DoD's $52.8M generator contract awarded to Cummins Power Generation Inc. lacked competition

Contract Overview

Contract Amount: $52,811,166 ($52.8M)

Contractor: Cummins Power Generation Inc.

Awarding Agency: Department of Defense

Start Date: 2019-03-18

End Date: 2022-08-31

Contract Duration: 1,262 days

Daily Burn Rate: $41.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AMMPS DELIVERY ORDER #3 (W909MY19F0029)

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55432

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $52.8 million to CUMMINS POWER GENERATION INC. for work described as: AMMPS DELIVERY ORDER #3 (W909MY19F0029) Key points: 1. The contract value of $52.8 million represents a significant investment in power generation equipment. 2. Awarded as a delivery order, it suggests a need for immediate or specific equipment deployment. 3. The duration of the contract (1262 days) indicates a long-term requirement for these generators. 4. The lack of competition raises questions about potential overpayment and missed opportunities for better pricing. 5. The firm-fixed-price structure aims to control costs, but the absence of competition limits price discovery. 6. The contract falls under the Motor and Generator Manufacturing sector, highlighting a critical industrial capability.

Value Assessment

Rating: questionable

Benchmarking the value of this $52.8 million contract is challenging without specific unit details or comparable sole-source awards. However, the lack of competition inherently limits the government's ability to secure the best possible price. While firm-fixed-price contracts offer cost certainty, the absence of competitive bidding means the government may not have benefited from potential discounts or innovative pricing strategies that multiple bidders could have offered. The total value suggests a substantial procurement, making competitive pressure even more critical for ensuring taxpayer value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order, meaning it was not competed. The Department of Defense likely determined that only Cummins Power Generation Inc. could fulfill the specific requirements of this order, possibly due to unique specifications, existing infrastructure, or urgent operational needs. The absence of multiple bidders means there was no direct price comparison or negotiation leverage derived from a competitive process, which can lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in the government paying a premium for goods or services.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential power generation equipment. This contract supports military readiness and operational capabilities by ensuring reliable power supply. The geographic impact is primarily within Minnesota, where Cummins Power Generation Inc. is located, potentially supporting local jobs and the regional economy. The contract likely impacts the manufacturing and logistics workforce involved in producing and delivering these generators.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices compared to a fully competed scenario.
Sole-source awards can reduce transparency and accountability in the procurement process.
Potential for vendor lock-in if the equipment requires specialized support or parts from the same vendor.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established manufacturer like Cummins suggests a focus on reliability and proven technology.
Long contract duration indicates a sustained need and potential for ongoing support.

Sector Analysis

This contract falls within the Motor and Generator Manufacturing industry (NAICS 335312). This sector is crucial for national infrastructure, providing essential components for power generation across various industries, including defense, utilities, and commercial enterprises. The market is characterized by established players and significant technological advancements. Comparable spending benchmarks are difficult to ascertain without specific product details, but large-scale government procurements for specialized generators can run into tens of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the award was made directly to a large corporation, Cummins Power Generation Inc. There is no explicit information regarding subcontracting plans for small businesses within this specific delivery order. Therefore, the direct impact on the small business ecosystem from this particular award is likely minimal, although the prime contractor may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by 'sa: Defense Contract Management Agency'. They are responsible for ensuring contract compliance, quality assurance, and timely delivery. Transparency is limited due to the sole-source nature of the award. Accountability rests with Cummins Power Generation Inc. to meet the contract terms and with the DoD contracting officers to ensure the terms are appropriate and executed correctly. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency (DLA) - Energy
Army Materiel Command
General Services Administration (GSA) - Federal Supply Schedule

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.8 million to CUMMINS POWER GENERATION INC.. AMMPS DELIVERY ORDER #3 (W909MY19F0029)

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 $52.8 million.

What is the period of performance?

Start: 2019-03-18. End: 2022-08-31.

What specific type of generators were procured under this contract, and what are their technical specifications?

The provided data indicates the contract is for 'AMMPS DELIVERY ORDER #3 (W909MY19F0029)' and falls under NAICS code 335312 (Motor and Generator Manufacturing). While the specific type of generators is not detailed, AMMPS typically refers to the "Advanced Medium Mobile Power Sources" program, which provides tactical, mobile, and modular power generation systems for military use. These systems are designed to be rugged, transportable, and capable of operating in harsh environments, often featuring advanced control systems for power management and integration with other battlefield assets. Technical specifications would likely include power output (kW), voltage, fuel type, cooling mechanisms, noise levels, and environmental operating ranges, tailored to meet specific military operational requirements.

How does the $52.8 million contract value compare to typical spending on similar generator systems by the DoD?

Comparing the $52.8 million value requires understanding the scale and type of generators procured. If this order covers a large quantity of high-capacity tactical generators under the AMMPS program, the value could be within a reasonable range for a sole-source award to a prime contractor like Cummins, which is a known supplier for such systems. However, without knowing the exact number of units and their individual specifications, a direct comparison to typical spending is difficult. Generally, sole-source awards tend to be higher than competitively bid contracts. The DoD procures various power generation solutions, from small portable units to large base-load systems, with costs varying significantly based on capacity, mobility, and technological features.

What are the primary risks associated with awarding a $52.8 million contract on a sole-source basis?

The primary risk associated with a sole-source award of this magnitude is the potential for paying a premium due to the lack of competition. Without competing bids, the government loses the opportunity to leverage market forces to drive down prices and potentially discover more cost-effective solutions. There's also a risk of reduced innovation, as vendors may have less incentive to offer novel or highly efficient designs when they are the only option. Furthermore, sole-source contracts can sometimes indicate a lack of adequate market research or planning, potentially leading to suboptimal procurement outcomes. Ensuring the justification for the sole-source award is robust and that the price negotiated is fair and reasonable becomes paramount.

What is the track record of Cummins Power Generation Inc. in fulfilling government contracts, particularly for mobile power systems?

Cummins Power Generation Inc. (now part of Cummins Inc.) has a long-standing history of supplying power generation solutions to the U.S. government, including the Department of Defense. They are a major manufacturer of diesel and natural gas generators, engines, and related power systems. Their involvement in programs like AMMPS suggests a proven capability in delivering rugged, reliable, and mobile power sources suitable for military applications. Government contract databases often show numerous awards to Cummins for various generator sets, parts, and maintenance services across different agencies. Their track record generally indicates a capacity to meet demanding specifications and delivery schedules, although specific performance on individual contracts can vary.

How has federal spending on motor and generator manufacturing (NAICS 335312) trended over the past five years?

Federal spending data for NAICS 335312, encompassing motor and generator manufacturing, can fluctuate based on defense procurement cycles, infrastructure projects, and energy initiatives. While specific aggregate spending figures for this NAICS code are not directly provided in the abbreviated data, general trends indicate significant government investment in power generation and related equipment, particularly by the Department of Defense and the Department of Energy. Defense spending often drives demand for specialized, high-reliability generators for tactical and operational support. Broader infrastructure investments and energy transition initiatives may also contribute to overall federal outlays in this sector. Analyzing historical spending patterns requires accessing detailed federal procurement databases like FPDS or USASpending.gov.

Industry Classification

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

Product/Service Code: ELECTRIC WIRE, POWER DISTRIB EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Cummins Inc. (UEI: 006415160)

Address: 1400 73RD AVE NE, MINNEAPOLIS, MN, 55432

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: $52,811,166

Exercised Options: $52,811,166

Current Obligation: $52,811,166

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W909MY18D0033

IDV Type: IDC

Timeline