Dozer rental contract awarded to HERC RENTALS INC. for over $13.4 million by the Department of the Army

Contract Overview

Contract Amount: $13,435,971 ($13.4M)

Contractor: Herc Rentals Inc.

Awarding Agency: Department of Defense

Start Date: 2007-05-16

End Date: 2008-06-30

Contract Duration: 411 days

Daily Burn Rate: $32.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: D-8 DOZER W/ SINGLE TOOTH RIPPER

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85008

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $13.4 million to HERC RENTALS INC. for work described as: D-8 DOZER W/ SINGLE TOOTH RIPPER Key points: 1. The contract value of $13.4 million for a single dozer rental appears high, warranting a closer look at the unit cost and rental duration. 2. Awarded as 'NOT COMPETED', this contract raises questions about the justification for foregoing a competitive bidding process. 3. The duration of 411 days suggests a long-term need, which might have been more cost-effectively met through purchase or a longer-term lease. 4. The contract was awarded in 2007, indicating historical spending patterns that may not reflect current market conditions or pricing. 5. The specific equipment, a D-8 Dozer with a single tooth ripper, is a specialized piece of machinery, but the rental cost needs to be benchmarked. 6. The absence of small business involvement (sb: false) means potential opportunities for small businesses were not utilized in this procurement.

Value Assessment

Rating: questionable

The total contract value of $13.4 million for a single D-8 Dozer rental over 411 days is exceptionally high. This equates to a daily rental rate of approximately $32,675. This rate is significantly above typical market rates for heavy equipment rental, even for specialized machinery. Without further details on specific operational requirements or included services, the value proposition appears questionable. It is possible that the rental included extensive support, maintenance, or was for a highly specialized configuration, but this is not evident from the provided data.

Cost Per Unit: Approximately $32,675 per day (calculated as $13,435,971.39 / 411 days). This daily rate is considerably higher than industry benchmarks for similar equipment rentals.

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT COMPETED' (sole-source) procurement method. This indicates that the agency did not solicit bids from multiple vendors. The justification for this approach is not provided, but it typically implies that only one source was capable of meeting the requirement, or there was an urgent need that precluded competition. The lack of competition limits price discovery and may lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers did not benefit from competitive pricing, potentially resulting in a higher overall expenditure than if multiple bids had been solicited.

Public Impact

The primary beneficiary of this contract is HERC RENTALS INC., which received over $13.4 million for equipment rental services. The service delivered is the rental of a D-8 Dozer with a single tooth ripper, a heavy construction and earthmoving machine. The contract was awarded to a vendor with operations in Arizona (st: AZ, sn: ARIZONA), suggesting the equipment was likely utilized within that geographic region. The contract supports military operations or construction projects managed by the Department of the Army, contributing to defense infrastructure or readiness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High daily rental rate suggests potential overpayment.
Sole-source award raises concerns about lack of competition and price justification.
Long rental duration might indicate a missed opportunity for more cost-effective acquisition methods.
Contract awarded in 2007, historical data may not reflect current market value.
Lack of small business participation limits economic opportunities for smaller firms.

Positive Signals

Contract awarded to a known equipment rental company (HERC RENTALS INC.).
Specific equipment (D-8 Dozer w/ single tooth ripper) indicates a defined need for heavy machinery.
Fixed price contract provides cost certainty once awarded, though the initial price is high.

Sector Analysis

The construction and heavy equipment rental sector is a critical component of infrastructure development and maintenance. This contract falls under the machinery and equipment rental and leasing subsector (NAICS 532412). The market for heavy equipment rental is competitive, with numerous national and regional players. However, specialized equipment or long-term rentals can command premium pricing. The government's spending in this area is often tied to infrastructure projects, military base construction, and disaster recovery efforts. Benchmarking this rental cost against similar long-term, specialized equipment leases by government agencies or large private sector projects would be crucial for a comprehensive value assessment.

Small Business Impact

This contract was not set aside for small businesses (sb: false), nor does it indicate any subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific procurement were absent. For large federal contracts, subcontracting plans are often a mechanism to ensure small business participation. The lack of such provisions here suggests that the prime contractor, HERC RENTALS INC., was not obligated to engage small businesses for this particular award, potentially limiting the ripple effect on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the contracting agency, the Department of the Army, and potentially the Department of Defense's Inspector General. Given the contract's award date in 2007, current oversight mechanisms might differ. Transparency regarding the justification for the sole-source award and the detailed breakdown of costs would be key areas for oversight. Without access to the contract file and justification documents, a full assessment of accountability measures is limited. The fixed-price nature of the contract provides some cost control, but the initial pricing remains a point of concern.

Related Government Programs

Heavy Equipment Rental Services
Construction Machinery Leases
Department of Defense Equipment Procurement
Army Corps of Engineers Contracts
Sole-Source Federal Contracts

Risk Flags

High Unit Cost
Sole-Source Award
Lack of Competition
Potential Overpricing
Historical Data Anomaly

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.4 million to HERC RENTALS INC.. D-8 DOZER W/ SINGLE TOOTH RIPPER

Who is the contractor on this award?

The obligated recipient is HERC RENTALS 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 $13.4 million.

What is the period of performance?

Start: 2007-05-16. End: 2008-06-30.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED', signifying a sole-source award. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for contracting without full and open competition. Justifications typically include reasons such as only one responsible source being available, urgent and compelling needs, or specific national defense requirements. Without the official Justification for Other Than Full and Open Competition (JOFOC) document, the precise reason remains unknown. However, such justifications must be approved at specific levels and publicly documented. The lack of competition here suggests a potential for higher costs and reduced value for taxpayers, underscoring the importance of rigorous justification and review processes.

How does the daily rental rate compare to market benchmarks for a D-8 Dozer with a single tooth ripper?

The calculated daily rental rate of approximately $32,675 is exceptionally high when compared to industry benchmarks. Typical daily rental rates for a D-8 Dozer, even with specialized attachments and including basic maintenance, often range from $1,000 to $3,000 per day, depending on the rental duration, location, and specific model year. A rate exceeding $30,000 per day strongly suggests that either the provided data is incomplete (e.g., the 'a' value represents more than just the rental cost, perhaps including significant services or equipment modifications), or the contract was significantly overpriced. Further investigation into the contract details and market surveys from 2007 would be necessary for a definitive comparison.

What are the potential risks associated with a long-term, sole-source equipment rental contract?

Long-term, sole-source equipment rental contracts carry several risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures of a competitive bidding process. Secondly, the fixed duration might not align with evolving project needs, potentially leading to inefficiencies or the need for costly contract modifications. Thirdly, if the equipment becomes obsolete or a better alternative emerges, the government is locked into the existing agreement. Finally, sole-source awards can create a perception of impropriety or favoritism, even if justified, potentially undermining public trust. Robust oversight and a clear, documented justification for sole-sourcing are critical to mitigate these risks.

What was the historical spending pattern for similar equipment rentals by the Department of the Army around 2007?

Analyzing historical spending patterns for similar equipment rentals by the Department of the Army around 2007 is crucial for context. Without access to a comprehensive database of past contracts, a precise comparison is difficult. However, federal procurement data often reveals trends in equipment leasing versus purchasing, average rental rates for specific machinery, and the prevalence of sole-source awards for certain types of equipment. If this $13.4 million contract for a single dozer rental represents a significant outlier compared to other Army procurements of similar equipment during that period, it would further strengthen concerns about its value. Understanding the typical duration, cost, and competition levels for such rentals would provide a baseline for assessing this specific contract's anomalies.

What is the track record of HERC RENTALS INC. in fulfilling federal contracts, particularly for heavy equipment?

HERC RENTALS INC. is a major player in the equipment rental industry, and its track record in fulfilling federal contracts is generally extensive. As a large, established company, it possesses the resources and experience to manage complex equipment needs. However, the specific performance details, on-time delivery, equipment reliability, and adherence to contract terms for individual federal awards are critical. While the company's overall reputation may be strong, each contract should be evaluated on its own merits. The high value and sole-source nature of this particular contract warrant scrutiny of HERC RENTALS INC.'s performance and pricing history with the government, especially concerning large-dollar, non-competed awards.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Commercial and Industrial Machinery and Equipment Rental and Leasing › Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing

Product/Service Code: LEASE/RENT EQUIPMENT › LEASE OR RENTAL OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Herc Holdings Inc. (UEI: 614886062)

Address: 22422 S. ALAMEDA ST, CARSON, CA, 44

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $13,435,971

Exercised Options: $13,435,971

Current Obligation: $13,435,971

Contract Characteristics

Cost or Pricing Data: NO

Timeline