DoD spent $37M on generator sets, with 6 bidders indicating competitive pricing

Contract Overview

Contract Amount: $37,045,352 ($37.0M)

Contractor: Cummins Power Generation Inc.

Awarding Agency: Department of Defense

Start Date: 2012-05-04

End Date: 2014-03-31

Contract Duration: 696 days

Daily Burn Rate: $53.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PURCHASE OF AMMPS GENERATOR SETS IN 5KW TO 60KW SIZES.

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55432

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $37.0 million to CUMMINS POWER GENERATION INC. for work described as: PURCHASE OF AMMPS GENERATOR SETS IN 5KW TO 60KW SIZES. Key points: 1. The contract aimed to procure generator sets across various power outputs. 2. A firm-fixed-price contract type suggests predictable costs for the government. 3. The award was made under full and open competition, promoting a broad vendor pool. 4. The duration of the contract was approximately two years. 5. The procurement was managed by the Defense Contract Management Agency. 6. The North American Industry Classification System code indicates motor and generator manufacturing.

Value Assessment

Rating: good

The total contract value of $37 million for generator sets over nearly two years appears reasonable given the scope. While specific per-unit costs are not detailed here, the presence of six bidders under full and open competition suggests a healthy market and likely competitive pricing. Benchmarking against similar DoD procurements for generator sets of comparable power ratings (5kW to 60kW) would provide further insight into value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. Six bids were received, indicating a healthy level of interest and competition for this requirement. This broad competition is generally favorable for price discovery and ensures the government can select from a wide range of qualified vendors.

Taxpayer Impact: The full and open competition likely resulted in a more favorable price for taxpayers by fostering a competitive bidding environment.

Public Impact

The Department of Defense benefits from reliable power generation capabilities for its operations. Generator sets are crucial for maintaining essential functions in various military installations and deployments. The procurement supports the motor and generator manufacturing sector. The geographic impact is primarily within the defense infrastructure, potentially nationwide or at deployed locations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for obsolescence if technology advances rapidly during the contract period.
Dependence on a single manufacturer (Cummins Power Generation Inc.) for a significant portion of the supply chain.

Positive Signals

Firm-fixed-price contract type helps control costs and budget predictability.
Full and open competition ensures a wide selection of potential suppliers.
Multiple bidders (6) suggest a competitive market for these generator sets.

Sector Analysis

This contract falls within the Motor and Generator Manufacturing industry, a key component of the broader industrial base supporting defense and infrastructure needs. The market for generator sets is driven by demand for reliable power solutions across commercial, industrial, and government sectors. Comparable spending benchmarks would involve analyzing other large-scale procurements of similar equipment by federal agencies or large industrial organizations.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While Cummins Power Generation Inc. is a large business, the contract's structure under full and open competition does not preclude small businesses from participating as subcontractors. Further analysis would be needed to determine the extent of small business subcontracting.

Oversight & Accountability

The contract was awarded under full and open competition, suggesting adherence to standard procurement regulations. Oversight would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contract compliance and performance. Transparency is generally maintained through contract award databases, though specific performance metrics and detailed spending breakdowns may require further inquiry.

Related Government Programs

Tactical Wheeled Vehicles
Base Operations Support
Military Construction

Risk Flags

Potential for cost overruns if contractor underbid.
Risk of quality compromise if profit margins are squeezed.
Dependence on a single primary supplier for critical equipment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.0 million to CUMMINS POWER GENERATION INC.. PURCHASE OF AMMPS GENERATOR SETS IN 5KW TO 60KW SIZES.

Who is the contractor on this award?

The obligated recipient is CUMMINS POWER GENERATION INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $37.0 million.

What is the period of performance?

Start: 2012-05-04. End: 2014-03-31.

What is the historical spending trend for generator sets by the Department of Defense?

Analyzing historical spending on generator sets by the Department of Defense reveals a consistent need for reliable power solutions across various military branches and operational theaters. Over the past decade, DoD spending in this category has fluctuated based on modernization efforts, deployment requirements, and the lifecycle of existing equipment. For instance, significant procurements often coincide with major operational surges or upgrades to base infrastructure. While the $37 million awarded to Cummins Power Generation Inc. in 2012 represents a substantial single award, it should be viewed within the context of the DoD's overall annual expenditure on power generation equipment, which can range from hundreds of millions to over a billion dollars depending on the year and specific program needs. Tracking these trends helps identify patterns of demand, potential budget constraints, and the impact of technological advancements on procurement strategies.

How does the number of bidders (6) compare to similar DoD generator set procurements?

A total of six bidders for this generator set procurement is a moderately competitive number, suggesting a reasonably healthy market for these specific types of equipment. In the defense sector, the number of bidders can vary significantly based on the complexity, value, and technological specialization of the requirement. For standard, high-volume items like generator sets within a defined power range (5kW to 60kW), six bidders indicate that several manufacturers and suppliers were capable of meeting the specifications and were willing to compete. However, for highly specialized or technologically advanced systems, the number of bidders might be significantly lower. Conversely, for very basic, widely available items, one might expect even more bidders. Therefore, while six is a positive indicator of competition, a direct comparison with other similar DoD procurements of generator sets of comparable size and technical specifications would provide a more precise benchmark.

What are the potential risks associated with a firm-fixed-price contract for generator sets?

A firm-fixed-price (FFP) contract, while offering budget certainty, carries certain risks for both the government and the contractor, particularly for complex equipment like generator sets. For the government, the primary risk is that the contractor may cut corners on quality or service to maximize profit if the initial price was set too low or if unforeseen issues arise during production. Conversely, if the initial price was set too high due to contractor optimism or lack of precise cost data, the government may overpay. For the contractor, the risk lies in underestimating production costs, material price increases, or encountering unforeseen technical challenges, which could lead to reduced profit margins or even losses. In this specific case, with a duration of approximately two years and a value of $37 million, the risk of significant cost overruns for the contractor is present, potentially impacting their willingness to bid on similar future contracts if not managed effectively.

What is the typical performance context for generator sets procured by the DoD?

Generator sets procured by the DoD are critical for ensuring operational readiness and continuity across a wide spectrum of military activities. Their performance context spans from powering forward operating bases in austere environments to providing backup power for fixed installations, command centers, and communication systems. The 5kW to 60kW range suggests these units are likely intended for tactical support, powering individual units, field equipment, or smaller operational nodes, rather than large base-wide power generation. Reliability, durability, fuel efficiency, and ease of transport and maintenance are paramount performance characteristics. Failure of these units can directly impact mission effectiveness, troop safety, and the ability to sustain operations, underscoring the importance of rigorous testing and quality assurance during procurement and deployment.

How does the NAICS code 335312 (Motor and Generator Manufacturing) relate to this procurement?

The North American Industry Classification System (NAICS) code 335312, 'Motor and Generator Manufacturing,' directly classifies the primary industry sector involved in this procurement. This code signifies that the contractor, Cummins Power Generation Inc., operates within the business of designing, developing, and manufacturing electric motors and power generation equipment, including generators. For the DoD, procuring under this NAICS code ensures that the acquisition is directed towards specialized manufacturers with the requisite technical expertise, production capabilities, and quality control systems necessary for producing reliable power generation equipment. It also aids in industry analysis, allowing the government to track spending within specific manufacturing sectors and understand the industrial base supporting defense needs.

Industry Classification

NAICS: Manufacturing › Electrical Equipment Manufacturing › Motor and Generator Manufacturing

Product/Service Code: ELECTRIC WIRE, POWER DISTRIB EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: Cummins Inc. (UEI: 006415160)

Address: 1400 73RD AVENUE NE, MINNEAPOLIS, MN, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $37,045,352

Exercised Options: $37,045,352

Current Obligation: $37,045,352

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T04DA003

IDV Type: IDC

Timeline