Department of the Army awards $167M FHTV IV contract to Oshkosh Defense, a sole-source requirement

Contract Overview

Contract Amount: $166,874,307 ($166.9M)

Contractor: Oshkosh Defense LLC

Awarding Agency: Department of Defense

Start Date: 2020-03-27

End Date: 2021-12-31

Contract Duration: 644 days

Daily Burn Rate: $259.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FAMILY OF HEAVY TACTICAL VEHICLE (FHTV) IV IS A FIXED-PRICE- INCENTIVE-FIRM TARGET (FPIF) SOLE SOURCE, REQUIREMENTS CONTRACT AWARDED TO OSHKOSH DEFENSE, LLC WITH ESTABLISHED RANGE PRICING.

Place of Performance

Location: OSHKOSH, WINNEBAGO County, WISCONSIN, 54902

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $166.9 million to OSHKOSH DEFENSE LLC for work described as: FAMILY OF HEAVY TACTICAL VEHICLE (FHTV) IV IS A FIXED-PRICE- INCENTIVE-FIRM TARGET (FPIF) SOLE SOURCE, REQUIREMENTS CONTRACT AWARDED TO OSHKOSH DEFENSE, LLC WITH ESTABLISHED RANGE PRICING. Key points: 1. The contract is a sole-source requirement, limiting competitive opportunities and potentially impacting price discovery. 2. Oshkosh Defense, LLC is the sole awardee, indicating a concentrated market for this specific vehicle family. 3. The contract type is Fixed-Price Incentive (FPIF), which aims to balance cost control with performance incentives. 4. The contract duration is 644 days, suggesting a medium-term commitment for vehicle delivery. 5. The award was a delivery order under a larger contract, implying a phased approach to fulfilling Army needs. 6. The absence of small business set-aside indicates this contract was not specifically targeted for small business participation.

Value Assessment

Rating: fair

This contract's value is benchmarked against similar sole-source requirements for heavy tactical vehicles. As a sole-source award, direct price comparisons are limited. The FPIF structure suggests an attempt to manage costs, but the lack of competition means taxpayers may not benefit from the most aggressive pricing achievable in a competitive environment. Further analysis would require understanding the established range pricing and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Oshkosh Defense, LLC, meaning it was not competed. This approach is typically used when a specific capability or technology is only available from a single source, or for urgent requirements where competition is not feasible. The lack of multiple bidders means there was no direct price comparison or negotiation driven by competitive pressure.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. The government relies on negotiation and established pricing structures to ensure fair value, but the absence of alternatives limits leverage.

Public Impact

The primary beneficiaries are the U.S. Army units requiring Family of Heavy Tactical Vehicles (FHTV) for various operational missions. The contract delivers essential heavy tactical vehicles, crucial for troop transport, logistics, and combat support. The geographic impact is primarily within the United States, where Oshkosh Defense is located, and at Army installations receiving the vehicles. The contract supports jobs within Oshkosh Defense and its supply chain, contributing to the manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits price competition, potentially leading to higher costs for taxpayers.
Reliance on a single contractor for a critical vehicle family poses supply chain and long-term strategic risks.
FPIF contract type requires careful monitoring to ensure cost targets are met and incentives are effective.
Lack of small business participation may limit opportunities for smaller firms in this segment of defense contracting.

Positive Signals

Oshkosh Defense is an established provider of tactical vehicles, suggesting a track record of delivery.
The FPIF contract structure includes incentives, which can motivate the contractor to perform efficiently.
The contract addresses a clear requirement for heavy tactical vehicles, essential for military operations.
The award is a delivery order under a larger contract, indicating a structured approach to fulfilling needs.

Sector Analysis

The defense industrial base for tactical vehicles is a specialized sector with a few key players. Oshkosh Defense is a significant entity in this market, known for its robust tactical vehicle platforms. This contract fits within the broader category of defense manufacturing and procurement, where large, complex vehicle systems are developed and supplied. Comparable spending benchmarks would involve other large-scale vehicle procurement contracts within the Department of Defense.

Small Business Impact

This contract was not awarded as a small business set-aside. Oshkosh Defense, LLC is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. The absence of a set-aside means that opportunities for small businesses to directly participate in this specific contract are limited, though they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, there is a heightened need for robust oversight to ensure fair pricing and adherence to contract terms. Transparency is facilitated through contract award databases, but detailed performance and pricing data may be less accessible due to the sole-source nature. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Family of Medium Tactical Vehicles (FMTV)
Joint Light Tactical Vehicle (JLTV)
Heavy Expanded Mobility Tactical Truck (HEMTT)
Palletized Load System (PLS)

Risk Flags

Sole-source award
Potential for higher costs
Contractor dependency risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $166.9 million to OSHKOSH DEFENSE LLC. FAMILY OF HEAVY TACTICAL VEHICLE (FHTV) IV IS A FIXED-PRICE- INCENTIVE-FIRM TARGET (FPIF) SOLE SOURCE, REQUIREMENTS CONTRACT AWARDED TO OSHKOSH DEFENSE, LLC WITH ESTABLISHED RANGE PRICING.

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 $166.9 million.

What is the period of performance?

Start: 2020-03-27. End: 2021-12-31.

What is Oshkosh Defense's track record with similar heavy tactical vehicle contracts for the U.S. Army?

Oshkosh Defense has a long-standing relationship with the U.S. Army, having produced various generations of tactical vehicles, including the Family of Heavy Tactical Vehicles (FHTV) program. They are also the manufacturer of the Joint Light Tactical Vehicle (JLTV). Their track record generally indicates a capacity to produce and deliver large quantities of specialized vehicles. However, like many large defense contractors, they have faced scrutiny regarding cost overruns and delivery schedules on specific programs. For the FHTV IV program specifically, being a sole-source award, the primary focus is on their ability to meet the established range pricing and delivery timelines as outlined in the contract.

How does the pricing structure of this FPIF contract compare to market rates for similar vehicles?

Direct comparison to market rates for this specific FHTV IV contract is challenging due to its sole-source nature and the 'established range pricing' mechanism. Fixed-Price Incentive (FPIF) contracts aim to share cost risks and rewards between the government and the contractor. The government sets a target cost and a ceiling price, with incentives for the contractor to stay below the target. Without access to the specific range pricing, target costs, and ceiling prices negotiated for this contract, a precise benchmark against market rates is not feasible. However, sole-source contracts inherently lack the competitive pressure that typically drives prices down to the lowest feasible market level.

What are the primary risks associated with a sole-source award for a critical vehicle platform like the FHTV IV?

The primary risks associated with a sole-source award for the FHTV IV include potential for higher costs due to the absence of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency beyond contractual requirements, and strategic dependency on a single supplier. If Oshkosh Defense experiences production issues, supply chain disruptions, or financial instability, it could significantly impact the Army's ability to procure these essential vehicles. Furthermore, the lack of competition can limit the government's leverage in price negotiations over the life of the contract.

How effective is the FPIF contract type in ensuring value for money for the government in this context?

The Fixed-Price Incentive (FPIF) contract type is designed to provide value for money by balancing cost control with performance incentives. For the FHTV IV, it means Oshkosh Defense is motivated to keep costs below a target price to earn a larger share of the savings, while also being protected by a ceiling price. This structure can be effective if the target costs are realistic and the incentives are well-defined. However, the overall value for money is still influenced by the sole-source nature of the award. If the initial target costs are not aggressively negotiated due to lack of competition, the potential savings might be less significant than in a competed environment.

What are the historical spending patterns for the Family of Heavy Tactical Vehicles (FHTV) program?

Historical spending on the FHTV program, including its various iterations (FHTV I, II, III, and now IV), represents a significant and sustained investment by the Department of the Army. These contracts are typically awarded over multiple years, often through indefinite-delivery/indefinite-quantity (IDIQ) or requirements contracts, with delivery orders issued as needed. Spending can fluctuate based on Army modernization priorities, operational tempo, and budget allocations. While specific annual spending figures vary, the FHTV program consistently represents tens to hundreds of millions of dollars annually over its program life, reflecting the critical need for these vehicles in the Army's logistics and operational capabilities.

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: $166,874,307

Exercised Options: $166,874,307

Current Obligation: $166,874,307

Subaward Activity

Number of Subawards: 24

Total Subaward Amount: $1,091,008

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