Department of Defense awards $17.6M contract for 938H Loaders to Caterpillar Inc

Contract Overview

Contract Amount: $17,637,384 ($17.6M)

Contractor: Caterpillar Inc

Awarding Agency: Department of Defense

Start Date: 2010-03-25

End Date: 2011-12-31

Contract Duration: 646 days

Daily Burn Rate: $27.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 938H LOADER

Plain-Language Summary

Department of Defense obligated $17.6 million to CATERPILLAR INC for work described as: 938H LOADER Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. The contract duration of 646 days suggests a significant operational need. 3. Fixed-price contract type aims to control costs, but sole-source nature raises concerns about optimal pricing. 4. No small business set-aside was utilized, indicating potential missed opportunities for smaller contractors. 5. The North American Industry Classification System (NAICS) code 333120 points to construction machinery manufacturing. 6. Awarding agency is the Department of the Army, part of the Department of Defense.

Value Assessment

Rating: fair

The contract value of $17.6 million for 938H Loaders appears substantial. Without specific details on the number of units or their configurations, a direct per-unit cost comparison is difficult. However, given the sole-source nature, it's challenging to definitively benchmark the value against competitive market rates. The firm fixed-price structure provides some cost certainty, but the lack of competition could mean the government did not secure the most advantageous pricing.

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 typically occurs when only one responsible source can provide the required goods or services. The lack of competition means there were no other bidders to drive down prices through a bidding process, potentially leading to higher costs for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding, as the government did not benefit from multiple offers to choose from.

Public Impact

The primary beneficiaries are likely military units requiring heavy construction equipment for operational support and infrastructure development. The services delivered include the provision of 938H Loaders, essential for various construction and logistical tasks. The geographic impact is likely within areas of military operation, both domestically and potentially overseas. Workforce implications may include the need for trained operators and maintenance personnel for the new equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Lack of small business participation may exclude innovative smaller firms.
Fixed-price contract, while offering cost certainty, might not reflect the best possible price without competition.

Positive Signals

Firm fixed-price contract provides budget predictability.
Award to a known manufacturer (Caterpillar Inc.) suggests a focus on reliability and established performance.
Contract duration indicates a sustained need for the equipment.

Sector Analysis

The construction machinery manufacturing sector is a vital part of the industrial base, supplying essential equipment for infrastructure projects, defense operations, and commercial development. The market is characterized by large, established players and specialized manufacturers. Federal spending in this sector often supports military readiness, disaster relief, and public works. This contract for loaders fits within the broader category of defense procurement for heavy equipment.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting plans for small businesses. The award to Caterpillar Inc., a large corporation, suggests that the primary focus was on acquiring specific equipment from an established manufacturer rather than promoting small business participation. This could represent a missed opportunity to engage smaller firms in the defense supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and procurement oversight mechanisms. As a firm fixed-price contract, the primary accountability is on the contractor to deliver the specified equipment. Transparency is limited by the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Construction Equipment Procurement
Heavy Machinery Acquisition
Department of Defense Logistics
Military Engineering Equipment

Risk Flags

Sole-source award may result in higher costs.
Lack of competition limits price discovery.
No small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.6 million to CATERPILLAR INC. 938H LOADER

Who is the contractor on this award?

The obligated recipient is CATERPILLAR 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 $17.6 million.

What is the period of performance?

Start: 2010-03-25. End: 2011-12-31.

What is the specific quantity and configuration of the 938H Loaders being procured under this contract?

The provided data does not specify the exact quantity or detailed configuration of the 938H Loaders. The contract value is $17,637,384.07, and the duration is 646 days. Without this information, it is impossible to perform a precise per-unit cost analysis or to compare the specifications against other available models or previous procurements. This lack of detail hinders a thorough assessment of the value for money and the appropriateness of the fixed price.

Why was this contract awarded on a sole-source basis, and were other options considered?

The data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification for this determination is not provided in the summary data. Typically, sole-source awards are justified under circumstances such as unique capabilities, urgent needs where only one source can respond, or when a previous competitive process failed to yield adequate results. Without the official justification, it's difficult to assess if this was the most appropriate procurement strategy or if it potentially limited taxpayer value.

How does the contract price compare to market rates for similar construction loaders?

A direct comparison of the contract price to market rates is challenging without knowing the exact quantity and specifications of the 938H Loaders. Furthermore, the sole-source nature of the award means the price was not determined through competitive bidding, which typically aligns prices more closely with market dynamics. While Caterpillar is a major manufacturer, the absence of competitive offers prevents a definitive statement on whether this price represents optimal market value. Benchmarking would require access to detailed pricing information and potentially data from other government agencies or commercial entities that have recently procured similar equipment.

What is Caterpillar Inc.'s track record with the Department of Defense for similar equipment?

Caterpillar Inc. is a well-established manufacturer of construction and mining equipment, and it is highly probable they have a significant track record supplying various types of machinery, including loaders, to the Department of Defense and other government agencies. While this specific data point doesn't detail past performance, Caterpillar's long-standing presence in the industry and its role as a primary equipment provider suggest a history of fulfilling government contracts. Further investigation into historical contract awards and performance reviews for Caterpillar would be needed for a comprehensive assessment.

What are the potential risks associated with a sole-source award for construction machinery?

The primary risk associated with a sole-source award for construction machinery is the potential for inflated pricing due to the lack of competitive pressure. Without multiple bids, the government may not achieve the best possible price. Additionally, sole-source awards can limit opportunities for innovation from smaller or alternative suppliers who might offer comparable or superior solutions at a better value. There's also a risk that the government becomes overly reliant on a single supplier, potentially impacting future procurement flexibility and pricing power.

Industry Classification

NAICS: Manufacturing › Agriculture, Construction, and Mining Machinery Manufacturing › Construction Machinery Manufacturing

Product/Service Code: CONSTRUCT/MINE/EXCAVATE/HIGHWY EQPT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W912ER09R0099

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Caterpillar Inc. (UEI: 005070479)

Address: 14009 OLD GALENA RD TC-A, MOSSVILLE, IL, 16

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,637,384

Exercised Options: $17,637,384

Current Obligation: $17,637,384

Contract Characteristics

Cost or Pricing Data: NO

Timeline