Dozer procurement for Army exceeds $49M, awarded to Caterpillar Inc. under full and open competition

Contract Overview

Contract Amount: $49,833,457 ($49.8M)

Contractor: Caterpillar Inc

Awarding Agency: Department of Defense

Start Date: 2010-04-28

End Date: 2014-06-13

Contract Duration: 1,507 days

Daily Burn Rate: $33.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Construction

Official Description: TYPE I T-9 DOZER W/TYPE A KIT; TYPE II T-9 DOZER W/TYPE A KIT

Place of Performance

Location: MOSSVILLE, PEORIA County, ILLINOIS, 61552

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $49.8 million to CATERPILLAR INC for work described as: TYPE I T-9 DOZER W/TYPE A KIT; TYPE II T-9 DOZER W/TYPE A KIT Key points: 1. Value for money assessed against market benchmarks for heavy construction equipment. 2. Competition dynamics indicate a robust bidding process for this significant acquisition. 3. Risk indicators include potential for economic price adjustments impacting final cost. 4. Performance context is tied to the Army's construction and engineering needs. 5. Sector positioning places this contract within the broader defense industrial base for heavy machinery.

Value Assessment

Rating: fair

The contract value of $49.8 million for dozers and kits appears substantial. Benchmarking against similar large-scale construction equipment procurements is necessary to determine true value. The inclusion of economic price adjustment clauses introduces variability, making a definitive value assessment challenging without post-award cost data. However, the fixed-price nature with adjustment suggests an attempt to balance cost certainty with market fluctuations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 7 bidders suggests a healthy level of competition for this type of specialized construction equipment. A competitive environment generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: The broad competition likely resulted in a more cost-effective outcome for taxpayers compared to a sole-source or limited competition award.

Public Impact

Benefits the Department of the Army by providing essential heavy construction equipment for infrastructure projects and operational support. Services delivered include the provision of Type I and Type II T-9 dozers with Type A kits, crucial for earthmoving and construction tasks. Geographic impact is likely nationwide, supporting Army installations and operations across various regions. Workforce implications involve the operators and maintenance personnel required to utilize and service this specialized machinery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost overruns if market prices for components or labor increase significantly.
The long duration of the contract (1507 days) increases exposure to market volatility and potential obsolescence.
Dependence on a single manufacturer (Caterpillar Inc.) for specialized equipment can limit future negotiation leverage and create supply chain risks.

Positive Signals

Awarded under full and open competition, ensuring a broad range of potential suppliers participated.
Multiple bidders (7) indicate a competitive market for this type of equipment.
The contract specifies fixed-price with economic price adjustment, providing some cost control while accounting for market changes.

Sector Analysis

This contract falls within the Construction Machinery Manufacturing sector, specifically for heavy earthmoving equipment. The market for defense-related heavy machinery is often characterized by a few large, established manufacturers. Spending benchmarks for similar large-scale dozer procurements by military branches would provide further context on the scale and pricing of this award.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While there is no direct indication of small business subcontracting requirements in the provided snippet, large prime contracts often include provisions for small business participation. The impact on the small business ecosystem would depend on whether Caterpillar Inc. utilizes small businesses for parts, services, or specialized components related to these dozers.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Army contracting command. Accountability measures are embedded in the contract terms, including delivery schedules and equipment specifications. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Army Construction Equipment Procurement
Heavy Machinery Acquisition Programs
Defense Logistics Agency Equipment Contracts
Tactical Vehicle Procurement

Risk Flags

Potential for cost increases due to Economic Price Adjustment
Long contract duration increases exposure to market volatility
Dependence on a single manufacturer for specialized equipment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.8 million to CATERPILLAR INC. TYPE I T-9 DOZER W/TYPE A KIT; TYPE II T-9 DOZER W/TYPE A KIT

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 $49.8 million.

What is the period of performance?

Start: 2010-04-28. End: 2014-06-13.

What is the historical spending trend for similar dozers by the Department of the Army?

Analyzing historical spending data for similar dozer procurements by the Department of the Army is crucial for contextualizing the $49.8 million award. While specific historical figures for 'TYPE I T-9 DOZER W/TYPE A KIT' and 'TYPE II T-9 DOZER W/TYPE A KIT' are not provided, a trend analysis would involve examining contracts for comparable heavy construction equipment over the past 5-10 years. This would include looking at the number of units procured, average unit prices, contract durations, and the types of competition utilized. For instance, if the Army has consistently procured similar dozers from Caterpillar Inc. or other manufacturers at similar price points over extended periods, it might suggest stable market pricing and a reliable supplier relationship. Conversely, significant price increases or shifts in awarded contractors could indicate market changes, increased demand, or evolving technological requirements. Understanding these historical patterns helps assess whether the current contract represents a fair market price and a prudent use of funds.

How does the unit cost of these dozers compare to commercial off-the-shelf (COTS) equivalents?

Comparing the unit cost of these dozers to Commercial Off-The-Shelf (COTS) equivalents is essential for evaluating value for money. The provided data does not include unit pricing, but if the total award is $49.8 million for 7 units (based on 'no': 7), the average unit cost would be approximately $7.1 million. This figure needs careful consideration, as military-specification equipment often includes specialized features, ruggedization, and integrated technology (like the 'Type A kit') that increase costs beyond standard commercial models. However, a significant premium over comparable COTS dozers, even accounting for military requirements, could signal potential overpricing or inefficient procurement. Benchmarking against high-end commercial dozers from manufacturers like Komatsu, John Deere, or even other Caterpillar models used in demanding industrial applications would be necessary. The 'Type A kit' specifically needs to be assessed for its cost contribution and necessity compared to commercially available attachments.

What are the specific risks associated with the 'Economic Price Adjustment' (EPA) clause in this contract?

The 'Economic Price Adjustment' (EPA) clause in this $49.8 million dozer contract introduces several risks for the Department of the Army. Primarily, it allows the contractor, Caterpillar Inc., to adjust the contract price based on fluctuations in specified economic factors, such as labor costs, material prices (e.g., steel, engine components), and potentially fuel. The main risk is that these factors could increase significantly during the contract's 1507-day duration, leading to a higher final price than initially anticipated under a firm fixed-price contract. This uncertainty makes budget forecasting more difficult and could result in the government paying more than planned. To mitigate this, the government should have closely monitored the indices used for adjustment and potentially negotiated caps on price increases. The effectiveness of the EPA clause in protecting both parties depends heavily on the specific indices chosen and the clarity of the adjustment formula.

What is Caterpillar Inc.'s track record with large military construction equipment contracts?

Caterpillar Inc. has a long-standing and extensive track record of supplying heavy construction and military equipment to government agencies, including the Department of Defense. They are a primary manufacturer of dozers, excavators, and other earthmoving machinery, many of which are adapted or specified for military use. Historically, Caterpillar has been a frequent awardee of large contracts for these types of assets due to their established production capabilities and product lines. Their track record generally includes delivering robust equipment suitable for demanding environments. However, like any large defense contractor, they may have faced scrutiny regarding pricing, delivery timelines, or specific contract performance issues on occasion. A thorough review would involve examining past contract performance evaluations (e.g., CPARS), any significant disputes or litigation, and their history of meeting delivery schedules and technical specifications for similar large-scale military procurements.

How does the number of bidders (7) influence the perceived value and risk of this contract?

The fact that 7 bidders participated in the competition for this dozer contract (awarded to Caterpillar Inc.) generally suggests a healthy level of market interest and competition, which is positive for perceived value and risk reduction. A higher number of bidders typically indicates that the market is contestable and that the barriers to entry for qualified firms are not prohibitively high. This competitive environment usually drives down prices and encourages contractors to offer better terms and quality to win the award. From a risk perspective, having multiple bidders reduces the government's reliance on any single supplier and increases the likelihood of finding a capable contractor. If only one or two bidders had participated, it might have raised concerns about limited competition, potentially leading to higher prices and increased risk of contractor underperformance or default. Therefore, 7 bidders is a strong signal that the government likely achieved a reasonable price and selected from a pool of qualified sources.

What are the implications of the 'Illinois' (IL) state code for this contract's logistics or manufacturing?

The 'IL' state code associated with this contract likely indicates the location of the manufacturing facility or a significant point of performance for Caterpillar Inc. related to this dozer procurement. For the Department of the Army, this has several implications. Firstly, it points to a specific geographic region for production, which can be relevant for supply chain management, oversight, and potentially economic impact considerations within Illinois. Secondly, if manufacturing occurs in Illinois, it might influence transportation logistics for delivery to Army installations, depending on where the equipment is ultimately needed. It could also suggest that Caterpillar's primary heavy machinery manufacturing operations relevant to these T-9 dozers are based in that state. Understanding the specific facility and its role is important for assessing production capacity, quality control processes, and lead times associated with fulfilling the contract.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 7

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

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

Financial Breakdown

Contract Ceiling: $49,833,457

Exercised Options: $49,833,457

Current Obligation: $49,833,457

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV08D0169

IDV Type: IDC

Timeline