DoD awards $50.6M for generators to Cummins Power Generation, a sole-source contract

Contract Overview

Contract Amount: $50,642,306 ($50.6M)

Contractor: Cummins Power Generation Inc.

Awarding Agency: Department of Defense

Start Date: 2020-06-26

End Date: 2022-05-31

Contract Duration: 704 days

Daily Burn Rate: $71.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AMMPS DELIVERY ORDER #0009 (W909MY20F0089)

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55432

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $50.6 million to CUMMINS POWER GENERATION INC. for work described as: AMMPS DELIVERY ORDER #0009 (W909MY20F0089) Key points: 1. Contract awarded without competition raises concerns about price discovery and potential overpayment. 2. The firm fixed-price contract type offers some cost certainty but relies heavily on initial negotiation. 3. A long performance period of 704 days suggests a significant need for these power generation units. 4. The specific product classification (Motor and Generator Manufacturing) indicates a focus on essential equipment. 5. The contract's value is substantial, warranting close scrutiny of its necessity and cost-effectiveness. 6. Lack of small business participation noted, with no set-aside or subcontracting requirements specified.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns or comparisons to similar sole-source awards. The absence of competition suggests that the government may not have achieved the most favorable pricing. However, the firm fixed-price structure provides a degree of cost control once the price is set. Further analysis would require understanding the specific generator models and their market prices.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in urgent situations. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the best value.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less assurance that the price reflects true market value.

Public Impact

The Department of Defense benefits from the acquisition of essential power generation equipment. This contract supports military readiness by ensuring reliable power sources for operations. The geographic impact is primarily within the operational areas where these generators will be deployed by the Army. Workforce implications are likely internal to Cummins Power Generation, focusing on manufacturing and delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Potential for overpayment without competitive bidding.
Lack of transparency in the procurement process.
No small business participation or subcontracting opportunities.
Long contract duration could mask inefficiencies if not managed closely.

Positive Signals

Firm fixed-price contract provides cost certainty post-award.
Award to an established manufacturer (Cummins) suggests potential for reliable product.
Supports critical military operational needs.

Sector Analysis

The motor and generator manufacturing sector is a key component of the industrial base, providing essential equipment for various applications, including defense. The market is characterized by established players and technological advancements. Federal spending in this area often supports national security and infrastructure resilience. Comparable spending benchmarks would typically involve analyzing other large-scale generator procurements by defense agencies.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to include subcontracting requirements for small businesses. This indicates a missed opportunity to engage the small business industrial base and potentially foster innovation and competition. The absence of small business participation could limit the broader economic impact of this federal spending.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which caps the government's liability. Transparency is limited due to the sole-source nature of the award, making detailed public scrutiny of the pricing and justification more difficult.

Related Government Programs

Defense Logistics Agency (DLA) Energy procurements
Army tactical vehicle power systems
Expeditionary power generation contracts
General Services Administration (GSA) Federal Supply Schedule contracts for generators

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.6 million to CUMMINS POWER GENERATION INC.. AMMPS DELIVERY ORDER #0009 (W909MY20F0089)

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 $50.6 million.

What is the period of performance?

Start: 2020-06-26. End: 2022-05-31.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. A sole-source justification is typically required when only one responsible source can satisfy the agency's needs. Common reasons include unique capabilities, urgent and compelling needs, or specific compatibility requirements. Without the official justification document (e.g., a Justification and Approval - J&A), it's impossible to determine the precise rationale. However, the lack of competition means the government did not explore alternative vendors or solutions, potentially leading to a higher price than if the contract had been competed.

How does the $50.6 million award compare to typical spending on similar generator contracts by the Department of Defense?

Comparing this $50.6 million award requires context on the type and quantity of generators procured. Large-scale, high-capacity generators for military installations or expeditionary use can command significant prices. However, without knowing the specific model numbers, power outputs (kW), and quantities, a direct comparison is difficult. Generally, sole-source awards tend to be higher than competed contracts for similar items. Further research into historical DoD procurements of generators with similar specifications, especially those awarded competitively, would be necessary for a robust benchmark.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of $50.6 million include: 1. **Price:** The government may pay a higher price than necessary due to the lack of competitive pressure. 2. **Performance:** While Cummins is a known entity, without competition, there's less incentive for exceptional performance beyond contractual minimums. 3. **Innovation:** The government misses out on potential innovations or alternative solutions that other manufacturers might offer. 4. **Transparency:** Sole-source awards can be perceived as less transparent, potentially leading to public scrutiny or accusations of favoritism if not properly justified and documented.

What is Cummins Power Generation Inc.'s track record with the federal government, particularly the Department of Defense?

Cummins Power Generation Inc. has a significant history of contracting with the U.S. federal government, including the Department of Defense. Their products, primarily generators and power systems, are critical for military operations. Historical data likely shows numerous awards across various agencies and branches. While this specific award is sole-source, their overall track record with the DoD suggests they are a capable and established supplier. A deeper dive into their contract history would reveal the volume and types of awards, payment performance, and any past performance issues.

What are the implications of the 704-day duration (approx. 23 months) for this contract?

The 704-day duration indicates a long-term need for the power generation equipment. This could involve ongoing operational requirements, deployment to multiple locations, or a phased delivery schedule. For the government, a longer duration can sometimes offer price stability over the period, especially with a firm fixed-price contract. However, it also means the funds are committed for an extended period. For the contractor, it provides a substantial revenue stream and requires sustained production and support capabilities. It also necessitates ongoing contract management and oversight from the agency to ensure timely delivery and performance.

Are there any specific performance metrics or deliverables outlined in this delivery order?

The provided data for Delivery Order #0009 does not detail specific performance metrics or deliverables. Typically, a delivery order issued under a larger contract or basic ordering agreement (BOA) would reference the terms and conditions of that parent agreement. These would include specifications for the generators, delivery schedules, acceptance criteria, warranty information, and potentially performance standards. Without access to the full contract documentation or the specific delivery order details beyond the basic identifiers, it's impossible to list the exact performance metrics.

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

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: $50,642,306

Exercised Options: $50,642,306

Current Obligation: $50,642,306

Actual Outlays: $6,453,786

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W909MY18D0033

IDV Type: IDC

Timeline