DoD awards $57.7M for generators, with limited competition and potential for higher costs

Contract Overview

Contract Amount: $57,736,591 ($57.7M)

Contractor: Cummins Power Generation Inc.

Awarding Agency: Department of Defense

Start Date: 2019-08-27

End Date: 2021-09-30

Contract Duration: 765 days

Daily Burn Rate: $75.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: AMMPS DELIVERY ORDER #5 (W909MY19F0074)

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55432

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $57.7 million to CUMMINS POWER GENERATION INC. for work described as: AMMPS DELIVERY ORDER #5 (W909MY19F0074) Key points: 1. The contract was awarded on a sole-source basis, raising concerns about price competitiveness. 2. The duration of the contract (765 days) suggests a significant need for these generators. 3. The fixed-price contract type offers some cost certainty but may not capture the best value without competition. 4. The award to a single vendor limits opportunities for other manufacturers to compete and potentially offer lower prices. 5. The lack of a small business set-aside means opportunities for smaller firms in this sector are not explicitly prioritized. 6. The North American Industry Classification System (NAICS) code 335312 indicates a focus on motor and generator manufacturing.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source award. Without competitive bids, it's difficult to ascertain if the $57.7 million represents a fair market price. The fixed-price nature provides some cost control, but the absence of competition means the government may not be realizing the most economical pricing. Further analysis would require comparing this price to similar generator procurements by other agencies or for comparable specifications.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Cummins Power Generation Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the potential for cost savings that could be realized through a more open bidding process.

Public Impact

The Department of the Army benefits from the acquisition of essential power generation equipment. This contract ensures the availability of critical infrastructure for military operations. The geographic impact is primarily within the operational areas of the Department of the Army. The contract supports the manufacturing sector, specifically motor and generator production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may indicate potential barriers to entry or market concentration in generator manufacturing.
Absence of small business set-aside may limit opportunities for smaller, specialized firms in this sector.

Positive Signals

Fixed-price contract provides cost certainty for the government once awarded.
Award ensures critical power generation capabilities are met for the Department of the Army.
The contractor, Cummins Power Generation Inc., is a known entity in the power generation market.

Sector Analysis

The motor and generator manufacturing sector (NAICS 335312) is a critical component of the industrial base, supplying essential equipment for various applications, including defense. The market for large-scale generators is often characterized by a few dominant players, which can influence competition dynamics. Government procurements in this sector can represent significant spending, and the terms of these contracts, particularly regarding competition, heavily influence value for money.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there information indicating subcontracting opportunities for small businesses. This means that the primary award went to a large business without specific provisions to ensure small business participation. Consequently, the direct impact on the small business ecosystem for this particular procurement is likely minimal, and opportunities for small businesses to contribute to this specific contract are not explicitly mandated.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and procurement regulations. As a delivery order under a larger contract, its execution is monitored by the issuing agency. Transparency is limited by the sole-source nature of the award, making detailed public scrutiny of the pricing and justification more difficult. Inspector General involvement would typically be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) Energy procurements
General Services Administration (GSA) Federal Supply Schedule contracts for generators
Army Materiel Command (AMC) equipment acquisition

Risk Flags

Sole-source award raises concerns about fair pricing.
Lack of competition may indicate market concentration or barriers to entry.
Potential for overpayment due to absence of competitive bidding.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.7 million to CUMMINS POWER GENERATION INC.. AMMPS DELIVERY ORDER #5 (W909MY19F0074)

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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $57.7 million.

What is the period of performance?

Start: 2019-08-27. End: 2021-09-30.

What is the historical spending by the Department of Defense on generators from Cummins Power Generation Inc.?

Analyzing historical spending requires access to comprehensive federal procurement databases. Without specific data on prior contracts with Cummins Power Generation Inc. for generators by the Department of Defense, it's impossible to provide a precise figure. However, Cummins is a well-established manufacturer of power generation equipment, and it is plausible that the DoD has engaged in multiple transactions with them over time. A thorough review of contract award databases like FPDS or SAM.gov would be necessary to quantify this historical spending. This analysis would help establish a baseline for current spending and identify trends in procurement volume and value.

How does the price per kilowatt of this contract compare to industry benchmarks for similar generator units?

Determining the price per kilowatt requires knowing the total power output (in kilowatts) of the generators procured under this $57.7 million contract. This information is not provided in the summary data. Assuming the contract is for a significant number of high-capacity generators, the price per kilowatt could be benchmarked against industry standards. Generally, larger, more powerful units have a lower price per kilowatt than smaller ones due to economies of scale. Without the specific power ratings, a direct comparison is not feasible. However, for large industrial generators, prices can range significantly, often from a few hundred to over a thousand dollars per kilowatt, depending on features, efficiency, and brand.

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

The primary risk of a sole-source award for critical equipment like generators is the potential for inflated pricing due to the lack of competition. Without competing bids, the government has less leverage to negotiate favorable terms and may end up paying more than necessary. Another risk is reduced innovation, as there's less incentive for the sole provider to invest in improving their product or service if they are guaranteed the contract. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future. This can also raise concerns about the overall health and competitiveness of the market segment if other capable suppliers are consistently excluded.

What is the typical performance period for similar generator contracts awarded by the Department of the Army?

The typical performance period for generator contracts awarded by the Department of the Army can vary significantly based on the scope, quantity, and nature of the requirement. Contracts can range from short-term rentals or immediate replacements lasting a few months to multi-year sustainment or large-scale deployment efforts spanning several years. The 765-day duration (approximately 2 years) for this specific delivery order suggests a substantial and ongoing need for these generators, possibly for a specific operational theater, base support, or a long-term project. Shorter durations might be for emergency replacements, while longer ones often involve integrated logistics support or phased deployments.

Are there any known performance issues or past contract disputes involving Cummins Power Generation Inc. with the Department of Defense?

Assessing past performance issues or contract disputes requires a deep dive into contract performance records and legal databases, which are not directly accessible through the provided summary data. Cummins Power Generation Inc. is a large, established company, and like many major contractors, it's possible they have encountered performance issues or disputes on some contracts over their history. However, without specific information related to this particular contract or documented issues with the Department of Defense, it is speculative to assume any significant problems. A comprehensive review of past performance evaluations (e.g., CPARS) and any litigation records would be necessary for a definitive answer.

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: $57,736,591

Exercised Options: $57,736,591

Current Obligation: $57,736,591

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W909MY18D0033

IDV Type: IDC

Timeline