DoD's $33M order for dozers to Caterpillar Inc. awarded under full and open competition

Contract Overview

Contract Amount: $32,976,720 ($33.0M)

Contractor: Caterpillar Inc

Awarding Agency: Department of Defense

Start Date: 2012-03-13

End Date: 2016-08-17

Contract Duration: 1,618 days

Daily Burn Rate: $20.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Construction

Official Description: DELIVERY ORDER FOR TYPE I T-9 DOZERS AND TYPE II T-9 DOZERS.

Place of Performance

Location: MOSSVILLE, PEORIA County, ILLINOIS, 61552

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $33.0 million to CATERPILLAR INC for work described as: DELIVERY ORDER FOR TYPE I T-9 DOZERS AND TYPE II T-9 DOZERS. Key points: 1. Value for money assessed against comparable heavy equipment procurements. 2. Competition dynamics indicate a potentially favorable pricing environment. 3. Risk indicators are low given the established nature of the equipment and contractor. 4. Performance context is a delivery order for essential construction machinery. 5. Sector positioning within construction machinery manufacturing is a core competency for the awardee.

Value Assessment

Rating: good

The total award amount of $32,976,720 for T-9 dozers appears reasonable when benchmarked against similar heavy construction equipment procurements by the Department of Defense. The fixed-price with economic price adjustment contract type offers some cost certainty while allowing for market fluctuations. Without specific per-unit pricing details, a direct cost comparison is challenging, but the overall value seems aligned with market rates for specialized heavy machinery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with seven bids received. The robust competition suggests that multiple manufacturers were capable of meeting the government's requirements, which typically drives more competitive pricing and a wider selection of offerings. The presence of seven bidders indicates a healthy market for these types of dozers.

Taxpayer Impact: The extensive competition benefits taxpayers by likely securing a more favorable price than a sole-source or limited competition award. It ensures that the government is not overpaying due to a lack of market engagement.

Public Impact

The Department of the Army benefits from the acquisition of essential construction machinery. These dozers are critical for various construction and engineering projects, potentially including infrastructure development and military base support. The geographic impact is likely concentrated where the Army conducts its operations, potentially worldwide. Workforce implications include the operation and maintenance of this heavy equipment by military personnel or civilian contractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for economic price adjustments to increase final cost beyond initial estimates.
Long-term maintenance and parts availability for specialized equipment could pose future cost concerns.

Positive Signals

Award to a well-established manufacturer with a proven track record in heavy equipment.
Delivery order structure allows for phased acquisition and deployment.
Fixed-price element provides a baseline cost control.

Sector Analysis

The contract falls within the Construction Machinery Manufacturing sector, a segment of the broader industrial manufacturing industry. This sector is characterized by high capital investment, technological innovation, and significant global competition. The market size for heavy construction equipment is substantial, driven by infrastructure projects, defense needs, and global development. This specific award represents a procurement of specialized, high-value machinery.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor are there explicit subcontracting requirements mentioned. Given the nature of heavy machinery manufacturing and the prime contractor's size, the direct impact on small businesses is likely minimal unless they are suppliers to Caterpillar Inc. The focus appears to be on acquiring specialized equipment from a large, established manufacturer.

Oversight & Accountability

Oversight for this delivery order would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the fixed-price contract structure and performance delivery requirements. Transparency is generally maintained through contract award databases, though specific operational details may be sensitive.

Related Government Programs

Heavy Construction Equipment Procurement
Department of Defense Vehicle Acquisition
Construction Machinery Manufacturing Contracts

Risk Flags

Economic Price Adjustment Clause
Long-term Sustainment Costs
Potential for Delivery Delays

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.0 million to CATERPILLAR INC. DELIVERY ORDER FOR TYPE I T-9 DOZERS AND TYPE II T-9 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 $33.0 million.

What is the period of performance?

Start: 2012-03-13. End: 2016-08-17.

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

Caterpillar Inc. has a long-standing and extensive track record of supplying heavy equipment, including dozers, to the Department of Defense and other government agencies. Their history with the DoD encompasses numerous contracts for various models of construction and engineering vehicles, often awarded through competitive processes. This includes providing equipment for military construction projects, base operations, and overseas deployments. The company is known for its robust product lines and established support networks, making it a frequent and reliable supplier for military needs. Their experience suggests a deep understanding of military specifications and operational requirements, contributing to their consistent success in winning defense contracts.

How does the $33 million award compare to the average cost of T-9 dozers in the federal market?

Determining the precise average cost of T-9 dozers within the federal market based solely on this $33 million delivery order is challenging without knowing the exact quantity of dozers procured and their specific configurations. Federal procurement data often aggregates costs, and economic price adjustments can further complicate direct comparisons. However, the total value suggests a significant acquisition, likely involving multiple units or specialized variants. To establish a benchmark, one would need to analyze historical contract awards for similar T-9 models, factoring in the year of award, contract type (e.g., fixed-price vs. cost-plus), and any included support services or warranties. Without this granular data, a direct per-unit cost comparison to an 'average' is speculative, but the overall sum indicates a substantial investment in critical heavy machinery.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential cost overruns due to the economic price adjustment clause, which allows for fluctuations in material and labor costs. Another risk is the long-term sustainment and maintenance of specialized heavy equipment, including the availability and cost of spare parts and specialized repair services. Performance risk, such as delivery delays or equipment malfunctions, is also a consideration. Mitigation strategies are embedded within the contract structure: the fixed-price component provides a baseline cost control, while the economic price adjustment is capped or managed through specific indices. The award to Caterpillar Inc., a reputable manufacturer, reduces performance risk due to their established quality and support infrastructure. Furthermore, the Department of the Army likely has maintenance protocols and potentially separate support contracts in place to ensure the operational readiness of the dozers throughout their lifecycle.

How effective is the full and open competition process in ensuring value for money for this type of specialized equipment?

The full and open competition process is generally highly effective in ensuring value for money for specialized equipment like dozers. By allowing all responsible sources to submit bids, the government maximizes the potential for receiving competitive pricing from multiple manufacturers. This broad competition drives down costs as contractors vie for the award. It also encourages innovation and ensures that the government can select the best combination of price, technical capability, and delivery schedule. For specialized equipment, this process is crucial because it allows the government to assess a range of technical specifications and performance capabilities against cost. The presence of seven bidders in this specific case strongly suggests that the competition was robust, leading to a more favorable outcome for the taxpayer than a limited or sole-source award.

What are the historical spending patterns for construction machinery by the Department of the Army?

Historical spending patterns for construction machinery by the Department of the Army show a consistent and significant investment in heavy equipment to support its global operations and infrastructure development. The Army regularly procures a wide array of machinery, including dozers, excavators, loaders, and specialized engineering vehicles, to maintain its operational readiness and execute construction projects. Spending in this category fluctuates based on strategic priorities, modernization efforts, and the lifecycle of existing equipment fleets. Major deployments, base construction or upgrades, and disaster relief efforts can all drive spikes in procurement. Contracts are typically awarded through competitive bidding processes, often to large, established manufacturers like Caterpillar, John Deere, and others specializing in heavy industrial equipment. The total annual expenditure can range from tens of millions to hundreds of millions of dollars, depending on the scale of acquisition programs.

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: $32,976,720

Exercised Options: $32,976,720

Current Obligation: $32,976,720

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV08D0169

IDV Type: IDC

Timeline