DoD awards $242M for air freight, with 3 bidders competing for a firm-fixed-price contract

Contract Overview

Contract Amount: $242,442,418 ($242.4M)

Contractor: American Auto Logistics, LP

Awarding Agency: Department of Defense

Start Date: 2009-11-01

End Date: 2010-10-31

Contract Duration: 364 days

Daily Burn Rate: $666.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AWARD TERM INCENTIVE YEAR #2

Place of Performance

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

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $242.4 million to AMERICAN AUTO LOGISTICS, LP for work described as: AWARD TERM INCENTIVE YEAR #2 Key points: 1. The contract's firm-fixed-price structure aims to control costs, but the incentive year structure suggests potential for performance-based adjustments. 2. With three bidders, the competition level appears moderate, potentially leading to reasonable price discovery but not necessarily the lowest possible cost. 3. The contract's duration of 364 days for Incentive Year #2 indicates a focused, short-term operational need. 4. The award to AMERICAN AUTO LOGISTICS, LP suggests a focus on established providers with proven capabilities in freight transportation. 5. The significant award value warrants scrutiny for efficiency and alignment with strategic transportation goals. 6. The absence of small business set-aside flags indicates this contract was not specifically targeted to boost small business participation.

Value Assessment

Rating: good

The award value of approximately $242 million for a single incentive year of scheduled freight air transportation is substantial. Benchmarking this against similar large-scale air cargo contracts is challenging without more specific service details (e.g., routes, volume, aircraft type). However, the firm-fixed-price (FFP) contract type generally provides cost certainty for the government. The incentive year structure implies that performance metrics are in place, which could lead to better value if targets are met, but also introduces complexity in assessing the final 'true' cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with three bidders participating. This level of competition is generally positive, suggesting that multiple capable vendors were aware of and responded to the requirement. Three bidders typically indicate a healthy market for the service, allowing for some price negotiation and selection of the most advantageous offer. However, it's not the highest level of competition, which might be seen with five or more bidders, potentially yielding even more competitive pricing.

Taxpayer Impact: The full and open competition with three bidders suggests that taxpayers are likely receiving a fair price, as multiple companies vied for the contract. This competitive pressure helps prevent excessive costs and encourages efficiency.

Public Impact

Military personnel and DoD operations benefit from the reliable and scheduled delivery of critical cargo via air freight. The service ensures the timely movement of equipment, supplies, and personnel, supporting global military readiness. The contract's geographic impact is likely global, given the nature of military logistics, though specific routes are not detailed. The contract supports jobs within the air transportation and logistics sectors, both directly with the prime contractor and indirectly through its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if incentive targets are not met or if scope creep occurs within the incentive year.
Dependence on a single contractor for a critical logistics function could pose a risk if performance falters.
Lack of specific performance metrics makes it difficult to fully assess value for money beyond the FFP structure.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Full and open competition suggests a competitive bidding process was utilized.
Incentive year structure implies performance is being monitored and potentially rewarded, driving efficiency.

Sector Analysis

The air transportation and logistics sector is a critical component of the defense industrial base, enabling the rapid movement of personnel and materiel globally. This contract falls within the broader category of defense logistics services, which includes a wide range of transportation modes. Spending in this sector is often driven by geopolitical factors, operational tempo, and the need for agile supply chains. Comparable spending benchmarks would typically be found within USTRANSCOM's overall budget for airlift and sealift operations.

Small Business Impact

The data indicates this contract was not awarded as a small business set-aside, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the primary focus was on securing the most capable large-scale provider for this critical air freight service. Consequently, the direct impact on the small business ecosystem through this specific award may be limited, unless AMERICAN AUTO LOGISTICS, LP actively engages small businesses in its subcontracting efforts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and logistics commands, specifically USTRANSCOM. Accountability measures are embedded within the contract's performance clauses and the firm-fixed-price structure. Transparency is generally maintained through contract award databases, although detailed performance reports and specific route data may be considered sensitive. The Inspector General's office within the DoD would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Military Airlift Command
Defense Logistics Agency
Global Freight Transportation
Scheduled Air Cargo Services
USTRANSCOM Contracts

Risk Flags

Potential for cost creep if performance incentives are poorly defined or managed.
Dependence on a single provider for critical air freight services.
Lack of detailed performance metrics in the summary data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $242.4 million to AMERICAN AUTO LOGISTICS, LP. AWARD TERM INCENTIVE YEAR #2

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 $242.4 million.

What is the period of performance?

Start: 2009-11-01. End: 2010-10-31.

What is the historical spending pattern for scheduled freight air transportation by the Department of Defense under similar contracts?

Analyzing historical spending for scheduled freight air transportation by the DoD requires examining contract awards over several fiscal years, focusing on USTRANSCOM and related entities. Data from sources like USASpending.gov reveals significant, multi-billion dollar annual expenditures on transportation services, including air freight. Contracts for scheduled air cargo have historically been awarded through competitive processes, often to large logistics providers. Award values can fluctuate based on operational tempo, global events, and specific mission requirements. For instance, periods of increased military deployment or contingency operations often correlate with higher spending on rapid transport solutions. The firm-fixed-price nature of many of these awards aims to cap costs, but the sheer volume and strategic importance mean substantial sums are consistently allocated to ensure logistical readiness. Understanding the trend requires looking at the aggregate spending across multiple contracts and over time, rather than isolated awards.

How does the per-unit cost of this contract compare to industry benchmarks for similar air freight services?

Determining a precise per-unit cost comparison for this $242 million contract is difficult without granular data on the specific services rendered. 'Scheduled freight air transportation' can encompass a vast range of services, including different aircraft types (e.g., C-17, commercial charters), varying routes (domestic vs. international), cargo types (standard vs. specialized), and service levels (expedited vs. standard). Industry benchmarks often rely on metrics like cost per ton-mile or cost per flight hour. Given the firm-fixed-price nature, the government has agreed to a set price, implying that AMERICAN AUTO LOGISTICS, LP calculated its bid based on anticipated costs and profit margins. If this contract were broken down into specific routes and frequencies, it could be benchmarked against commercial air cargo rates. However, military logistics often involve unique requirements, security protocols, and operational demands that can influence pricing compared to purely commercial operations.

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

AMERICAN AUTO LOGISTICS, LP has a history of receiving significant federal contracts, particularly within the Department of Defense and other agencies requiring transportation and logistics services. Reviewing their contract award history reveals numerous awards, often in the millions or tens of millions of dollars, for various freight and vehicle transportation needs. Their performance on these contracts would be documented in federal databases, including past performance reviews and any reported issues or successes. For a contract of this magnitude ($242 million), the DoD would have likely conducted a thorough review of the company's past performance, financial stability, and technical capabilities to ensure they could meet the demanding requirements of scheduled air freight. Their continued success in winning large contracts suggests a generally positive track record, though specific details on performance quality for each contract would require deeper investigation.

What are the key performance indicators (KPIs) associated with this incentive year contract, and how are they measured?

The provided data snippet does not detail the specific Key Performance Indicators (KPIs) for this 'AWARD TERM INCENTIVE YEAR #2' contract. However, typical KPIs for scheduled freight air transportation contracts often include metrics such as on-time pickup and delivery rates, cargo damage rates, flight schedule adherence, fuel efficiency, and response times for service requests. Incentive contracts are structured so that the contractor can earn additional profit or bonuses if they exceed certain performance targets, or conversely, may face penalties if they fall short. The 'AWARD TERM' designation suggests that contract duration or specific terms might be extended or modified based on performance. Measurement would likely involve data reporting from the contractor, verified by government quality assurance personnel, and potentially integrated with DoD logistics tracking systems.

What is the strategic importance of this contract to USTRANSCOM's overall mission?

This contract is strategically important to USTRANSCOM's mission of providing full-spectrum global mobility solutions and enabling joint force readiness. Scheduled freight air transportation is a critical component of rapid global logistics, ensuring that personnel, equipment, and supplies can be moved efficiently and reliably across vast distances. In an environment requiring agile response to global events, maintaining robust air cargo capabilities is paramount. This contract likely supports routine logistical movements as well as surge requirements, contributing to the DoD's ability to project power and sustain operations anywhere in the world. The reliability and timeliness offered by scheduled services are essential for maintaining operational tempo and minimizing downtime for deployed forces.

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: $242,442,418

Exercised Options: $242,442,418

Current Obligation: $242,442,418

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAMT0103D0184

IDV Type: IDC

Timeline