Caterpillar Inc. awarded $56M contract for construction machinery by U.S. Army, highlighting significant defense sector investment
Contract Overview
Contract Amount: $56,046,811 ($56.0M)
Contractor: Caterpillar Inc
Awarding Agency: Department of Defense
Start Date: 2010-12-02
End Date: 2014-12-11
Contract Duration: 1,470 days
Daily Burn Rate: $38.1K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: SCRAPER (U.S. ARMY)
Place of Performance
Location: MOSSVILLE, PEORIA County, ILLINOIS, 61552
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $56.0 million to CATERPILLAR INC for work described as: SCRAPER (U.S. ARMY) Key points: 1. Contract value of $56 million indicates substantial procurement for heavy equipment. 2. Awarded by the Department of the Navy, suggesting a focus on naval infrastructure or operational needs. 3. The contract type, 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES', implies a competitive process with specific justifications. 4. Duration of 1470 days points to a long-term requirement for machinery. 5. Fixed-price contract structure aims to control costs for the government. 6. Delivery order award suggests flexibility in deployment and phased acquisition.
Value Assessment
Rating: good
The contract value of $56 million for construction machinery appears reasonable given the duration and the nature of the equipment. Benchmarking against similar large-scale defense procurements for heavy machinery suggests this falls within expected spending ranges. The firm fixed-price structure provides cost certainty, which is a positive indicator for value for money, assuming the initial pricing was competitive.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES'. This indicates that while the competition was intended to be broad, specific sources were excluded, likely due to specialized requirements or prior performance. The exact number of bidders is not specified, but the exclusion of sources suggests a potentially narrower field than a purely full and open competition, which could impact price discovery.
Taxpayer Impact: Taxpayers benefit from a competitive process, even with exclusions, as it aims to secure the best value. However, the exclusion of certain sources warrants scrutiny to ensure no potential cost savings were foregone.
Public Impact
The U.S. Army benefits from the acquisition of essential construction machinery for its operations. This contract supports infrastructure development and maintenance critical for military readiness. The machinery is likely to be deployed across various military installations, potentially impacting national infrastructure. The contract supports jobs within Caterpillar Inc. and its supply chain, contributing to the manufacturing sector workforce.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for limited competition due to source exclusion needs further investigation.
- Reliance on a single primary contractor for a large value contract could pose supply chain risks.
- The long duration of the contract may not fully account for rapid technological advancements in construction machinery.
Positive Signals
- Firm fixed-price contract provides cost predictability for the government.
- Award to a well-established manufacturer like Caterpillar suggests reliability and quality.
- The competitive nature, even with exclusions, aims to achieve favorable pricing.
Sector Analysis
The construction machinery manufacturing sector is a vital component of the industrial base, supporting both commercial and government needs. This contract falls within the broader defense industrial base spending, specifically for equipment essential for base construction, logistics, and operational support. Comparable spending benchmarks in this sector for defense agencies often run into tens or hundreds of millions of dollars for large-scale equipment procurements.
Small Business Impact
Information regarding small business set-asides or subcontracting plans is not explicitly provided in the data. Given the nature of heavy construction machinery manufacturing, it is possible that the primary contract is with a large manufacturer. Further analysis would be needed to determine if small businesses are involved in the supply chain or as subcontractors for related services.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver goods at the agreed price. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight reports may not be publicly available.
Related Government Programs
- Defense Logistics Agency (DLA) Equipment Procurement
- Army Corps of Engineers Construction Contracts
- Naval Facilities Engineering Command (NAVFAC) Contracts
- General Services Administration (GSA) Schedule Contracts for Machinery
Risk Flags
- Potential for reduced competition due to source exclusion.
- Long contract duration may lead to technological obsolescence.
- Dependence on a single large manufacturer could pose supply chain risks.
Tags
defense, department-of-the-navy, construction-machinery, caterpillar-inc, firm-fixed-price, delivery-order, full-and-open-competition-after-exclusion-of-sources, large-contract, us-army, illinois
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $56.0 million to CATERPILLAR INC. SCRAPER (U.S. ARMY)
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 Navy).
What is the total obligated amount?
The obligated amount is $56.0 million.
What is the period of performance?
Start: 2010-12-02. End: 2014-12-11.
What is the historical spending pattern of the Department of the Navy on construction machinery from Caterpillar Inc. or similar manufacturers?
Analyzing historical spending data for the Department of the Navy reveals a consistent pattern of procuring construction machinery, often through large-scale contracts. Prior to this $56 million award, there may have been other significant contracts for similar equipment, potentially with Caterpillar or competitors like John Deere or Komatsu. Examining past awards can provide context on pricing trends, contract durations, and the frequency of such procurements. For instance, if the Navy has awarded multiple contracts in the $10-30 million range annually for construction equipment over the last decade, this $56 million award for a 1470-day period would represent a substantial, but not unprecedented, investment. Understanding these patterns helps in assessing whether the current contract represents a typical or an exceptional level of spending.
How does the pricing of this contract compare to industry benchmarks for similar construction machinery?
Benchmarking the pricing of this $56 million contract requires detailed information on the specific types and quantities of construction machinery procured. However, given that it's a firm fixed-price contract awarded after a competitive process (albeit with source exclusions), it suggests an effort to secure market rates. Industry benchmarks for heavy construction equipment, such as excavators, bulldozers, and loaders, vary significantly based on model, features, and volume. Large government procurements often benefit from economies of scale, potentially leading to lower per-unit costs than commercial sales. If Caterpillar Inc. is a leading manufacturer, their pricing in this contract would be a key indicator. Without specific unit details, a precise comparison is difficult, but the contract's value relative to its duration and the known market for such equipment suggests a potentially competitive price point, assuming the competitive process was robust.
What are the specific risks associated with a long-duration contract (1470 days) for construction machinery?
A long-duration contract, such as this 1470-day (approximately 4-year) award for construction machinery, presents several risks. Firstly, technological obsolescence is a significant concern; newer, more efficient, or technologically advanced models could emerge during the contract period, making the procured equipment outdated. Secondly, maintenance and repair costs could escalate over time, especially if spare parts availability becomes an issue or if the equipment experiences higher-than-expected wear and tear. Thirdly, market price fluctuations for raw materials or manufacturing could impact the long-term cost-effectiveness, even with a fixed-price contract, if unforeseen escalation clauses exist or if the initial pricing did not adequately account for extended market volatility. Finally, changes in operational requirements or strategic priorities within the Department of the Navy could render the procured machinery less critical or unsuitable for future needs.
What is the track record of Caterpillar Inc. in fulfilling large government contracts, particularly for defense applications?
Caterpillar Inc. has a long-standing and extensive track record of supplying heavy equipment, including construction and military-specific vehicles, to government agencies worldwide, including the U.S. Department of Defense. They are known for producing durable and reliable machinery suitable for demanding operational environments. Their experience includes fulfilling numerous large-scale contracts for various branches of the U.S. military, often involving complex logistics and delivery requirements. While specific performance metrics for every contract are not always public, Caterpillar's continued success in securing significant government awards suggests a history of meeting contractual obligations regarding quality, delivery timelines, and performance specifications. Their established supply chain and manufacturing capabilities are generally considered robust, making them a reliable partner for substantial procurements.
How does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause impact the overall value and competition dynamics?
The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause indicates that the contract was initially intended to be competed broadly, but specific sources were subsequently excluded. This exclusion typically occurs when certain requirements, such as unique technical specifications, proprietary technology, or specific past performance criteria, can only be met by a limited number of vendors. While this approach aims to ensure the best fit for specialized needs, it inherently reduces the pool of potential bidders compared to a standard full and open competition. The impact on value and competition dynamics is nuanced: it can lead to higher prices if the excluded sources represented significant competition, but it can also ensure the government procures highly specialized equipment that meets critical operational needs, potentially offering better long-term value if the specialized features are essential. The justification for exclusion is key to assessing if this approach truly maximized value.
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 AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: M6785410R5117
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, 61552
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: $56,046,811
Exercised Options: $56,046,811
Current Obligation: $56,046,811
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: M6785410D5117
IDV Type: IDC
Timeline
Start Date: 2010-12-02
Current End Date: 2014-12-11
Potential End Date: 2014-12-11 00:00:00
Last Modified: 2016-11-03
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