DoD awards $28.8M for turbine generators, raising questions about competition and value

Contract Overview

Contract Amount: $28,844,772 ($28.8M)

Contractor: Hamilton Sundstrand Corporation

Awarding Agency: Department of Defense

Start Date: 2023-06-30

End Date: 2026-10-24

Contract Duration: 1,212 days

Daily Burn Rate: $23.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: GENERATOR, CONTAINER NSN: 2835-01-676-1595 P/N: 57K7328 QTY: 144 EACH

Place of Performance

Location: ROCKFORD, WINNEBAGO County, ILLINOIS, 61108

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $28.8 million to HAMILTON SUNDSTRAND CORPORATION for work described as: GENERATOR, CONTAINER NSN: 2835-01-676-1595 P/N: 57K7328 QTY: 144 EACH Key points: 1. Contract awarded on a sole-source basis, limiting price discovery. 2. High unit cost suggests potential for overpayment without competitive benchmarking. 3. Long contract duration may indicate a need for ongoing support or specialized equipment. 4. Lack of small business participation raises concerns about broader economic impact. 5. Performance risk appears moderate given the firm-fixed-price structure. 6. This award falls within the Turbine and Turbine Generator Set Units Manufacturing sector.

Value Assessment

Rating: questionable

The total award of $28.8 million for 144 turbine generators results in a per-unit cost of approximately $199,616. Without competitive bids, it is difficult to benchmark this price against market rates or similar government contracts. The firm-fixed-price structure offers some cost certainty, but the lack of competition prevents an assessment of whether this represents a fair and reasonable price. Further analysis would require comparing this to commercial off-the-shelf pricing or other sole-source awards for comparable equipment.

Cost Per Unit: $199,616 per unit

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Hamilton Sundstrand Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government.

Taxpayer Impact: The absence of competition means taxpayers may not be receiving the best possible price for these turbine generators, as there was no incentive for vendors to offer lower bids.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical turbine generator units. These generators are likely intended for operational readiness and power generation at military installations. The contract's geographic impact is tied to the location of the Defense Logistics Agency and potentially the end-user facilities. The award supports manufacturing jobs within the aerospace and defense sector, specifically related to turbine technology.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the procurement process due to sole-source justification.
No clear indication of small business participation or subcontracting opportunities.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a known entity (Hamilton Sundstrand) may suggest a reliance on established capabilities.
Long-term contract duration (over 3 years) indicates a sustained need for the equipment.

Sector Analysis

The Turbine and Turbine Generator Set Units Manufacturing sector (NAICS 333611) is a specialized area within the broader industrial manufacturing landscape. This sector is characterized by high barriers to entry due to complex engineering requirements and significant capital investment. The Department of Defense is a major customer for such specialized equipment, often requiring robust and reliable power generation solutions for operational needs. Comparable spending benchmarks are difficult to establish without more detailed specifications of the turbine generators, but this award represents a significant investment within this niche market.

Small Business Impact

This contract does not appear to have been set aside for small businesses, nor is there an indication of significant subcontracting opportunities for small businesses. The sole-source nature of the award further limits the potential for small business involvement. This suggests that the primary contractor, Hamilton Sundstrand Corporation, will likely fulfill the majority of the contract requirements internally, potentially missing opportunities to leverage the agility and innovation of the small business sector.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring compliance with contract terms and financial accountability. The firm-fixed-price nature simplifies some aspects of financial oversight compared to cost-plus contracts. Transparency is limited due to the sole-source award, making it harder for the public to scrutinize the value proposition. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency Procurement
Turbine Generator Set Procurements
Sole-Source Defense Contracts
Industrial Manufacturing Contracts
Department of Defense Equipment Acquisition

Risk Flags

Sole-source award lacks competitive justification.
Potential for overpricing due to lack of competition.
Limited transparency in procurement process.
No clear small business participation plan.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.8 million to HAMILTON SUNDSTRAND CORPORATION. GENERATOR, CONTAINER NSN: 2835-01-676-1595 P/N: 57K7328 QTY: 144 EACH

Who is the contractor on this award?

The obligated recipient is HAMILTON SUNDSTRAND CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $28.8 million.

What is the period of performance?

Start: 2023-06-30. End: 2026-10-24.

What is the specific technical capability or justification for awarding this contract on a sole-source basis to Hamilton Sundstrand Corporation?

The provided data does not specify the exact justification for the sole-source award. Typically, sole-source procurements are justified when only one responsible source is available to meet the government's requirements. This could be due to unique technical capabilities, proprietary technology, compatibility with existing systems, or urgent and compelling needs where competition is not feasible. For Hamilton Sundstrand Corporation, this might relate to specific turbine designs, existing support infrastructure, or specialized manufacturing processes essential for these particular generator units. A full justification would typically be documented within the contract file and potentially made public through sources like SAM.gov.

How does the per-unit cost of $199,616 compare to similar turbine generator units procured by the DoD or other federal agencies?

Benchmarking the per-unit cost of $199,616 is challenging without more specific details about the turbine generators' specifications (e.g., power output, fuel type, environmental hardening). However, this figure appears substantial for individual units. A comprehensive comparison would involve analyzing historical contract data for similar NSNs or PSC codes, looking at both competitive and sole-source awards. If this price is significantly higher than comparable competitive awards or commercial off-the-shelf alternatives, it would indicate a potential lack of value for money. The sole-source nature of this award makes direct comparison to competitive pricing even more critical for assessing fairness.

What are the potential risks associated with a sole-source award for critical equipment like turbine generators?

Sole-source awards carry several risks. Primarily, the lack of competition can lead to inflated prices, as the contractor faces no pressure to offer the most competitive bid. This can result in the government overpaying for the equipment. Secondly, it reduces transparency in the procurement process, making it harder for oversight bodies and the public to assess the fairness and reasonableness of the price. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future options and flexibility. Finally, it can stifle innovation by not engaging a broader range of potential suppliers.

What is Hamilton Sundstrand Corporation's track record with the Department of Defense, particularly concerning turbine generator contracts?

Hamilton Sundstrand Corporation, now part of Collins Aerospace (a Raytheon Technologies company), has a long history of supplying complex systems, including power generation equipment, to the Department of Defense and the aerospace industry. While the specific data provided doesn't detail their past performance on similar contracts, their established presence suggests experience in meeting stringent military requirements. Analyzing their historical contract awards, delivery performance, and any past performance issues or awards would provide a clearer picture of their reliability and capability in fulfilling this current contract.

What is the expected operational lifespan and maintenance requirement for these turbine generators, and how does this influence the contract's value?

The provided data indicates a contract duration of 1212 days (approximately 3.3 years) with an end date of October 24, 2026. This duration likely covers the delivery and potentially initial operational support or warranty period for the generators. The actual operational lifespan of the turbine generators themselves is expected to be significantly longer than the contract period, often measured in years or tens of thousands of operating hours. Understanding the expected lifespan and associated maintenance costs is crucial for a complete value assessment. If the generators are designed for long-term, reliable operation with manageable maintenance, the initial investment, even if high, could represent good long-term value. Conversely, short lifespans or high maintenance burdens would diminish the overall value.

Are there any specific performance metrics or Key Performance Indicators (KPIs) outlined in the contract to ensure the generators meet DoD requirements?

The provided data indicates the contract type is 'FIRM FIXED PRICE' (FFP) and the award number is '1'. While FFP contracts establish a ceiling price, they don't inherently detail specific performance metrics within the summary data. However, for critical equipment like turbine generators procured by the DoD, performance specifications are almost certainly defined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS). These would likely include requirements related to power output, efficiency, reliability (e.g., Mean Time Between Failures - MTBF), environmental operating conditions, and compliance with military standards. The government's acceptance of the delivered units would be contingent upon meeting these defined performance criteria.

Industry Classification

NAICS: Manufacturing › Engine, Turbine, and Power Transmission Equipment Manufacturing › Turbine and Turbine Generator Set Units Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: SPRDL121R0020

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4747 HARRISON AVE, ROCKFORD, IL, 61108

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: $28,844,772

Exercised Options: $28,844,772

Current Obligation: $28,844,772

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $76,561

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline