Department of the Army spent $29M on 12 Caterpillar water distributors, a sole-source award

Contract Overview

Contract Amount: $28,950,999 ($29.0M)

Contractor: Caterpillar Inc

Awarding Agency: Department of Defense

Start Date: 2007-01-31

End Date: 2008-11-10

Contract Duration: 649 days

Daily Burn Rate: $44.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PURCHASE OF 12 WATER DISTRIBUTORS

Place of Performance

Location: MOSSVILLE, PEORIA County, ILLINOIS, 61552

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $29.0 million to CATERPILLAR INC for work described as: PURCHASE OF 12 WATER DISTRIBUTORS Key points: 1. The contract awarded to Caterpillar Inc. for water distributors appears to be a sole-source procurement, raising questions about potential price inflation and lack of competitive pressure. 2. With a duration of 649 days, the contract's value suggests a significant investment in specialized equipment for the Department of the Army. 3. The absence of competition (contract type: NOT COMPETED) is a key risk indicator, potentially leading to suboptimal pricing and limited innovation. 4. The contract falls under the NAICS code 532412 for Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing, indicating a specific industrial equipment need. 5. The award was made under the 'Other' contract action type, which warrants further investigation into the specific circumstances of this non-competitive award. 6. The fixed price contract type provides some cost certainty, but the lack of competition limits the ability to benchmark against market alternatives.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific equipment procured. Without competitive bids, it's difficult to ascertain if the $29 million price represents fair market value for 12 water distributors. The price per unit, approximately $2.4 million, seems high and would require detailed analysis of the equipment's specifications and capabilities to compare against similar offerings or rental rates in the market. The lack of competition inherently limits the government's ability to secure the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Army did not solicit bids from multiple vendors. This typically occurs when only one vendor can provide the required goods or services, or in specific emergency situations. The lack of competition means there were no other bidders, and the government did not benefit from the price discovery mechanisms that competition provides. This raises concerns about whether the government obtained the most advantageous pricing.

Taxpayer Impact: Taxpayers may have paid a premium for these water distributors due to the absence of competitive bidding. The government's negotiating position is weakened when only one supplier is considered.

Public Impact

The primary beneficiaries of this contract are the Department of the Army, which receives 12 specialized water distributors. These water distributors are likely intended for operational support, potentially in areas requiring water transport or management, such as construction sites, disaster relief, or forward operating bases. The geographic impact is likely concentrated within the operational areas of the Department of the Army, potentially domestic or international, depending on deployment. The contract supports the equipment rental and leasing sector, indirectly impacting the workforce involved in the manufacturing, maintenance, and operation of such heavy machinery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may result in higher costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
High per-unit cost requires further justification and market comparison.
Contract duration of over 1.5 years without competitive re-evaluation.
Potential for vendor lock-in with specialized equipment.

Positive Signals

Award to a known manufacturer (Caterpillar Inc.) suggests potential for reliable equipment.
Firm Fixed Price contract provides cost certainty for the government.
Specific equipment (water distributors) addresses a defined operational need for the Army.
Awarded under 'Other' contract action type may indicate a unique or specialized requirement.

Sector Analysis

The market for heavy construction and specialized equipment rental and leasing is substantial, with numerous players ranging from large manufacturers to regional rental companies. NAICS code 532412 specifically covers the rental and leasing of construction, mining, and forestry machinery. This contract, involving the purchase of 12 water distributors, fits within this sector. However, the sole-source nature of this award suggests that Caterpillar Inc. may hold a unique position or proprietary technology for these specific distributors, or that the procurement process did not adequately explore competitive alternatives within the broader equipment rental market.

Small Business Impact

This contract does not appear to involve any small business set-asides, as indicated by 'sb: false'. Furthermore, there is no information suggesting subcontracting opportunities for small businesses. The award to a large manufacturer like Caterpillar Inc. suggests a focus on prime contract delivery rather than leveraging the small business ecosystem for this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and financial management offices. The 'Other' contract action type and sole-source nature might necessitate specific justifications and approvals within the Army's procurement hierarchy. Transparency is limited due to the non-competitive award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the procurement or execution of the contract.

Related Government Programs

Construction Equipment Rental
Military Logistics Support Equipment
Water Management Systems
Heavy Machinery Procurement
Department of Defense Equipment Acquisition

Risk Flags

Sole-source award
High per-unit cost
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.0 million to CATERPILLAR INC. PURCHASE OF 12 WATER DISTRIBUTORS

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 $29.0 million.

What is the period of performance?

Start: 2007-01-31. End: 2008-11-10.

What specific capabilities and features do these Caterpillar water distributors possess that justified a sole-source award?

The provided data does not detail the specific capabilities or features of the 12 water distributors purchased from Caterpillar Inc. A sole-source award typically requires justification demonstrating that only one responsible source can provide the unique supplies or services needed, or that the cost savings from a competitive bid would be negligible. For these water distributors, potential justifications could include highly specialized filtration systems, extreme durability requirements for harsh environments, integration with existing Army infrastructure, or proprietary technology exclusive to Caterpillar. Without further documentation from the contract award file, such as a Justification for Other than Full and Open Competition (JOFOC), the specific reasons remain speculative. Further analysis would involve reviewing the contract's justification documentation to understand the technical or operational necessity that precluded competition.

How does the $2.4 million per-unit cost compare to market rates for similar heavy-duty water distributors?

Determining the precise market rate for these specific Caterpillar water distributors is challenging without detailed specifications and a competitive bidding process. However, $2.4 million per unit is exceptionally high for standard water distribution equipment. Typical large-scale water trucks or mobile water treatment units can range from tens of thousands to several hundred thousand dollars, depending on capacity, features (like purification or pumping capabilities), and chassis. If these units are highly specialized, perhaps incorporating advanced purification, extreme capacity, or designed for unique military operational environments, the cost might be justifiable. However, the lack of competition means there's no benchmark to confirm this. A thorough comparison would require identifying comparable military or industrial equipment, assessing their specifications, and analyzing their acquisition or rental costs from multiple vendors.

What are the potential risks associated with a sole-source award for specialized equipment like water distributors?

Sole-source awards carry several inherent risks for the government. Primarily, the absence of competition can lead to inflated prices, as the contractor faces no pressure to offer the most competitive bid. This can result in taxpayers paying more than necessary for the equipment. Secondly, it limits the government's options and flexibility; if issues arise with the contractor or the equipment, seeking alternatives can be difficult and costly. There's also a reduced incentive for the sole-source provider to innovate or offer superior service, as they have a guaranteed contract. Furthermore, sole-source procurements can raise concerns about fairness and transparency in the acquisition process, potentially leading to perceptions of favoritism or inefficiency if not properly justified and documented.

What is the historical spending pattern for water distributors by the Department of the Army?

The provided data only covers this single contract for 12 water distributors awarded in 2007. To assess historical spending patterns, a broader analysis of Department of the Army (and potentially other DoD branches) procurements for similar equipment over several fiscal years would be necessary. This would involve searching contract databases for keywords like 'water distributor,' 'water truck,' 'water tanker,' 'water purification unit,' and related terms, filtering by the awarding agency (Department of the Army) and relevant NAICS codes. Analyzing the volume, value, contract types (competed vs. sole-source), and average prices of past awards would reveal trends, identify periods of increased or decreased spending, and highlight any shifts in procurement strategies or reliance on specific vendors. Without this broader dataset, it's impossible to establish a historical context for this $29 million award.

What is the track record of Caterpillar Inc. as a government contractor, particularly for specialized equipment?

Caterpillar Inc. is a well-established global manufacturer of construction, mining, and agricultural machinery, and has a long history of supplying equipment to government entities, including the U.S. Department of Defense. Their track record as a government contractor is generally extensive, often involving large-scale procurements of heavy machinery, vehicles, and related parts and services. While specific performance data for individual contracts isn't provided here, Caterpillar is known for producing durable and reliable equipment. However, like any large contractor, there may be instances of contract disputes, performance issues, or pricing concerns on specific awards. A comprehensive assessment of their track record would involve reviewing contract performance ratings, past performance questionnaires, and any documented disputes or terminations across their government contracts, particularly those involving similar specialized equipment or rental/leasing agreements.

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: METALWORKING MACHINERY

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $28,950,999

Exercised Options: $28,950,999

Current Obligation: $28,950,999

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAE0702DT012

IDV Type: IDC

Timeline