Vehicles at ~$6.1B: buying, refurbishing and storing bundled into one contract (Oshkosh Defense, Army)

1More than buying is packed into one contract

The scope of this contract is long because the object is not only vehicles. What is listed runs from vehicles and trailers and installed kits and test hardware through vehicle refurbishment, storage and maintenance, engineering and program management, integrated product support, and a technical data package — buying, repairing, keeping, and receiving the drawings, in one continuous line.

Equipment is not ordered as a delivery and done; the arrangements for keeping it in service are ordered with it.

2Firm fixed price and cost reimbursement, side by side

The other thing readable here is that pricing differs by line item. Where specification and quantity are settled — vehicles, kits — the item sits at firm fixed price. Where the amount of work is hard to judge in advance — technical support, fielding support to units — it sits at cost plus fixed fee. The first puts the risk of overrun on the contractor, the second on the government.

Vehicles procured in the later option periods additionally carry an economic price adjustment clause that passes material price movement into the price, a design that assumes steel and similar inputs will move over a long contract.

3Contract value against recorded outlays

The contract value is about $6.10 billion and recorded outlays in this data are about $605.12 million. Public outlay fields can be incompletely recorded depending on the age of the contract and the reporting route, so the ratio between those two figures cannot be read as an execution rate. This site states both only as recorded values.

4Pricing methods divide inside one contract

What this contract shows is that the way price is set differs item by item. What is being bought determines whether cost can be foreseen, and that in turn determines who carries the risk.

The scope further lists vehicles and trailers, kits to be fitted, test hardware, vehicle reset, storage and maintenance, engineering management, integrated product support and the technical data package — buying, repairing, storing and receiving the drawings, all in one line. The allocation of risk in a decade-long procurement appears here as the structure of the contract itself.