DoD awards $246M for air freight, with 3 bidders competing for this firm-fixed-price contract

Contract Overview

Contract Amount: $246,223,185 ($246.2M)

Contractor: American Auto Logistics, LP

Awarding Agency: Department of Defense

Start Date: 2011-11-01

End Date: 2012-10-31

Contract Duration: 365 days

Daily Burn Rate: $674.6K/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 #4, DELIVERY ORDER 0008

Plain-Language Summary

Department of Defense obligated $246.2 million to AMERICAN AUTO LOGISTICS, LP for work described as: AWARD TERM INCENTIVE YEAR #4, DELIVERY ORDER 0008 Key points: 1. The contract's value of $246 million over its term suggests a significant need for air freight services within the Department of Defense. 2. With three bidders participating, the competition level indicates a moderately competitive market for this type of service. 3. The firm-fixed-price contract type shifts cost risk to the contractor, potentially leading to more predictable government expenditures. 4. The award term incentive year 4 suggests a long-term relationship and potential for performance-based adjustments. 5. The contract's duration of 365 days for this specific delivery order points to a focused, short-term operational requirement. 6. The absence of small business set-aside flags indicates that this contract was not specifically targeted for small business participation.

Value Assessment

Rating: good

The total award amount of $246,223,185 for scheduled freight air transportation appears substantial, reflecting the scale of military logistics. Benchmarking this against similar large-scale air cargo contracts within the DoD or other federal agencies would provide a clearer picture of its value-for-money. The firm-fixed-price structure is generally favorable for cost control when requirements are well-defined. However, without specific performance metrics or comparisons to industry standard rates for similar routes and cargo types, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with three bidders vying for the opportunity. The presence of multiple bidders suggests that the market is accessible and that the solicitation was structured to attract a reasonable number of interested parties. This level of competition is generally positive for price discovery, as it encourages bidders to offer competitive pricing to secure the award. The specific details of the bidding process, such as the number of proposals received and the evaluation criteria, would further illuminate the effectiveness of the competition.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down prices. With three bidders, there is a reasonable expectation that the government secured a fair market price for the air freight services.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, ensuring the timely and efficient movement of critical cargo. The service delivered is scheduled freight air transportation, essential for maintaining operational readiness and supporting global military missions. The geographic impact is likely global, given the nature of military logistics, supporting deployments and supply chains worldwide. Workforce implications include support for logistics personnel, aircrews, and ground support staff involved in the transportation chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if fuel prices or other operational costs escalate significantly, despite the fixed-price nature.
Dependence on a limited number of bidders could reduce future competition if market dynamics shift.
Ensuring consistent service quality and on-time delivery across all flights requires robust performance monitoring.

Positive Signals

The firm-fixed-price contract structure provides cost certainty for the government.
Full and open competition suggests a healthy market and potential for competitive pricing.
The award term incentive year 4 implies a successful prior performance and a stable, long-term relationship.

Sector Analysis

The air freight transportation sector is a critical component of global logistics and supply chains, supporting both commercial and governmental needs. For the federal government, particularly the Department of Defense, air cargo services are vital for rapid deployment of personnel and materiel, disaster relief, and maintaining operational readiness. The market is characterized by a mix of large global carriers and specialized logistics providers. Spending in this sector can fluctuate based on geopolitical events, defense spending priorities, and the need for expedited shipping. Comparable spending benchmarks would involve analyzing other large-scale air cargo contracts awarded by agencies like USTRANSCOM or the Department of Homeland Security.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by the 'ss' field being false. Consequently, there are no direct subcontracting requirements mandated for small businesses within this specific award. The absence of a set-aside means that large businesses were eligible to compete and potentially win the entire contract. This could limit opportunities for small businesses to participate directly in this particular contract, though they might be involved as subcontractors to the prime contractor if the prime chooses to engage them.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the Department of Defense's contracting officers and the USTRANSCOM (United States Transportation Command) as the awarding agency. Accountability measures are embedded in the firm-fixed-price contract terms, requiring the contractor to deliver services as specified. Transparency is facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected or reported.

Related Government Programs

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

Risk Flags

Potential for price escalation due to market volatility (e.g., fuel costs).
Dependence on a small number of qualified providers.
Ensuring consistent service quality and on-time performance.
Geopolitical events impacting global air routes and availability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $246.2 million to AMERICAN AUTO LOGISTICS, LP. AWARD TERM INCENTIVE YEAR #4, DELIVERY ORDER 0008

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 $246.2 million.

What is the period of performance?

Start: 2011-11-01. End: 2012-10-31.

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 reveals a consistent and significant investment in this capability. While specific figures for 'scheduled freight air transportation' can vary based on categorization, overall DoD spending on air mobility and cargo services typically runs into billions of dollars annually. This particular contract, valued at $246 million, represents a substantial portion of that spending for the period it covers. Trends often show increased spending during periods of heightened global military activity or during major logistical operations. Factors such as fuel costs, aircraft availability, and the demand for rapid deployment directly influence year-over-year expenditures in this category. Benchmarking this contract's value against the total historical spend provides context on its relative importance within the DoD's broader logistics strategy.

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

Determining the precise per-unit cost for this contract is challenging without detailed breakdowns of cargo volume, weight, and specific routes. The total award of $246 million over its term covers 'Scheduled Freight Air Transportation,' which is a broad category. To compare against industry benchmarks, one would need to isolate specific metrics such as cost per ton-mile or cost per kilogram for comparable routes and service levels. General industry data suggests that military air freight can sometimes be more expensive than commercial rates due to specialized requirements, security protocols, and the need for rapid, often unpredictable, deployment. However, the firm-fixed-price nature and competitive bidding process aim to mitigate excessive costs. A thorough comparison would require access to detailed pricing data from the bids received and a robust database of commercial air cargo rates for similar operational profiles.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance under this agreement?

While the specific Key Performance Indicators (KPIs) are not detailed in the provided summary data, contracts of this nature typically include metrics focused on timeliness, reliability, and cargo integrity. For scheduled freight air transportation, critical KPIs would likely involve on-time departure and arrival rates, successful delivery percentages, and the rate of cargo damage or loss. The 'AWARD TERM INCENTIVE YEAR #4' suggests that performance has been monitored and potentially rewarded in previous years, implying that established KPIs were met. The contracting officer and the requiring activity within USTRANSCOM would be responsible for tracking these metrics and ensuring the contractor adheres to the service level agreements stipulated in the contract's statement of work. Failure to meet critical KPIs could result in penalties or impact future contract awards.

What is the track record of American Auto Logistics, LP with Department of Defense contracts, particularly in air transportation?

American Auto Logistics, LP (AAL) has a significant history of performing transportation and logistics services for the Department of Defense. While their name might suggest a primary focus on vehicle logistics, their contract portfolio often includes broader freight and shipping services. Reviewing their contract history reveals numerous awards across various DoD components, indicating a substantial operational capacity and experience. Their involvement in air transportation specifically would need to be verified through detailed contract databases, but their overall experience in managing complex logistics for the military suggests a capability to handle air freight requirements. Past performance evaluations and award data would provide a clearer picture of their success rate and reliability in executing similar air transportation contracts.

What are the potential risks associated with relying on a limited number of bidders for essential military air freight services?

Relying on a limited number of bidders, such as the three identified in this contract, for essential military air freight services presents several potential risks. Firstly, it can reduce competitive pressure over time, potentially leading to higher prices in future contract renewals or re-competitions if the pool of capable providers shrinks further. Secondly, it increases vulnerability to supply chain disruptions; if one of the few providers experiences operational issues (e.g., fleet grounding, financial difficulties, labor disputes), the impact on military logistics could be significant. Thirdly, it may limit the government's ability to leverage innovation or specialized capabilities that might be offered by a broader range of potential contractors. Ensuring robust contract management and exploring avenues to encourage new entrants into the market are crucial mitigation strategies.

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: $246,223,185

Exercised Options: $246,223,185

Current Obligation: $246,223,185

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAMT0103D0184

IDV Type: IDC

Timeline