Department of the Army awards $91.6M for Abrams transmission systems, a sole-source contract

Contract Overview

Contract Amount: $91,599,897 ($91.6M)

Contractor: Allison Transmission Inc

Awarding Agency: Department of Defense

Start Date: 2020-04-22

End Date: 2023-12-31

Contract Duration: 1,348 days

Daily Burn Rate: $68.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ABRAMS TRANSMISSION - ALLISON TRANSMISSION CY 2021 PM ABRAMS AND ILSC DELIVERY ORDER.

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46222

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $91.6 million to ALLISON TRANSMISSION INC for work described as: ABRAMS TRANSMISSION - ALLISON TRANSMISSION CY 2021 PM ABRAMS AND ILSC DELIVERY ORDER. Key points: 1. Contract awarded to Allison Transmission Inc. for Abrams transmission systems. 2. The contract covers delivery orders for the fiscal year 2021. 3. This is a sole-source award, indicating limited competition. 4. The contract duration is 1348 days. 5. The award falls under the Mechanical Power Transmission Equipment Manufacturing NAICS code. 6. The contract type is Firm Fixed Price. 7. The contract was awarded by the Department of the Army. 8. The principal place of performance is Indiana.

Value Assessment

Rating: questionable

Benchmarking the value for this specific contract is challenging due to its sole-source nature and the specialized equipment involved. Without competitive bids, it's difficult to ascertain if the $91.6 million represents optimal value for money. However, the firm fixed-price structure provides some cost certainty. Further analysis would require comparing pricing for similar transmission systems in other military platforms or historical data for Abrams upgrades, which is not readily available in this dataset.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Allison Transmission Inc., was solicited. This typically occurs when a specific product or service is only available from a single source, or in cases of urgent need where competition is not feasible. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, the government has less leverage to negotiate the best possible price for these critical Abrams transmission systems.

Public Impact

The primary beneficiaries are the U.S. Army's Abrams tank fleet, ensuring operational readiness. The contract delivers essential mechanical power transmission equipment for armored vehicles. The geographic impact is concentrated in Indiana, where the contractor is based. Workforce implications include continued employment for skilled manufacturing and engineering roles at Allison Transmission Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-sourcing requires further investigation.
Reliance on a single supplier could pose supply chain risks.
The significant dollar amount warrants scrutiny for cost-effectiveness.
Limited public information on the specific technical requirements and alternatives considered.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to an established supplier may ensure timely delivery of critical components.
Contract supports the operational readiness of a key military asset (Abrams tanks).
Principal place of performance in Indiana supports domestic manufacturing jobs.

Sector Analysis

The defense industrial base relies on specialized manufacturers for critical components like vehicle transmissions. Allison Transmission Inc. is a significant player in this niche market. The market for heavy-duty vehicle transmissions, particularly those designed for demanding military applications, is characterized by high barriers to entry due to engineering complexity and stringent performance requirements. This contract represents a substantial investment in maintaining the operational capability of the Abrams main battle tank fleet.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the sole-source nature of the award limits opportunities for small businesses to participate as prime contractors. Subcontracting opportunities for small businesses may exist, but are dependent on Allison Transmission Inc.'s procurement practices and the specific needs of the contract. The impact on the small business ecosystem is likely minimal for this specific award.

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, the justification and approval process would be subject to specific federal acquisition regulations and potentially oversight from the Government Accountability Office (GAO) if protested. Transparency is limited due to the non-competitive nature, but contract performance and payment would be tracked through the Army's financial systems. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Abrams Tank Systems
Military Vehicle Components
Defense Procurement
Mechanical Power Transmission Equipment

Risk Flags

Sole-source award
Lack of competition
Potential for higher costs
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $91.6 million to ALLISON TRANSMISSION INC. ABRAMS TRANSMISSION - ALLISON TRANSMISSION CY 2021 PM ABRAMS AND ILSC DELIVERY ORDER.

Who is the contractor on this award?

The obligated recipient is ALLISON TRANSMISSION INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $91.6 million.

What is the period of performance?

Start: 2020-04-22. End: 2023-12-31.

What is the specific justification for awarding this contract on a sole-source basis to Allison Transmission Inc.?

The provided data indicates the contract was 'NOT COMPETED' and is 'sole-source'. While the specific justification is not detailed in the provided snippet, common reasons for sole-source awards in defense contracting include: unique proprietary technology, essentiality of a specific contractor's product for interoperability or sustainment of existing systems (like the Abrams tank), urgent and compelling needs where competition is not feasible, or when only one responsible source is capable of providing the required product or service. For specialized components like the transmission systems for a main battle tank, it's plausible that Allison Transmission Inc. holds unique intellectual property, possesses specialized manufacturing capabilities, or is the sole provider of a component critical for the Abrams platform's continued operation and sustainment, making competition impractical or detrimental to readiness.

How does the $91.6 million contract value compare to historical spending on Abrams transmission systems?

Direct historical spending comparisons for Abrams transmission systems are not available within the provided data snippet. However, the $91.6 million represents a significant investment. To provide a meaningful comparison, one would need to analyze historical contract awards for similar transmission systems or upgrades for the Abrams platform over several fiscal years. This would involve searching federal procurement databases (like FPDS or SAM.gov) for contracts awarded to Allison Transmission Inc. or other potential suppliers for Abrams components. Understanding the frequency and value of these awards would help determine if this $91.6 million is an outlier, a consistent level of investment, or indicative of increasing costs for these critical parts.

What are the key performance indicators (KPIs) for this contract, and how is performance being measured?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this specific contract. However, for a contract involving the delivery of mechanical power transmission equipment for military vehicles, typical KPIs would likely include: on-time delivery rates, adherence to technical specifications and quality standards (e.g., defect rates, reliability metrics), and potentially warranty performance. The Department of the Army would establish these metrics in the contract's Statement of Work (SOW) or Performance Work Statement (PWS). Performance would be monitored through regular reporting by the contractor, government inspections and acceptance testing, and potentially through contractor performance assessment reporting systems (CPARS).

What is the potential risk associated with relying on a single supplier for such a critical component?

Relying on a single supplier, as is the case with this sole-source contract, introduces several potential risks. Firstly, there's a supply chain vulnerability; any disruption at Allison Transmission Inc. (e.g., natural disaster, labor strike, financial instability, geopolitical issues) could halt the production or delivery of essential Abrams transmission systems, impacting military readiness. Secondly, the lack of competition can lead to reduced price pressure, potentially resulting in higher costs for the government over the life of the contract. Thirdly, it can stifle innovation, as there is less incentive for the incumbent supplier to significantly improve their product or processes when they face no competitive threat. Lastly, there's a risk of vendor lock-in, making it difficult and costly to switch suppliers in the future.

Are there any plans for future competition or transitioning to alternative suppliers for Abrams transmission systems?

The provided data does not contain information regarding future competition or plans to transition to alternative suppliers for the Abrams transmission systems. Typically, sole-source contracts are awarded when competition is not feasible at that specific time. However, defense agencies often conduct market research to identify potential alternative sources or technologies for future procurements. If Allison Transmission Inc. holds patents or unique manufacturing processes, transitioning might be complex and costly. Future competition could arise if these barriers are overcome, if alternative technologies emerge, or if the Army decides to re-compete the requirement after a period, potentially seeking to break the sole-source status through strategic planning and market engagement.

Industry Classification

NAICS: Manufacturing › Engine, Turbine, and Power Transmission Equipment Manufacturing › Mechanical Power Transmission Equipment Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Allison Transmission Holdings, Inc.

Address: ONE ALLISON WAY, INDIANAPOLIS, IN, 46222

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $91,599,897

Exercised Options: $91,599,897

Current Obligation: $91,599,897

Actual Outlays: $31,285,984

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV20D0043

IDV Type: IDC

Timeline