Department of the Army awards $55M for heavy tactical vehicles, with Oshkosh Defense LLC as the sole provider

Contract Overview

Contract Amount: $55,051,602 ($55.1M)

Contractor: Oshkosh Defense LLC

Awarding Agency: Department of Defense

Start Date: 2019-02-07

End Date: 2022-07-31

Contract Duration: 1,270 days

Daily Burn Rate: $43.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FUNDS ORDER YEAR 4 TRUCKS AND TRAILERS FOR THE FAMILY OF HEAVY TACTICAL VEHICLES (FHTV) IV CONTRACT, A FIVE YEAR FIXED-PRICE INCENTIVE-FIRM, REQUIREMENTS CONTRACT.

Place of Performance

Location: OSHKOSH, WINNEBAGO County, WISCONSIN, 54902

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $55.1 million to OSHKOSH DEFENSE LLC for work described as: FUNDS ORDER YEAR 4 TRUCKS AND TRAILERS FOR THE FAMILY OF HEAVY TACTICAL VEHICLES (FHTV) IV CONTRACT, A FIVE YEAR FIXED-PRICE INCENTIVE-FIRM, REQUIREMENTS CONTRACT. Key points: 1. The contract utilizes a fixed-price incentive firm structure, aiming to balance cost control with performance incentives. 2. As a requirements contract, it allows the Army to procure vehicles as needed over its duration. 3. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 4. Performance is benchmarked against similar large-scale vehicle procurement programs within the DoD. 5. The contract falls under the Truck Trailer Manufacturing sector, supporting essential military logistics capabilities. 6. Oversight will be critical to ensure fair pricing and adherence to delivery schedules given the lack of competition.

Value Assessment

Rating: fair

The total award of $55,051,602.15 for trucks and trailers represents a significant investment in tactical mobility. Without comparable sole-source awards for similar vehicle families, a direct value-for-money assessment is challenging. However, the fixed-price incentive structure suggests an attempt to manage costs, though the absence of competition limits the ability to benchmark against market rates or alternative suppliers. The duration of the contract (1270 days) and the delivery order mechanism imply ongoing needs, making consistent value assessment crucial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Oshkosh Defense LLC. The rationale for this approach, such as unique technical requirements or existing platform integration, is not detailed in the provided data. The lack of competition means that price discovery through a bidding process did not occur, potentially leading to higher costs than if multiple vendors had vied for the contract. This approach limits the government's ability to leverage market forces for cost savings.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government's negotiating power is reduced, and there is less incentive for the contractor to offer the most competitive pricing.

Public Impact

The primary beneficiaries are the U.S. Army units requiring heavy tactical vehicles for logistics and operational support. The contract delivers essential trucks and trailers, crucial for transporting personnel, equipment, and supplies. The geographic impact is national, supporting military readiness across various deployments and bases. Workforce implications include sustained employment at Oshkosh Defense LLC facilities, primarily located in Wisconsin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of open competition raises questions about whether the best available technology or pricing was secured.
Long-term reliance on a single provider could create vendor lock-in and reduce future flexibility.
Fixed-price incentive contracts can still lead to cost overruns if not managed meticulously.

Positive Signals

Oshkosh Defense LLC is a known entity with established capabilities in heavy tactical vehicle manufacturing.
The fixed-price incentive structure provides some cost control mechanisms and performance incentives.
The contract addresses a clear and ongoing need for essential military logistics equipment.
The award is tied to a specific, established vehicle family (FHTV IV), suggesting platform continuity.

Sector Analysis

This contract falls within the broader Defense Industrial Base, specifically supporting the manufacturing of tactical wheeled vehicles. The market for such specialized military equipment is often concentrated among a few key defense contractors due to high barriers to entry, including specialized manufacturing capabilities, security clearances, and established relationships with the Department of Defense. Spending in this category is driven by military modernization efforts and operational readiness requirements. Comparable spending benchmarks would typically involve other large-scale vehicle procurement contracts within the DoD.

Small Business Impact

The data indicates that small business participation (ss and sb fields) is false for this specific contract. This suggests that small businesses were not specifically targeted through set-asides for this award. Consequently, there are no direct subcontracting implications for small businesses stemming from this particular contract, nor is there an immediate positive impact on the small business ecosystem related to this specific procurement.

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 fixed-price incentive firm contract terms, focusing on delivery schedules and performance specifications. Transparency is generally facilitated through contract databases like FPDS, although detailed operational oversight specifics are often internal. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Family of Heavy Tactical Vehicles (FHTV)
Logistics Vehicle System Replacement (LVSR)
Joint Light Tactical Vehicle (JLTV)
Tactical Wheeled Vehicles (TWV) Procurement

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns in FPI contract.
Dependence on a single supplier for critical assets.
Limited transparency on specific performance metrics.
No explicit small business subcontracting goals identified.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.1 million to OSHKOSH DEFENSE LLC. FUNDS ORDER YEAR 4 TRUCKS AND TRAILERS FOR THE FAMILY OF HEAVY TACTICAL VEHICLES (FHTV) IV CONTRACT, A FIVE YEAR FIXED-PRICE INCENTIVE-FIRM, REQUIREMENTS CONTRACT.

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 $55.1 million.

What is the period of performance?

Start: 2019-02-07. End: 2022-07-31.

What is Oshkosh Defense LLC's track record with the Family of Heavy Tactical Vehicles (FHTV) program?

Oshkosh Defense LLC has a significant track record with the FHTV program, having been awarded previous contracts within the FHTV IV iteration and likely preceding versions. Their role as a primary manufacturer for these heavy tactical vehicles suggests a deep understanding of the program's requirements and a history of production. The FHTV program itself is designed to provide a common platform for various heavy-duty military trucks, and Oshkosh's continued selection indicates their ability to meet the demanding specifications and production volumes required by the Department of the Army. Analyzing past performance data, including delivery timeliness, defect rates, and any contract modifications or disputes, would provide a more comprehensive view of their reliability and effectiveness in fulfilling these critical military needs.

How does the pricing of this contract compare to similar sole-source awards for heavy tactical vehicles?

Directly comparing the pricing of this $55 million sole-source award for FHTV IV trucks and trailers to other similar sole-source contracts is challenging without access to proprietary pricing data for comparable vehicle families or specific configurations. Sole-source awards inherently lack the price discovery mechanism of open competition, making external benchmarking difficult. However, the fixed-price incentive (FPI) contract type suggests that while a target cost and price are set, there are provisions for sharing savings or cost overruns between the government and the contractor. This structure aims to incentivize efficiency. A thorough analysis would require comparing the per-unit cost of specific truck/trailer models within this contract against historical FPI contracts for similar military vehicles, adjusted for inflation, technological advancements, and quantity, while acknowledging the limitations imposed by the sole-source nature.

What are the primary risks associated with a sole-source award for essential military vehicles?

The primary risks associated with a sole-source award for essential military vehicles like those under the FHTV IV contract are multifaceted. Firstly, the lack of competition can lead to inflated pricing, as the government does not benefit from the cost-saving pressures that multiple bidders would typically exert. Secondly, there is a reduced incentive for the sole contractor to innovate or improve efficiency beyond what is contractually mandated, potentially leading to stagnation in technology or processes. Thirdly, dependence on a single supplier creates vulnerability; any production issues, financial instability, or geopolitical factors affecting the contractor could severely disrupt the supply chain for critical military assets. Lastly, the absence of competitive benchmarking makes it harder to ascertain if the government is receiving optimal value for its investment over the contract's lifecycle.

How effective is the fixed-price incentive (FPI) contract type in managing costs for this type of procurement?

The fixed-price incentive (FPI) contract type is designed to provide a middle ground between fixed-price and cost-reimbursement contracts, aiming to achieve cost control while allowing for flexibility. In the context of this FHTV IV procurement, the FPI structure establishes a target cost, target profit, and ceiling price. If the final cost is below the target, both the government and the contractor share in the savings according to a pre-negotiated formula. Conversely, if the cost exceeds the target, the contractor bears a larger portion of the overrun up to the ceiling price. This incentivizes the contractor to manage costs effectively. However, the effectiveness hinges on realistic target setting and robust government oversight to prevent cost underruns achieved through quality compromises or cost overruns that reach the ceiling, especially in a sole-source environment where the contractor has significant leverage.

What is the historical spending trend for the FHTV program or similar heavy tactical vehicle procurements by the Department of the Army?

Historical spending on the Family of Heavy Tactical Vehicles (FHTV) program and similar heavy tactical vehicle procurements by the Department of the Army has been substantial, reflecting the ongoing need for robust logistics and transport capabilities. The FHTV program itself, spanning multiple contract iterations (e.g., FHTV, FHTV II, FHTV III, FHTV IV), has represented billions of dollars in investment over the years. Spending patterns are typically characterized by large, multi-year requirements contracts awarded to a primary manufacturer, often Oshkosh Defense. These awards are driven by military operational tempo, vehicle modernization cycles, and the need to replace aging fleets. Fluctuations in annual spending can be influenced by budget allocations, specific program milestones, and the number of delivery orders issued against the contract. Analyzing past FPDS data for FHTV and related programs would reveal significant, consistent outlays, underscoring the strategic importance and financial commitment to this vehicle category.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Body and Trailer Manufacturing › Truck Trailer Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Oshkosh Corp

Address: 2307 OREGON ST, OSHKOSH, WI, 54903

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: $55,051,602

Exercised Options: $55,051,602

Current Obligation: $55,051,602

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV15D0031

IDV Type: IDC

Timeline