Department of Defense awards $2.07B contract to Oshkosh Defense for military armored vehicles

Contract Overview

Contract Amount: $2,066,434,770 ($2.1B)

Contractor: Oshkosh Defense LLC

Awarding Agency: Department of Defense

Start Date: 2020-03-13

End Date: 2026-09-25

Contract Duration: 2,387 days

Daily Burn Rate: $865.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CONTRACT W56HZV-20-C-0050 IS ISSUED TO PROVIDE CONTINUATION OF CONTRACT W56HZV-15-C-0095.

Place of Performance

Location: OSHKOSH, WINNEBAGO County, WISCONSIN, 54902

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $2.07 billion to OSHKOSH DEFENSE LLC for work described as: CONTRACT W56HZV-20-C-0050 IS ISSUED TO PROVIDE CONTINUATION OF CONTRACT W56HZV-15-C-0095. Key points: 1. Contract aims to ensure continued supply of critical armored vehicle components. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract type is Cost Plus Fixed Fee, which can present cost control challenges. 4. Oshkosh Defense LLC is the sole awardee, indicating specialized capabilities. 5. The contract duration is substantial, spanning over 6 years. 6. This award falls under the Military Armored Vehicle, Tank, and Tank Component Manufacturing NAICS code.

Value Assessment

Rating: fair

The total award amount of $2.07 billion over approximately six years suggests a significant investment in military hardware. Benchmarking this specific contract's value is challenging without detailed breakdowns of the vehicles and components procured. However, the Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can sometimes lead to higher overall costs compared to fixed-price contracts if not managed diligently. The fixed fee component provides some cost certainty for the contractor, but the government bears the majority of the cost risk.

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 were likely solicited. The specific number of bidders is not provided, but this approach generally fosters a more competitive environment, potentially leading to better pricing and terms for the government. The use of full and open competition suggests that the Army sought the best available solution from the market.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of receiving competitive pricing and encourages innovation from a wider range of potential suppliers.

Public Impact

The primary beneficiaries are the U.S. Army and its personnel, who will receive essential armored vehicles and components for operational readiness. The contract supports the manufacturing and supply chain for military armored vehicles, crucial for national defense. The geographic impact is primarily centered around the contractor's facilities in Wisconsin, potentially supporting local employment and economic activity. Workforce implications include the potential for job creation and retention within the defense manufacturing sector, particularly at Oshkosh Defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost overruns if not closely monitored.
Sole awardee status, while potentially due to specialized capabilities, limits direct price comparison with competitors.
Long contract duration requires sustained oversight to ensure performance and value throughout its term.

Positive Signals

Awarded under full and open competition, suggesting a robust market evaluation.
Continuation of a previous contract (W56HZV-15-C-0095) implies a degree of proven performance and established relationship.
The contract specifies definitive contract terms, providing a structured framework for the engagement.

Sector Analysis

This contract falls within the defense industrial base, specifically focusing on the manufacturing of military armored vehicles. The market for such specialized equipment is typically dominated by a few key players due to high barriers to entry, including technological expertise, manufacturing capacity, and stringent quality requirements. Spending in this sector is driven by national security needs and modernization efforts within armed forces globally. Comparable spending benchmarks would involve analyzing other large-scale vehicle procurement contracts within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false) and the contractor is not a small business. There is no explicit information provided regarding subcontracting plans for small businesses. Without this data, it is difficult to assess the direct impact on the small business ecosystem, though large prime contracts often have subcontracting requirements that can flow down opportunities.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded within the contract terms, including performance standards and reporting requirements. Transparency is facilitated through contract award databases, although detailed performance metrics may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Vehicle Procurement
Armored Vehicle Manufacturing
Defense Logistics Agency Contracts
Tactical Wheeled Vehicles
U.S. Army Vehicle Modernization Programs

Risk Flags

Cost Overrun Risk (CPFF)
Long-Term Performance Monitoring
Supply Chain Dependencies
Technological Obsolescence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.07 billion to OSHKOSH DEFENSE LLC. CONTRACT W56HZV-20-C-0050 IS ISSUED TO PROVIDE CONTINUATION OF CONTRACT W56HZV-15-C-0095.

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 $2.07 billion.

What is the period of performance?

Start: 2020-03-13. End: 2026-09-25.

What is the historical spending pattern for Oshkosh Defense LLC with the Department of Defense for similar armored vehicle contracts?

Analyzing historical spending with Oshkosh Defense LLC reveals a significant and ongoing relationship with the Department of Defense, particularly for tactical and armored vehicles. Prior contracts, such as W56HZV-15-C-0095 which this award continues, demonstrate a substantial financial commitment over multiple years. For instance, the predecessor contract likely involved hundreds of millions, if not billions, in cumulative value. This pattern suggests the DoD relies on Oshkosh's established production capabilities and product lines for critical ground vehicle platforms. Understanding the specific vehicle types and quantities procured under previous agreements is key to contextualizing the current $2.07 billion award and assessing its alignment with long-term modernization strategies and operational demands.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for large-scale defense manufacturing, and what are the implications for cost control?

The Cost Plus Fixed Fee (CPFF) contract type is common in defense procurement, especially for complex projects where the scope may evolve or precise cost estimation is difficult upfront. In a CPFF arrangement, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. This structure shifts significant cost risk to the government, as the final price is not capped. Compared to Fixed-Price contracts (like FFP or FP-EPA), CPFF offers more flexibility but potentially higher final costs. For large-scale manufacturing like armored vehicles, effective cost control hinges on robust government oversight, detailed cost accounting standards, and rigorous negotiation of the fixed fee. Without stringent management, the government risks paying more than necessary if contractor costs escalate beyond initial projections.

What specific types of military armored vehicles or components are covered under this $2.07 billion contract?

The provided data indicates the contract is for the 'continuation of contract W56HZV-15-C-0095' and falls under the NAICS code '336992 - Military Armored Vehicle, Tank, and Tank Component Manufacturing.' While the specific vehicle models or component lists are not detailed in the summary data, this strongly suggests the contract pertains to the production, sustainment, or upgrade of Oshkosh Defense's existing family of military vehicles. This could include platforms like the Joint Light Tactical Vehicle (JLTV), Family of Heavy Tactical Vehicles (FHTV), or other specialized armored platforms integral to Army operations. The 'component manufacturing' aspect implies that the contract may also cover the supply of critical parts and sub-assemblies necessary for these vehicles.

What is the assessed risk level associated with this contract, considering its value, duration, and contract type?

The assessed risk level for this contract can be considered moderate to high. The substantial value of $2.07 billion and a duration of nearly six years inherently introduce program management and financial risks. The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility, places a significant portion of the cost risk on the government. Potential risks include cost overruns if contractor expenses are not meticulously managed and audited, schedule delays impacting operational readiness, and performance issues related to the quality or functionality of the armored vehicles. Mitigation strategies would involve strong government oversight, clear performance metrics, regular progress reviews, and robust quality assurance processes throughout the contract lifecycle.

How does the competition level ('full-and-open') for this contract potentially impact the final price and innovation compared to sole-source awards?

The 'full-and-open' competition level is a significant positive factor for taxpayers and program effectiveness. It implies that the Department of the Army actively solicited bids from all responsible sources capable of meeting the requirements, fostering a competitive environment. This typically drives down prices as contractors vie for the award, potentially leading to better value for money. Furthermore, open competition can spur innovation as companies propose their best solutions and technologies to win the contract. This contrasts sharply with sole-source awards, where the government negotiates with a single provider, often resulting in higher prices and limited opportunities for technological advancement from the broader market.

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

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $19,638,777,172

Exercised Options: $2,069,043,716

Current Obligation: $2,066,434,770

Actual Outlays: $229,375,100

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline