DoD awards $198M for air freight, with 3 bidders competing for a firm-fixed-price contract

Contract Overview

Contract Amount: $198,080,529 ($198.1M)

Contractor: American Auto Logistics, LP

Awarding Agency: Department of Defense

Start Date: 2008-11-01

End Date: 2010-10-31

Contract Duration: 729 days

Daily Burn Rate: $271.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: AWARD TERM INCENTIVE YEAR#1

Place of Performance

Location: PARK RIDGE, BERGEN County, NEW JERSEY, 07656

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $198.1 million to AMERICAN AUTO LOGISTICS, LP for work described as: AWARD TERM INCENTIVE YEAR#1 Key points: 1. The contract value represents a significant investment in scheduled air freight services. 2. Competition was robust with three bidders, suggesting potential for competitive pricing. 3. The firm-fixed-price structure shifts cost risk to the contractor. 4. This award is part of a broader USTRANSCOM effort to ensure global logistics capabilities. 5. The contractor, AMERICAN AUTO LOGISTICS, LP, has secured a substantial portion of this service category. 6. The duration of the contract (729 days) indicates a need for sustained service delivery.

Value Assessment

Rating: good

The award of $198 million for scheduled freight air transportation appears reasonable given the scope and duration. While specific per-unit cost benchmarks are not provided in the data, the firm-fixed-price nature of the contract suggests that the government has negotiated a set price, limiting potential cost overruns. Comparing this to similar large-scale air freight contracts would provide further insight into its value-for-money, but the competitive nature of the award is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with three distinct bidders vying for the opportunity. This level of competition is generally favorable for price discovery and ensures that multiple vendors had the chance to present their offerings. The presence of three bidders suggests a healthy market for these services, preventing a sole-source situation and likely driving more competitive pricing.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which typically leads to lower prices and better value for the services procured. The open competition ensures that the Department of Defense is not locked into a single provider, fostering an environment where cost efficiencies are pursued.

Public Impact

Military personnel and operations worldwide benefit from the reliable and timely delivery of critical cargo via air freight. The contract supports the Department of Defense's global logistics and supply chain management capabilities. This award ensures the continued operation of essential transportation services for national security objectives. The contract likely supports jobs within the air cargo and logistics industry, both directly with the prime contractor and indirectly through its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single contractor for a critical logistics function could pose a risk if performance issues arise.
Geopolitical events or global health crises could disrupt air freight capacity and impact delivery times.

Positive Signals

Awarded under full and open competition, indicating a competitive market.
Firm-fixed-price contract structure transfers cost risk to the contractor.
Contract duration suggests a stable, long-term need for these services, allowing for efficient planning.
The contractor has secured a significant award, implying capability and capacity to meet demand.

Sector Analysis

The scheduled freight air transportation sector is a critical component of the global logistics and defense supply chain. This contract falls within a market segment that is highly sensitive to fuel costs, geopolitical stability, and regulatory environments. The Department of Defense is a major consumer of air cargo services, and contracts of this magnitude are essential for maintaining operational readiness and projecting power. Benchmarks for similar large-scale air freight contracts would typically consider factors like cargo weight, distance, speed of delivery, and specialized handling requirements.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract, nor does it detail subcontracting plans. Given the large dollar value and specialized nature of scheduled air freight, it is possible that larger, established carriers are the primary participants. Further analysis would be needed to determine if small businesses are involved as subcontractors or if there are opportunities missed for small business participation in this significant federal procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the Department of Defense's contracting officers and the USTRANSCOM. Accountability measures are embedded within the firm-fixed-price contract terms, which stipulate performance requirements and penalties for non-compliance. Transparency is generally maintained through contract award databases, though detailed operational performance metrics may not always be publicly disclosed. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Military Sealift Command (MSC) contracts
Air Mobility Command (AMC) airlift services
Global Freight Forwarding Services
Department of Defense Logistics and Transportation Services

Risk Flags

Potential for performance issues given the scale of the award.
Dependence on contractor's operational stability.
Vulnerability to external factors impacting air cargo (e.g., fuel prices, geopolitical events).

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $198.1 million to AMERICAN AUTO LOGISTICS, LP. AWARD TERM INCENTIVE YEAR#1

Who is the contractor on this award?

The obligated recipient is AMERICAN AUTO LOGISTICS, LP.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $198.1 million.

What is the period of performance?

Start: 2008-11-01. End: 2010-10-31.

What is the historical spending pattern for scheduled freight air transportation by the Department of Defense over the last five years?

Analyzing historical spending for scheduled freight air transportation by the Department of Defense over the last five years would reveal trends in demand, pricing, and contractor reliance. This contract, valued at $198 million for a two-year term, represents a significant annual expenditure. Understanding if this award is consistent with, higher than, or lower than previous years' average annual spending on similar services would provide context. For instance, if historical spending averaged $150 million annually, this award might indicate increased demand or a shift towards longer-term contracts. Conversely, if spending has been declining, this award could signal a renewed focus on air freight capabilities. Such analysis is crucial for budget forecasting and identifying potential market shifts or consolidation.

How does the per-unit cost of this contract compare to other similar air freight contracts awarded by USTRANSCOM or other DoD components?

A direct comparison of per-unit costs for this $198 million contract against similar air freight contracts awarded by USTRANSCOM or other DoD components is challenging without access to detailed pricing breakdowns (e.g., cost per ton-mile, cost per kilogram). However, the fact that this contract was awarded under full and open competition with three bidders suggests that the pricing achieved is likely competitive within the market. Firm-fixed-price contracts generally aim to secure predictable costs. If comparable contracts show significantly higher per-unit costs for similar services, it would indicate good value for this award. Conversely, if other contracts demonstrate substantially lower per-unit costs, it might warrant a closer look at the specifics of this award, such as the included services or the geographic scope.

What is the track record of AMERICAN AUTO LOGISTICS, LP in performing large-scale federal transportation contracts?

AMERICAN AUTO LOGISTICS, LP's track record in performing large-scale federal transportation contracts is a key indicator of their capability and reliability. While this specific award is substantial, understanding their past performance on similar contracts, particularly those with the Department of Defense or USTRANSCOM, is crucial. This includes examining their history of on-time delivery, cargo security, responsiveness to logistical challenges, and overall customer satisfaction ratings (if publicly available through sources like the Contractor Performance Assessment Reporting System - CPARS). A history of successful performance on complex, high-value contracts would bolster confidence in their ability to meet the demands of this $198 million award. Conversely, any significant past performance issues could represent a risk factor.

What are the primary risks associated with relying on scheduled air freight for military logistics, and how are they mitigated in this contract?

The primary risks associated with relying on scheduled air freight for military logistics include susceptibility to flight delays or cancellations due to weather, air traffic control issues, or airline operational problems; potential for cargo damage or loss; vulnerability to geopolitical disruptions affecting flight paths or airspace access; and the high cost compared to other modes of transport. This contract attempts to mitigate some of these risks through its firm-fixed-price structure, which shifts cost-related risks to the contractor. Additionally, the selection of a contractor with a proven track record (assuming AMERICAN AUTO LOGISTICS, LP has one) and the competitive bidding process aim to ensure service reliability. However, risks related to external disruptions remain inherent to air transportation and would likely be managed through contingency planning and potentially alternative transportation strategies by USTRANSCOM.

How does the geographic scope of this contract (implied by USTRANSCOM's mission) impact the complexity and cost of the air freight services provided?

USTRANSCOM's mission inherently involves global logistics, meaning this contract likely covers a wide geographic scope, potentially spanning multiple continents and diverse operational environments. Such a broad scope significantly increases complexity and cost due to factors like varying international regulations, customs procedures, fuel price fluctuations across regions, security requirements in different territories, and the need for extensive network coordination. Longer transit times and the potential for multiple handoffs also add layers of risk and management overhead. The cost is directly influenced by the distance, the number of origin/destination pairs, and the specific security protocols required for military cargo in different global hotspots. A contract covering worldwide operations will naturally be more expensive and complex than one limited to domestic routes.

Industry Classification

NAICS: Transportation and Warehousing › Scheduled Air Transportation › Scheduled Freight Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 85 CHESTNUT RIDGE RD, MONTVALE, NJ, 05

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $198,080,529

Exercised Options: $198,080,529

Current Obligation: $198,080,529

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAMT0103D0184

IDV Type: IDC

Timeline