DoD's $39M KC-135 PDM contract awarded to McDonnell Douglas Corp. without competition

Contract Overview

Contract Amount: $39,189,666 ($39.2M)

Contractor: Mcdonnell Douglas Corp

Awarding Agency: Department of Defense

Start Date: 2009-10-14

End Date: 2011-10-24

Contract Duration: 740 days

Daily Burn Rate: $53.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KC-135 R/T/D & E MODELS (PDM) - OPTION V

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78226

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $39.2 million to MCDONNELL DOUGLAS CORP for work described as: KC-135 R/T/D & E MODELS (PDM) - OPTION V Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The firm-fixed-price contract type shifts risk to the contractor, but the lack of competition raises concerns about overall value. 3. Performance period of 740 days suggests a focused maintenance or upgrade effort. 4. The contract falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicating a specialized support role. 5. Awarded by the Defense Contract Management Agency, suggesting a focus on contract execution and oversight. 6. The absence of small business involvement indicates this contract did not prioritize small business set-asides.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available comparable sole-source awards for KC-135 PDM services. The firm-fixed-price structure is generally favorable for the government, but without competitive bidding, it's difficult to ascertain if the pricing reflects fair market value. The award amount of approximately $39 million for a 740-day period suggests a significant investment in maintaining the KC-135 fleet's operational readiness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when only one responsible source can fulfill the requirement, or in cases of urgent need. The lack of multiple bidders means the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium for this service due to the absence of competition, as the contractor faced no pressure to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the KC-135 Stratotanker aircraft, ensuring their continued air refueling and strategic airlift capabilities. The services delivered likely involve Program Depot Maintenance (PDM), crucial for extending the lifespan and maintaining the airworthiness of aging KC-135 aircraft. The geographic impact is national, supporting Air Mobility Command's global operations, though the specific maintenance location is not detailed. Workforce implications include skilled technicians and engineers at the contractor's facility, contributing to the aerospace maintenance sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Lack of transparency in the justification for a sole-source award.
Contract duration of 740 days without clear performance metrics makes ongoing value assessment difficult.
Aging aircraft fleet (KC-135) may incur higher maintenance costs over time.
Absence of small business participation means missed opportunities for economic inclusion.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Award to a known entity (McDonnell Douglas Corp., now part of Boeing) may imply established expertise.
Contract supports critical national defense assets (KC-135 refueling tankers).
Maintenance ensures continued operational readiness of vital military capabilities.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The KC-135 Stratotanker is a long-standing asset in the U.S. Air Force's inventory, requiring ongoing specialized maintenance. Spending on aircraft maintenance and sustainment is a significant portion of the defense budget, with major defense contractors often receiving sole-source awards for specialized, long-term support of legacy platforms where unique expertise or facilities are required.

Small Business Impact

This contract does not appear to have involved small business set-asides, as indicated by 'sb': false. The award was made directly to McDonnell Douglas Corp. (now part of Boeing), a large aerospace manufacturer. This suggests that the scope of work, requiring specialized capabilities for KC-135 PDM, was not segmented for small business participation. There is no indication of subcontracting plans to small businesses within the provided data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. As a firm-fixed-price contract, the primary oversight focus would be on ensuring the work is completed according to specifications and on schedule. Transparency regarding the sole-source justification and any subsequent modifications would be key accountability measures, though detailed public reporting on these aspects can vary.

Related Government Programs

KC-135 Stratotanker Sustainment Programs
Air Mobility Command Aircraft Maintenance
Defense Depot Maintenance and Industrial Operations
Aerospace Parts Manufacturing
Aircraft Component Repair and Overhaul

Risk Flags

Sole-source award without clear justification.
Potential for inflated pricing due to lack of competition.
Contract awarded to a large, established prime contractor, potentially excluding small businesses.
Aging aircraft platform may present ongoing sustainment challenges and costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.2 million to MCDONNELL DOUGLAS CORP. KC-135 R/T/D & E MODELS (PDM) - OPTION V

Who is the contractor on this award?

The obligated recipient is MCDONNELL DOUGLAS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $39.2 million.

What is the period of performance?

Start: 2009-10-14. End: 2011-10-24.

What is the historical spending trend for KC-135 PDM services awarded by the Department of Defense?

Analyzing historical spending trends for KC-135 Program Depot Maintenance (PDM) requires a deep dive into defense budget allocations and contract awards over several years. The KC-135 fleet is aging, necessitating consistent investment in sustainment. Spending typically fluctuates based on the lifecycle of the aircraft, the specific maintenance cycles (PDM is usually performed every several years), and the availability of funding. Historically, such contracts have been awarded to prime contractors with established relationships and specialized facilities for these legacy aircraft. Without access to a comprehensive database of all past KC-135 PDM contracts, it's difficult to provide precise figures, but it's reasonable to assume multi-million dollar annual expenditures dedicated to keeping this critical asset operational. The trend is generally one of sustained, significant investment to ensure airworthiness and extend the operational life of the fleet.

How does the firm-fixed-price contract type impact the government's risk exposure for this KC-135 PDM contract?

The firm-fixed-price (FFP) contract type is generally advantageous for the government as it shifts the majority of the cost risk to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This means that if the contractor experiences cost overruns due to unforeseen issues, inefficiencies, or rising material prices, they absorb those additional expenses. Conversely, if the contractor manages the work more efficiently and incurs lower costs than anticipated, they retain the profit. For the government, this structure provides cost certainty, making budgeting more predictable. However, the effectiveness of FFP in mitigating risk is somewhat dependent on the contractor's ability to accurately estimate costs upfront and manage execution effectively. In a sole-source scenario, the government has less leverage to ensure the initial price estimate is truly competitive.

What is the typical duration for KC-135 PDM contracts, and how does this contract's duration compare?

Program Depot Maintenance (PDM) for aircraft like the KC-135 Stratotanker is a comprehensive, labor-intensive process typically performed every several years to ensure the aircraft's structural integrity and operational readiness. The duration of PDM contracts can vary significantly depending on the specific maintenance tasks required, the condition of the aircraft, and the contractor's facilities and processes. Contracts for a single PDM event on one or a small number of aircraft can range from several months to over a year. This specific contract, with a duration of 740 days (approximately 24 months), falls within the higher end of typical PDM timelines. This longer duration might indicate a more extensive overhaul, the inclusion of modifications or upgrades alongside the standard PDM, or a contract covering multiple aircraft undergoing maintenance concurrently.

What are the potential risks associated with awarding aircraft maintenance contracts to a sole-source provider like McDonnell Douglas Corp. for the KC-135?

Awarding aircraft maintenance contracts on a sole-source basis, as seen with this KC-135 PDM contract to McDonnell Douglas Corp. (now part of Boeing), carries several potential risks for the government. Primarily, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process. Without competing offers, the government has less leverage to negotiate favorable terms or ensure the price reflects the best possible value. There's also a risk of complacency; a sole-source provider may face less pressure to innovate or improve efficiency over time. Furthermore, reliance on a single provider can create vulnerabilities if that provider experiences financial difficulties, operational disruptions, or changes in strategic focus. Finally, the justification for a sole-source award must be robust to ensure it is truly necessary and not simply a matter of convenience or established relationships.

What is the significance of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) for this contract?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' signifies the primary industry classification for the work performed under this contract. This code encompasses establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment, not elsewhere classified. For a KC-135 PDM contract, this code is appropriate as it covers the specialized manufacturing, repair, overhaul, and modification of components and systems essential for maintaining the airworthiness and operational capability of the aircraft. It suggests the work involves more than just routine servicing; it likely includes the fabrication or refurbishment of specific parts, integration of new or upgraded equipment, and ensuring all auxiliary systems function correctly, contributing to the overall sustainment of the aging KC-135 fleet.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 375 AIRLIFT DRIVE, SAN ANTONIO, TX, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $39,189,666

Exercised Options: $39,189,666

Current Obligation: $39,189,666

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810505D0004

IDV Type: IDC

Timeline