Department of the Army awards $38.8M for Family of Heavy Tactical Vehicles IV contract to Oshkosh Defense LLC

Contract Overview

Contract Amount: $38,817,351 ($38.8M)

Contractor: Oshkosh Defense LLC

Awarding Agency: Department of Defense

Start Date: 2019-02-07

End Date: 2021-08-31

Contract Duration: 936 days

Daily Burn Rate: $41.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FUNDS ORDER YEAR 4 CBT TRUCKS 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, 54903

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $38.8 million to OSHKOSH DEFENSE LLC for work described as: FUNDS ORDER YEAR 4 CBT TRUCKS FOR THE FAMILY OF HEAVY TACTICAL VEHICLES (FHTV) IV CONTRACT, A FIVE YEAR FIXED-PRICE INCENTIVE-FIRM, REQUIREMENTS CONTRACT. Key points: 1. Contract awarded for Family of Heavy Tactical Vehicles (FHTV) IV, a five-year requirements contract. 2. Oshkosh Defense LLC is the sole awardee for this specific delivery order. 3. The contract type is Fixed-Price Incentive-Firm, indicating shared risk between the government and contractor. 4. This award represents a portion of the overall FHTV IV program, with potential for future orders. 5. The contract duration is 936 days, spanning from February 2019 to August 2021. 6. The North American Industry Classification System (NAICS) code 336212 points to Truck Trailer Manufacturing.

Value Assessment

Rating: fair

The total award amount is $38.8 million. Without more detailed cost breakdowns or comparisons to similar vehicle procurements, it is difficult to definitively assess value for money. The fixed-price incentive structure suggests an attempt to control costs, but the ultimate price depends on performance against targets. Benchmarking against other heavy tactical vehicle contracts would be necessary for a more robust assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. While the data does not specify the reason for the sole-source nature, it could be due to the specialized nature of the vehicles, existing contractor capabilities, or previous program decisions. The lack of competition means there was no opportunity for other vendors to offer potentially lower prices or innovative solutions, which could impact price discovery.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, potentially leading to a higher cost than if multiple bids were considered.

Public Impact

The U.S. Army benefits from the acquisition of essential heavy tactical vehicles for its operations. These vehicles are critical for logistics, troop transport, and various combat support missions. The contract supports manufacturing activities and potentially jobs within Oshkosh Defense's supply chain. The geographic impact is primarily centered around the contractor's facilities in Wisconsin, where the vehicles are manufactured.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price discovery and potentially increases costs for taxpayers.
Sole-source awards can reduce market pressure for innovation and efficiency.
The fixed-price incentive structure requires careful monitoring to ensure contractor performance meets targets.

Positive Signals

Oshkosh Defense is an established provider of tactical wheeled vehicles to the U.S. military.
The FHTV IV contract is a continuation of a program, suggesting a degree of program maturity.
The fixed-price incentive contract aims to balance cost control with performance incentives.

Sector Analysis

The defense sector, particularly the manufacturing of tactical vehicles, is characterized by long-term contracts and specialized capabilities. Companies like Oshkosh Defense operate within a market that often involves sole-source or limited competition due to the unique requirements and high barriers to entry. Spending in this area is driven by military modernization efforts and operational readiness needs. Comparable spending benchmarks would typically involve other large-scale vehicle procurement programs within the Department of Defense.

Small Business Impact

This contract does not indicate any specific small business set-aside provisions. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely through subcontracting opportunities. The extent to which Oshkosh Defense utilizes small businesses in its supply chain for this contract would determine the indirect impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded within the contract's fixed-price incentive structure, which ties contractor profit to performance against established targets. Transparency is generally maintained through contract award databases, though detailed cost breakdowns may be considered proprietary. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Family of Heavy Tactical Vehicles (FHTV) Program
Tactical Wheeled Vehicles
Department of the Army Procurement

Risk Flags

Sole-source award may lead to higher costs.
Lack of competition limits price discovery.
Potential for vendor lock-in.
Performance targets in FPI contract require diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.8 million to OSHKOSH DEFENSE LLC. FUNDS ORDER YEAR 4 CBT TRUCKS 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 $38.8 million.

What is the period of performance?

Start: 2019-02-07. End: 2021-08-31.

What is the track record of Oshkosh Defense LLC with the U.S. military, particularly regarding the Family of Heavy Tactical Vehicles (FHTV) program?

Oshkosh Defense LLC has a long-standing and significant relationship with the U.S. military, serving as a primary provider of tactical wheeled vehicles. They are the incumbent contractor for the Family of Heavy Tactical Vehicles (FHTV) program, having been awarded previous iterations such as FHTV III. This continuity suggests a proven ability to meet the military's demanding specifications and operational requirements. Their track record includes delivering a wide range of vehicles, from light tactical to heavy-duty platforms, essential for logistics, troop transport, and various combat support roles. The FHTV IV contract, a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, builds upon this established relationship. While specific performance metrics for past contracts are not detailed here, the repeated awards indicate a generally satisfactory performance history in terms of delivery, reliability, and meeting technical requirements, though like any large defense program, specific issues or challenges may arise and are typically addressed through contract modifications or performance reviews.

How does the pricing of this contract compare to similar heavy tactical vehicle procurements by the Department of Defense?

Directly comparing the pricing of this specific $38.8 million delivery order for FHTV IV trucks to other heavy tactical vehicle procurements is challenging without access to detailed cost breakdowns and the specific configurations of the vehicles procured in those other contracts. The 'Truck Trailer Manufacturing' NAICS code (336212) and the 'Family of Heavy Tactical Vehicles' designation suggest a specialized product. However, general benchmarks for heavy tactical vehicles can be established by looking at the average unit cost of similar platforms procured by the Army or other branches. Factors such as payload capacity, armor, specialized equipment (e.g., cranes, mine rollers), and technological features significantly influence unit cost. Given this is a sole-source award, there's a risk that the price may not reflect the most competitive market rate. A comprehensive value-for-money assessment would require benchmarking against other sole-source or competitively awarded contracts for vehicles with comparable capabilities and quantities.

What are the primary risks associated with this sole-source contract for the FHTV IV program?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, Oshkosh Defense LLC faced less pressure to offer the most cost-effective solution, potentially leading to higher unit costs for the taxpayer. Another risk is the reduced incentive for innovation; a sole-source provider may have less motivation to invest in developing more efficient manufacturing processes or advanced vehicle technologies compared to a competitive environment. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future if performance issues arise or if a competitor develops a superior product. The fixed-price incentive structure, while designed to share risk, also carries the risk that performance targets may not be met, leading to cost overruns or reduced capability delivery if not managed diligently by the government.

How effective is the Fixed-Price Incentive (FPI) contract type in managing costs and ensuring performance for this type of defense procurement?

The Fixed-Price Incentive (FPI) contract type aims to provide a balance between cost control and performance incentives for both the government and the contractor. In this FHTV IV contract, the FPI structure means that the final price is determined by the contractor's performance against mutually agreed-upon cost and performance targets. If the contractor achieves or exceeds these targets, they can earn a higher profit margin. Conversely, if they fall short, their profit is reduced, and in some cases, the government may share in cost overruns above a certain ceiling, up to a negotiated limit. This structure incentivizes the contractor to manage costs efficiently and meet performance specifications. However, the effectiveness hinges on the realism of the targets set and the government's ability to monitor performance closely. For a sole-source award, the negotiation of these targets becomes even more critical, as there isn't a market benchmark from competitors to inform the negotiation process. If targets are set too high or too low, the incentive structure may not yield the desired cost savings or performance improvements.

What are the historical spending patterns for the Family of Heavy Tactical Vehicles (FHTV) program, and how does this award fit within that trend?

Historical spending on the Family of Heavy Tactical Vehicles (FHTV) program, including its various iterations (FHTV I, II, III, and IV), represents a significant and sustained investment by the Department of the Army. These programs are typically structured as indefinite-delivery/indefinite-quantity (IDIQ) contracts, allowing the Army to place multiple delivery orders over several years to meet evolving requirements. Spending can fluctuate year-to-year based on operational tempo, budget allocations, and specific vehicle needs. This $38.8 million award for FHTV IV falls within the expected spending range for a single delivery order under such a large, multi-year program. It signifies ongoing procurement to maintain and modernize the Army's tactical vehicle fleet. Without access to the total contract value and historical spending data for all FHTV contracts, it's difficult to pinpoint precise trends, but the continued reliance on Oshkosh Defense for these vehicles suggests a consistent demand and a long-term strategic commitment to this platform family.

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: $38,817,351

Exercised Options: $38,817,351

Current Obligation: $38,817,351

Actual Outlays: $820,554

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV15D0031

IDV Type: IDC

Timeline