Army awards $79M for Abrams transmission upgrades, a sole-source contract with Allison Transmission Inc

Contract Overview

Contract Amount: $79,083,510 ($79.1M)

Contractor: Allison Transmission Inc

Awarding Agency: Department of Defense

Start Date: 2021-06-22

End Date: 2026-06-30

Contract Duration: 1,834 days

Daily Burn Rate: $43.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ABRAMS TRANSMISSION - CY22 ABRAMS DELIVERY ORDER - UPGRADES, IRAN

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46222

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $79.1 million to ALLISON TRANSMISSION INC for work described as: ABRAMS TRANSMISSION - CY22 ABRAMS DELIVERY ORDER - UPGRADES, IRAN Key points: 1. Contract awarded to a single supplier, raising questions about price competitiveness. 2. Focus on Abrams tank transmission upgrades indicates a critical need for enhanced vehicle performance. 3. Long contract duration suggests sustained demand for these specialized components. 4. The contract's fixed-price nature aims to control costs, but without competition, true value is harder to ascertain. 5. Geographic concentration in Indiana for the contractor may have local economic implications. 6. This award represents a significant investment in armored vehicle modernization.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. While Allison Transmission Inc. is a known supplier for Abrams components, the absence of competition means there's no direct market comparison to assess if the $79 million price tag represents optimal value for money. The firm fixed-price structure provides cost certainty, but the government may be paying a premium without competitive pressure. Further analysis would require understanding the specific technological advancements and the cost breakdown of the upgrades.

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 approach is typically used when a unique capability or proprietary technology is required, or in situations where only one responsible source can fulfill the requirement. The lack of competition limits the government's ability to explore alternative solutions or leverage market dynamics to achieve lower prices. It suggests a reliance on a specific supplier's expertise for these critical Abrams transmission upgrades.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive bidding. Without multiple offers, the government cannot be assured it has secured the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the U.S. Army's armored vehicle fleet, ensuring operational readiness and enhanced performance of Abrams tanks. Services delivered include the manufacturing and delivery of upgraded transmission systems for the Abrams main battle tank. The geographic impact is primarily within Indiana, where Allison Transmission Inc. is located, potentially supporting local jobs and the regional economy. Workforce implications include the need for specialized manufacturing and engineering expertise within Allison Transmission Inc. to fulfill this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Long-term contract duration without clear performance metrics could pose risks if technology evolves rapidly.
Dependence on a single supplier for critical components can create supply chain vulnerabilities.

Positive Signals

Award to a known, established supplier with a track record in Abrams components.
Firm fixed-price contract provides cost certainty for the government.
Focus on upgrades suggests modernization efforts to maintain technological superiority.

Sector Analysis

The defense manufacturing sector, particularly for armored vehicle components, is characterized by high barriers to entry, specialized technology, and long product lifecycles. Allison Transmission Inc. operates within this niche, supplying critical powertrain systems for heavy-duty military vehicles. The market for such specialized components is often limited to a few key players capable of meeting stringent military specifications. This contract fits within the broader category of defense procurement for vehicle modernization, a significant segment of federal spending.

Small Business Impact

This contract does not appear to involve a small business set-aside, as the prime contractor, Allison Transmission Inc., is a large corporation. There is no explicit information provided regarding subcontracting plans to small businesses. The absence of a set-aside or specific subcontracting goals means that the direct impact on the small business ecosystem for this particular award is likely minimal, unless Allison Transmission Inc. voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited by the sole-source nature of the award, but contract details and performance reporting would typically be available through federal procurement databases. The Inspector General's office for the Department of Defense may conduct audits or investigations as deemed necessary.

Related Government Programs

Abrams Main Battle Tank Procurement
Army Vehicle Modernization Programs
Defense Powertrain Systems Contracts
Heavy Equipment Manufacturing

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $79.1 million to ALLISON TRANSMISSION INC. ABRAMS TRANSMISSION - CY22 ABRAMS DELIVERY ORDER - UPGRADES, IRAN

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 $79.1 million.

What is the period of performance?

Start: 2021-06-22. End: 2026-06-30.

What is Allison Transmission Inc.'s track record with the Department of Defense, specifically concerning Abrams tank components?

Allison Transmission Inc. has a long-standing relationship with the Department of Defense, particularly as a key supplier of transmissions for the M1 Abrams main battle tank. They have provided transmission systems for various configurations of the Abrams throughout its service life. Their expertise in heavy-duty powertrain solutions makes them a critical partner for maintaining and upgrading the Abrams fleet. This history suggests a deep understanding of the vehicle's requirements and a proven capability to deliver reliable components, which likely contributed to the sole-source award for these specific upgrades.

How does the $79 million cost compare to similar Abrams transmission upgrade contracts or procurements?

Direct comparison of the $79 million cost is difficult due to the sole-source nature of this award and the specific 'upgrades' designation, which may encompass unique technological advancements or specialized configurations. Historically, major component procurements for Abrams tanks can range from tens to hundreds of millions of dollars, depending on the quantity, scope of work, and technological sophistication. Without competitive bids, it's challenging to benchmark this specific value against market rates. However, the duration of the contract (2021-2026) and the substantial total value indicate a significant investment in enhancing the Abrams' operational capabilities.

What are the primary risks associated with a sole-source award for critical defense components like Abrams transmissions?

The primary risks associated with a sole-source award for critical defense components like Abrams transmissions include potential overpricing due to lack of competition, limited innovation from the sole provider who faces no market pressure, and increased supply chain vulnerability if the single supplier experiences production issues or goes out of business. There's also a risk that the government might not be aware of or able to access potentially superior or more cost-effective alternative solutions that could have emerged from a competitive bidding process. This reliance can also reduce the government's leverage in future negotiations.

What is the expected impact of these transmission upgrades on the Abrams tank's performance and operational effectiveness?

The transmission upgrades are expected to significantly enhance the Abrams tank's performance and operational effectiveness. While specific details of the 'upgrades' are not provided, improvements typically focus on increased power density, better fuel efficiency, enhanced durability, improved thermal management, and potentially greater reliability under demanding combat conditions. These enhancements are crucial for maintaining the Abrams' battlefield superiority, enabling faster acceleration, improved maneuverability across varied terrains, and extended operational range, all while potentially reducing maintenance burdens and increasing overall mission readiness.

What has been the historical spending trend for Abrams transmission-related procurements over the last five years?

Historical spending on Abrams transmission-related procurements over the last five years has been substantial, reflecting the ongoing modernization and sustainment needs of the Abrams fleet. While specific figures for 'transmission upgrades' as a distinct category are not readily available without deep database dives, the Army consistently allocates significant funds towards Abrams modernization, which includes powertrain components. Annual spending on Abrams sustainment and upgrades can fluctuate but often falls in the hundreds of millions to billions of dollars range, encompassing various systems. This $79 million award represents a portion of that ongoing investment in maintaining and enhancing the Abrams' combat capabilities.

Are there any known issues or concerns regarding the reliability or performance of Allison transmissions in Abrams tanks that this contract aims to address?

While specific issues are not detailed in the provided data, defense contracts for upgrades often arise from identified needs to improve reliability, address obsolescence, or enhance performance beyond original design specifications. Allison Transmission Inc. has historically supplied robust transmissions, but continuous operational demands and evolving battlefield requirements necessitate ongoing improvements. This contract likely aims to incorporate advancements in materials, design, or control systems to ensure the Abrams remains a leading platform, potentially addressing any known wear-and-tear issues or enhancing performance in extreme environments.

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: $79,208,579

Exercised Options: $79,208,579

Current Obligation: $79,083,510

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