DoD awards $47.7M for 180 dozers, with Caterpillar Inc. securing the contract

Contract Overview

Contract Amount: $47,752,692 ($47.8M)

Contractor: Caterpillar Inc

Awarding Agency: Department of Defense

Start Date: 2011-07-29

End Date: 2015-12-11

Contract Duration: 1,596 days

Daily Burn Rate: $29.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Construction

Official Description: ORDER 90 EACH TYPE I AND 90 EACH TYPE II T9 DOZERS.

Place of Performance

Location: MOSSVILLE, PEORIA County, ILLINOIS, 61552, UNITED STATES OF AMERICA

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $47.8 million to CATERPILLAR INC for work described as: ORDER 90 EACH TYPE I AND 90 EACH TYPE II T9 DOZERS. Key points: 1. Contract value appears reasonable given the quantity and type of specialized construction equipment. 2. Full and open competition suggests a potentially competitive bidding process. 3. Contract duration of over four years indicates a long-term need for these assets. 4. The award was made by the Department of the Army, highlighting defense infrastructure needs. 5. The North American Industry Classification System (NAICS) code 333120 points to the construction machinery manufacturing sector. 6. Fixed Price with Economic Price Adjustment (FP/EPA) contract type may expose the government to price fluctuations.

Value Assessment

Rating: good

The contract value of $47.7 million for 180 dozers (90 each of Type I and Type II T9) averages to approximately $265,000 per dozer. This price point seems within a reasonable range for heavy construction equipment, especially considering potential customization or specialized features. Benchmarking against similar large-scale government procurements of dozers would provide a more precise value assessment, but initial indications suggest fair pricing.

Cost Per Unit: Approximately $265,000 per dozer (based on 180 units for $47.7M).

Competition Analysis

Competition Level: full-and-open

The 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 requirement. A competitive environment generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: The full and open competition process likely resulted in a more competitive price for taxpayers, ensuring that the Department of the Army received value for its investment in these critical construction assets.

Public Impact

The primary beneficiaries are the Department of the Army and potentially other Department of Defense entities requiring heavy construction equipment for infrastructure projects, base maintenance, or operational support. The contract delivers 180 dozers, specifically 90 of Type I and 90 of Type II T9 models, which are essential for earthmoving and construction tasks. The contract was awarded to Caterpillar Inc., a major manufacturer, implying production and supply chain activities that could support jobs within the manufacturing sector. The specific geographic impact is not detailed, but these dozers would likely be deployed to various military installations or operational theaters requiring construction or engineering support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Fixed Price with Economic Price Adjustment (FP/EPA) contract type introduces risk of price increases due to economic factors, potentially exceeding initial budget estimates.
The long contract duration (1596 days) increases the exposure to market volatility and potential obsolescence of technology over time.

Positive Signals

Awarding to a well-established manufacturer like Caterpillar Inc. suggests a higher likelihood of product quality and reliability.
The full and open competition with 7 bidders indicates a robust market response and potential for competitive pricing.
The specific identification of Type I and Type II T9 dozers suggests a clear and well-defined requirement, reducing ambiguity.

Sector Analysis

This contract falls within the Construction Machinery Manufacturing sector, classified under NAICS code 333120. This industry is characterized by the production of heavy-duty equipment used in construction, mining, and other heavy industries. The market for such equipment is global, with major players like Caterpillar Inc. dominating a significant share. Government procurements, particularly from defense agencies, represent a substantial segment of demand for specialized and robust machinery.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside requirement for this contract (ss: false, sb: false). While Caterpillar Inc. is a large corporation, there may be opportunities for small businesses to participate as subcontractors in the supply chain or for maintenance and repair services. However, the primary award does not directly benefit small businesses through a set-aside mechanism.

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 fixed-price with economic price adjustment structure, requiring adherence to delivery schedules and specifications. Transparency is facilitated by the contract award being made under full and open competition, with the details publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Heavy Equipment Procurement
Army Corps of Engineers Construction Equipment
Tactical Wheeled Vehicle Contracts
Construction Machinery Manufacturing Industry Spending

Risk Flags

Potential for price increases due to FP/EPA clause.
Risk of technology obsolescence over the 4+ year contract duration.
Dependence on a single manufacturer (Caterpillar Inc.) for the entire quantity.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.8 million to CATERPILLAR INC. ORDER 90 EACH TYPE I AND 90 EACH TYPE II T9 DOZERS.

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 $47.8 million.

What is the period of performance?

Start: 2011-07-29. End: 2015-12-11.

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

Caterpillar Inc. has a long-standing relationship with the Department of Defense (DoD) and has historically supplied a wide range of heavy equipment, including dozers, loaders, and excavators, to various military branches. Their track record typically involves fulfilling large-scale contracts for both tactical and non-tactical equipment used in construction, engineering, and logistical support operations. While specific performance metrics for past contracts are not detailed here, Caterpillar is a recognized leader in this sector, known for producing durable and reliable machinery. The DoD often relies on established manufacturers like Caterpillar for critical equipment due to their production capacity, established supply chains, and ability to meet stringent military specifications. Past awards to Caterpillar by the DoD often involve significant dollar values and multi-year durations, reflecting the scale and importance of these procurements.

How does the average per-unit cost of $265,000 for these T9 dozers compare to market rates for similar commercial or military-grade equipment?

The average per-unit cost of approximately $265,000 for the Type I and Type II T9 dozers appears to be within a reasonable range for heavy construction equipment, especially when considering potential military-grade specifications and the inclusion of economic price adjustment clauses. Commercial-grade dozers of comparable size and capability can range from $150,000 to over $400,000 depending on features, engine power, and manufacturer. Military-specific variants often incorporate enhanced durability, specialized attachments, or specific environmental operating capabilities that can increase the cost. The inclusion of an economic price adjustment (EPA) in the contract also means the final price could fluctuate. Without precise specifications for the 'Type I' and 'Type II T9' models and a detailed breakdown of included features or services, a definitive comparison is challenging. However, given the quantity (180 units) and the nature of government procurement, this price point suggests a competitive outcome for specialized equipment.

What are the primary risks associated with a Fixed Price with Economic Price Adjustment (FP/EPA) contract for heavy machinery?

The primary risk associated with a Fixed Price with Economic Price Adjustment (FP/EPA) contract for heavy machinery like dozers is the potential for cost overruns due to fluctuations in the market prices of raw materials, labor, and components. While the FP/EPA structure aims to protect both the contractor from unforeseen cost increases and the government from excessive price hikes, it introduces uncertainty. The economic price adjustment formula is typically tied to specific indices (e.g., Producer Price Index for relevant goods), and if these indices rise significantly, the contract price will increase accordingly. This can lead to the final cost exceeding the initially anticipated budget. For the government, this means less predictable spending and the possibility of paying more than if a firm fixed price had been negotiated, especially in periods of high inflation or supply chain disruptions. Conversely, if prices fall, the government might not benefit from those reductions unless the EPA formula allows for downward adjustments.

How does the duration of this contract (1596 days) impact the overall value and risk for the Department of the Army?

The contract duration of 1596 days (approximately 4.37 years) for 180 dozers impacts the overall value and risk for the Department of the Army in several ways. On the value side, a longer duration allows for a more stable supply chain and potentially better unit pricing through economies of scale for the manufacturer, spreading production costs over a longer period. It also ensures a consistent availability of critical equipment for the Army's engineering and construction needs over several years, avoiding the need for frequent re-procurement. However, this extended period also introduces risks. Technological advancements in dozer design could render the procured models less efficient or outdated before the contract ends. Furthermore, the FP/EPA clause becomes more significant over a longer timeframe, increasing the potential for cumulative price increases due to economic factors. There's also a risk of the Army's requirements changing over such a long period, potentially leading to a surplus or shortage of specific dozer types if needs evolve significantly.

What does the presence of 7 bidders in a full and open competition signify for the government's procurement leverage?

The presence of 7 bidders in a full and open competition for these dozers signifies a healthy and robust market response, which generally enhances the government's procurement leverage. A larger number of bidders indicates that the requirement is attractive to multiple companies, suggesting that the market is competitive. This increased competition typically drives down prices as bidders strive to offer the most compelling proposals to win the contract. It also provides the government with more options and a better basis for evaluating proposals, potentially leading to the selection of a contractor offering superior value in terms of price, quality, and delivery terms. For the Department of the Army, having 7 bidders means they are less reliant on a single source and have a stronger position to negotiate favorable terms and ensure they are receiving fair market value for the $47.7 million investment.

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, 61552

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $47,752,692

Exercised Options: $47,752,692

Current Obligation: $47,752,692

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV08D0169

IDV Type: IDC

Timeline