370

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline