Department of the Army awards $97.8M FHTV IV contract to Oshkosh Defense, a sole-source requirement

Contract Overview

Contract Amount: $97,876,434 ($97.9M)

Contractor: Oshkosh Defense LLC

Awarding Agency: Department of Defense

Start Date: 2020-03-27

End Date: 2023-03-31

Contract Duration: 1,099 days

Daily Burn Rate: $89.1K/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 $97.9 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. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Fixed-price incentive contract type suggests shared risk between government and contractor. 3. Contract duration of 1099 days indicates a long-term need for tactical vehicles. 4. Oshkosh Defense is the sole awardee, suggesting a specialized capability or existing relationship. 5. The contract falls under Truck Trailer Manufacturing NAICS code, indicating vehicle production. 6. No small business set-aside was utilized for this award.

Value Assessment

Rating: fair

The contract's total value is $97.8 million. As a sole-source award, direct price comparisons to similar competitive contracts are challenging. The fixed-price incentive (FPIF) structure aims to control costs by incentivizing the contractor to stay within target price ranges, but the effectiveness depends on the realism of those targets and the oversight applied. Benchmarking against historical spending on similar tactical vehicle programs would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically used when only one responsible source is available or when a compelling justification exists for not seeking competition. The lack of competition means that the government did not benefit from the price reductions and innovation that can arise from multiple bidders vying for the contract.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Army units requiring heavy tactical vehicles for logistical and operational support. The contract delivers essential heavy tactical vehicles, crucial for military operations and troop mobility. The geographic impact is primarily within the United States, where Oshkosh Defense is located, and potentially at deployment locations globally. The contract supports jobs within the defense manufacturing sector, specifically at Oshkosh Defense in Wisconsin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Fixed-price incentive contracts can lead to cost overruns if targets are not well-defined or managed.
Lack of competition may reduce pressure on the contractor for innovation and efficiency.
Contract duration is long, requiring sustained oversight to ensure performance and value.

Positive Signals

Oshkosh Defense is an established provider of tactical vehicles, suggesting a degree of reliability.
The FPIF contract type includes incentives for cost control, aligning contractor and government interests.
The contract addresses a clear military requirement for heavy tactical vehicles.

Sector Analysis

The defense industrial base for tactical vehicles is a specialized sector dominated by a few key manufacturers. Oshkosh Defense is a significant player in this market, known for its robust and versatile vehicle platforms. This contract for the Family of Heavy Tactical Vehicles (FHTV) IV fits within the broader category of military vehicle procurement, which is a substantial segment of defense spending. Comparable spending benchmarks would involve looking at other large vehicle procurement contracts within the Department of Defense.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Oshkosh Defense voluntarily engages small businesses for subcontracting opportunities. Further analysis of subcontracting plans would be needed to assess the full impact.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a fixed-price incentive contract, performance and cost monitoring are crucial. Transparency is facilitated through contract award databases, but detailed operational oversight and accountability measures are internal to the agency. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Family of Medium Tactical Vehicles (FMTV)
Joint Light Tactical Vehicle (JLTV)
Heavy Equipment Transporter (HET)
Logistics Vehicle System Replacement (LVSR)

Risk Flags

Sole-source award
Potential for cost overruns in FPIF contracts
Long contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $97.9 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 $97.9 million.

What is the period of performance?

Start: 2020-03-27. End: 2023-03-31.

What is Oshkosh Defense's track record with similar heavy tactical vehicle contracts awarded by the Department of Defense?

Oshkosh Defense has a long-standing relationship with the Department of Defense, particularly in supplying tactical wheeled vehicles. They are the prime contractor for the Family of Heavy Tactical Vehicles (FHTV) program, including previous iterations like FHTV III. They also produce the Joint Light Tactical Vehicle (JLTV), which has seen significant investment and deployment. Their track record generally indicates a capacity to produce and deliver large quantities of specialized military vehicles, though like any large defense contractor, they have faced scrutiny regarding cost, schedule, and performance on various programs. Specific performance metrics for FHTV IV would require detailed review of delivery orders and performance reports.

How does the pricing structure of this FHTV IV contract compare to previous FHTV contracts or similar vehicle procurements?

Direct price comparison is difficult without access to specific line-item pricing and delivery order details for FHTV IV and its predecessors. However, the FHTV IV contract utilizes a Fixed-Price Incentive Firm Target (FPIF) structure. This means that while there is a target cost and target profit, the final profit is adjusted based on the final incurred cost, with a ceiling on the government's liability and a share line for cost savings or overruns. This structure aims to provide better cost control than a cost-plus contract but is inherently more complex than a firm-fixed-price contract. Benchmarking against other sole-source awards for similar vehicle classes would be necessary to assess if the pricing is competitive within the constraints of a non-competed award.

What are the primary risks associated with this sole-source FHTV IV contract, and how are they being mitigated?

The primary risk is the lack of price competition, which could lead to the government paying a premium. Mitigation relies heavily on the government's ability to establish realistic target costs and profits within the FPIF structure and to effectively monitor incurred costs. Another risk is potential contractor underperformance or delays, which are managed through contract clauses, performance metrics, and the incentive structure. The government's technical and contracting teams must maintain rigorous oversight to ensure the vehicles meet specifications and are delivered on time. The sole-source nature also poses a risk if Oshkosh Defense faces production issues or supply chain disruptions, as there are no immediate alternative suppliers for this specific contract.

What is the expected impact of this contract on the Army's overall tactical vehicle fleet readiness and modernization?

This contract is crucial for maintaining and potentially modernizing the Army's heavy tactical vehicle fleet. These vehicles form the backbone of logistics and support operations, enabling the transport of personnel, equipment, and supplies across various terrains and operational environments. By ensuring a steady supply of FHTV IV vehicles, the Army can replace aging platforms, fill fleet shortfalls, and support ongoing operational requirements. The specific impact on modernization depends on the capabilities and technological advancements incorporated into the FHTV IV platform compared to older models.

How has spending on the Family of Heavy Tactical Vehicles (FHTV) program evolved over the years leading up to this award?

Spending on the FHTV program has been substantial over the years, reflecting the Army's continuous need for robust logistics and transport capabilities. The program has evolved through different contract vehicles and iterations (e.g., FHTV I, II, III, and now IV), with significant annual obligations. Historical data typically shows multi-year procurements and delivery orders totaling hundreds of millions, sometimes billions, of dollars over the life of the program. This FHTV IV award represents a continuation of that investment, albeit under a specific contract structure and with a particular awardee. Analyzing historical spending patterns would reveal trends in demand, average unit costs, and the overall lifecycle investment in this vehicle 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: $97,876,434

Exercised Options: $97,876,434

Current Obligation: $97,876,434

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