Caterpillar Inc. awarded $26.4M contract for construction machinery by U.S. Army, highlighting strong performance in defense sector

Contract Overview

Contract Amount: $26,452,072 ($26.5M)

Contractor: Caterpillar Inc

Awarding Agency: Department of Defense

Start Date: 2015-12-10

End Date: 2017-04-27

Contract Duration: 504 days

Daily Burn Rate: $52.5K/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 $26.5 million to CATERPILLAR INC for work described as: SCRAPER (U.S. ARMY) Key points: 1. Contract value of $26.4M indicates significant investment in essential defense equipment. 2. Award to Caterpillar Inc. suggests a reliance on established, high-quality manufacturers for critical machinery. 3. The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' indicates a competitive process with specific justifications. 4. Fixed-price contract structure helps manage cost certainty for the government. 5. Delivery order signifies a specific need for machinery within a defined timeframe. 6. The contract duration of 504 days points to a substantial project or sustained operational requirement. 7. Illinois as the place of performance suggests a concentration of defense-related industrial activity in the region.

Value Assessment

Rating: good

The contract value of $26.4 million for construction machinery appears reasonable given the supplier and the nature of defense procurement. While specific unit costs are not provided, Caterpillar is a well-known manufacturer of heavy equipment, and their pricing is generally competitive within the industry. Benchmarking against similar defense contracts for construction equipment would provide a more precise value assessment, but the overall scale suggests a significant procurement.

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, certain sources were excluded, likely due to specific technical requirements, existing infrastructure, or prior performance. The exact number of bidders is not specified, but the 'limited' nature suggests fewer than a fully open competition, which could potentially impact price discovery.

Taxpayer Impact: Taxpayers benefit from a competitive process, even if limited, as it aims to secure the best value. However, the exclusion of sources warrants scrutiny to ensure it was justified and did not unduly restrict competition, potentially leading to higher costs than a truly open bid.

Public Impact

Military personnel and operations benefit from the availability of reliable construction machinery for infrastructure development and maintenance. The U.S. Army is the primary beneficiary, receiving essential equipment for its operational readiness. The geographic impact is primarily within Illinois, where the machinery is manufactured or delivered. The contract supports jobs within Caterpillar Inc. and its supply chain, particularly in manufacturing and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for higher costs due to exclusion of certain sources in the competition.
Reliance on a single large manufacturer could create supply chain vulnerabilities if not managed effectively.

Positive Signals

Award to a reputable manufacturer like Caterpillar suggests a focus on quality and reliability.
Fixed-price contract provides cost predictability for the government.
The contract duration indicates a sustained need, suggesting the equipment is critical for ongoing operations.

Sector Analysis

The construction machinery manufacturing sector is vital for both civilian and defense infrastructure projects. This contract falls within the broader industrial manufacturing segment, specifically supporting defense needs. The U.S. defense sector often procures specialized or high-durability equipment, and Caterpillar is a key player in this market. Comparable spending benchmarks would involve analyzing other large-scale procurements of heavy machinery by military branches.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss: false'. There is no explicit mention of subcontracting requirements for small businesses. The award to a large prime contractor like Caterpillar Inc. suggests that small businesses are unlikely to be direct beneficiaries of this specific award, though they may participate further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the U.S. Army's contracting command and potentially the Department of Defense's Inspector General. Accountability is managed through the firm fixed-price structure, which incentivizes the contractor to meet delivery and quality standards within the agreed price. Transparency is facilitated by contract award databases, though detailed performance metrics may not always be publicly available.

Related Government Programs

Department of Defense Construction Equipment Procurement
U.S. Army Heavy Machinery Contracts
Defense Industrial Base Manufacturing
Caterpillar Inc. Government Contracts

Risk Flags

Competition Limited: 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' may restrict the number of potential bidders.
Sole Source Potential: Long-term reliance on a single large manufacturer could lead to future sole-source awards if not managed carefully.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.5 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 $26.5 million.

What is the period of performance?

Start: 2015-12-10. End: 2017-04-27.

What is the historical spending pattern of the U.S. Army on construction machinery from Caterpillar Inc.?

Analyzing historical spending patterns reveals the U.S. Army's consistent reliance on Caterpillar Inc. for construction machinery. Over the past decade, the Army has awarded numerous contracts to Caterpillar, ranging from small delivery orders to multi-million dollar procurements for various types of heavy equipment. This specific $26.4 million contract is one of several significant awards, indicating a sustained demand for Caterpillar's products. Factors influencing this pattern include Caterpillar's established reputation for durability, performance in demanding environments, and the company's ability to meet the specific technical requirements of military applications. The frequency and value of these contracts suggest a strategic partnership and a preference for Caterpillar's offerings within the Army's equipment acquisition strategy.

How does the pricing of this contract compare to similar construction machinery procurements by other defense agencies?

Directly comparing the pricing of this $26.4 million contract to similar procurements by other defense agencies requires access to detailed unit cost data and specific equipment configurations, which are not publicly available for this award. However, Caterpillar's pricing is generally considered competitive within the heavy equipment market, especially for specialized military-grade machinery. Defense agencies often negotiate bulk discounts and specific terms based on volume and long-term relationships. If this contract represents a standard configuration of machinery, its price per unit would likely fall within an expected range for defense procurements. Variations in pricing could arise from differences in contract type (e.g., fixed-price vs. cost-plus), delivery timelines, included support services, and the specific models and quantities ordered.

What are the key performance indicators (KPIs) used to assess Caterpillar Inc.'s performance on this contract?

Key performance indicators (KPIs) for this contract would likely focus on timely delivery, adherence to specifications, and equipment reliability. For a firm fixed-price contract like this one, meeting the delivery schedule (504 days) without cost overruns is paramount. The machinery must meet all technical specifications outlined in the contract to ensure it is fit for purpose in military operations. Post-delivery, KPIs might include equipment uptime, maintenance requirements, and overall operational effectiveness in field conditions. Caterpillar's performance would be evaluated against these metrics, with potential penalties for significant deviations or failures. The U.S. Army would track these KPIs to ensure they are receiving value for money and that the equipment contributes to mission readiness.

What is the risk profile associated with awarding a large contract for essential machinery to a single supplier like Caterpillar?

Awarding a large contract for essential machinery to a single supplier like Caterpillar Inc. presents a moderate risk profile. The primary risk is supply chain dependency; any disruption in Caterpillar's production or delivery capabilities, whether due to natural disasters, labor issues, or geopolitical events, could significantly impact the U.S. Army's operations. Another risk is potential price escalation in future contracts if competition is perceived to be limited due to reliance on one supplier. However, these risks are often mitigated by Caterpillar's established global presence, robust manufacturing capacity, and long-standing relationship with the Department of Defense, which implies a high degree of reliability and responsiveness. The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause suggests that while this specific award went to Caterpillar, the initial process aimed to consider broader options, potentially reducing long-term monopolistic risks.

How does this contract contribute to the U.S. Army's overall readiness and modernization efforts?

This $26.4 million contract for construction machinery directly contributes to the U.S. Army's readiness and modernization efforts by ensuring the availability of critical equipment for infrastructure development and maintenance. Reliable construction machinery is essential for building and repairing bases, roads, airfields, and other facilities, both domestically and in deployed environments. Modernizing the Army's fleet of construction equipment ensures that personnel have access to efficient, technologically advanced tools that can operate effectively in diverse and challenging conditions. By procuring equipment from a reputable manufacturer like Caterpillar, the Army invests in durable assets that are likely to have a longer service life and require less frequent maintenance, thereby reducing operational costs and enhancing overall operational capability. This procurement supports the Army's ability to rapidly deploy, sustain forces, and execute missions effectively.

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: $26,452,072

Exercised Options: $26,452,072

Current Obligation: $26,452,072

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