Army National Guard's $26.4M contract for dozers and training awarded to Caterpillar Inc

Contract Overview

Contract Amount: $26,366,666 ($26.4M)

Contractor: Caterpillar Inc

Awarding Agency: Department of Defense

Start Date: 2012-06-05

End Date: 2016-10-11

Contract Duration: 1,589 days

Daily Burn Rate: $16.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Construction

Official Description: DO FOR ARMY NATIONAL GAURD DOZERS, TRAINING CLASSES, AND STTE KITS

Place of Performance

Location: MOSSVILLE, PEORIA County, ILLINOIS, 61552

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $26.4 million to CATERPILLAR INC for work described as: DO FOR ARMY NATIONAL GAURD DOZERS, TRAINING CLASSES, AND STTE KITS Key points: 1. Contract awarded for essential equipment and training to support Army National Guard operations. 2. Caterpillar Inc., a major manufacturer, secured the contract, indicating established market presence. 3. The contract duration of approximately 4.4 years suggests a significant operational need. 4. Fixed Price with Economic Price Adjustment (FPEPA) contract type may expose the government to price fluctuations. 5. The contract was awarded under full and open competition, suggesting a robust bidding process. 6. The award value of $26.4 million reflects substantial investment in construction machinery and related services.

Value Assessment

Rating: good

The contract value of $26.4 million for dozers, training, and state kits appears reasonable given the duration and the nature of the equipment. Benchmarking against similar large-scale equipment procurements for military branches would provide a more precise value-for-money assessment. The FPEPA pricing structure introduces some risk of cost escalation, which needs to be monitored against market trends for construction machinery and fuel.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of 7 bidders (implied by 'no': 7) suggests a competitive environment, which typically leads to better pricing and value for the government. This level of competition is a positive sign for price discovery and ensures that the awardee was selected based on merit and best value.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best possible price and quality for essential equipment and training, minimizing the risk of overpayment.

Public Impact

The Army National Guard benefits from the acquisition of critical construction machinery (dozers) and associated training, enhancing operational readiness. Services delivered include the provision of heavy equipment and specialized training classes, ensuring personnel are proficient in operating and maintaining the machinery. The contract's geographic impact is primarily within Illinois (ST: IL, SN: ILLINOIS), where the Army National Guard units are stationed and will utilize the equipment and training. Workforce implications include the training of National Guard personnel, potentially enhancing their skills in operating heavy machinery, which can have civilian applications.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The use of Fixed Price with Economic Price Adjustment (FPEPA) introduces potential for cost increases due to market fluctuations in raw materials or labor.
The specific details of the training curriculum and its effectiveness in preparing personnel for operational demands are not fully detailed.
Long-term maintenance and sustainment costs for the Caterpillar dozers beyond the contract period are not explicitly addressed.

Positive Signals

Awarded through full and open competition, ensuring a competitive selection process.
Caterpillar Inc. is a well-established manufacturer with a strong track record in producing heavy equipment.
The contract provides essential equipment and training, directly supporting the operational readiness of the Army National Guard.

Sector Analysis

This contract falls within the Construction Machinery Manufacturing sector, specifically related to heavy equipment used for earthmoving and construction. The market for such equipment is dominated by a few large manufacturers, including Caterpillar. Government procurement of heavy machinery is a significant segment, often involving large, complex contracts for military and infrastructure projects. Benchmarks for similar procurements would typically involve analyzing unit costs for dozers and associated training packages across different government agencies.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. As the awardee is Caterpillar Inc., a large corporation, the focus is likely on prime contract performance rather than direct small business participation through set-asides. However, Caterpillar may engage small businesses for subcontracting opportunities related to parts, services, or logistics, which would be a secondary consideration.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules, performance standards, and payment clauses. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Army National Guard Equipment Procurement
Heavy Construction Equipment Contracts
Military Training Services
Department of Defense Machinery Acquisition

Risk Flags

Potential for cost escalation due to FPEPA clause.
Need for detailed performance metrics on training effectiveness.
Long-term sustainment and maintenance costs not fully detailed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.4 million to CATERPILLAR INC. DO FOR ARMY NATIONAL GAURD DOZERS, TRAINING CLASSES, AND STTE KITS

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 $26.4 million.

What is the period of performance?

Start: 2012-06-05. End: 2016-10-11.

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

Caterpillar Inc. has a long-standing relationship with the U.S. military, including the Department of Defense, for supplying heavy construction and engineering equipment. They have a history of providing dozers, excavators, and other machinery for various military applications, including base construction, logistics support, and combat engineering. Past contracts have often involved robust support services, including maintenance, repair, and operator training. While specific contract values and details vary, Caterpillar's consistent presence in defense procurement suggests a proven ability to meet military specifications and delivery requirements. Their extensive dealer network also facilitates support in diverse operational environments. Analyzing historical performance data, such as on-time delivery rates and equipment reliability, would provide a more granular assessment of their track record for this specific type of contract.

How does the unit cost of the dozers in this contract compare to commercial market rates or other government procurements?

Determining the precise unit cost of the dozers within this $26.4 million contract is challenging without a detailed breakdown of equipment versus training and kit costs. However, government procurements often benefit from bulk purchasing power and negotiated discounts, which can lead to lower unit costs compared to commercial retail prices. The Fixed Price with Economic Price Adjustment (FPEPA) clause introduces complexity, as the final unit cost can fluctuate. To benchmark effectively, one would need to compare the negotiated price per dozer model against similar contracts awarded to Caterpillar or other manufacturers by agencies like the General Services Administration (GSA) or other branches of the military. Commercial market rates can be obtained from industry publications and dealer price lists, but these may not reflect the volume discounts or specific configurations required by the military.

What are the primary risks associated with the 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type for this procurement?

The primary risk associated with the FPEPA contract type for this procurement of dozers and training is potential cost escalation for the government. While FPEPA aims to protect the contractor from unforeseen increases in material, labor, or other specified costs, it can lead to higher final expenditures for the government if market prices rise significantly during the contract period. This is particularly relevant for heavy machinery where the cost of raw materials (like steel) and components can be volatile. The government's exposure is directly tied to the economic price adjustment formula stipulated in the contract. Effective risk mitigation would involve closely monitoring relevant economic indices and ensuring the adjustment formula is fair and accurately reflects market changes without unduly burdening the taxpayer.

How effective is the competition level (7 bidders) in ensuring optimal value for taxpayers on this contract?

A competition level involving seven bidders is generally considered robust and is highly effective in ensuring optimal value for taxpayers. A larger number of bidders typically intensifies competition, driving down prices and encouraging contractors to offer their best terms and quality. This scenario increases the likelihood that the government secures a favorable price and that the selected contractor provides superior performance. The presence of multiple qualified bidders suggests that the market is healthy and that the contracting agency structured the solicitation appropriately to attract a wide range of participants. This competitive environment reduces the risk of contractor collusion and minimizes the potential for the government to overpay for the goods and services procured.

What are the historical spending patterns for construction machinery and training by the Army National Guard or Department of Defense?

Historical spending patterns for construction machinery and training by the Army National Guard and the broader Department of Defense (DoD) reveal a consistent and significant investment in maintaining operational readiness and infrastructure. The DoD procures a wide array of heavy equipment, including dozers, excavators, and specialized engineering vehicles, to support global operations, base construction, and disaster relief efforts. Spending in this category can fluctuate based on geopolitical events, modernization initiatives, and infrastructure replacement cycles. Contracts for such equipment are often large-scale, multi-year procurements awarded through competitive bidding processes. Training components are typically bundled with equipment purchases or procured separately to ensure personnel proficiency. Analyzing past budgets and contract awards would show trends in equipment types, quantities, and associated training costs, providing context for the current $26.4 million award.

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: $26,366,666

Exercised Options: $26,366,666

Current Obligation: $26,366,666

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV08D0169

IDV Type: IDC

Timeline