State Department awards $199M contract for overseas air transportation support to AAR Government Services

Contract Overview

Contract Amount: $199,134,203 ($199.1M)

Contractor: AAR Government Services, Inc.

Awarding Agency: Department of State

Start Date: 2018-06-01

End Date: 2019-09-17

Contract Duration: 473 days

Daily Burn Rate: $421.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: OVERSEAS CONTRACT

Plain-Language Summary

Department of State obligated $199.1 million to AAR GOVERNMENT SERVICES, INC. for work described as: OVERSEAS CONTRACT Key points: 1. Contract value represents a significant investment in maintaining critical air transportation infrastructure. 2. Competition dynamics suggest a potentially competitive bidding process for this service. 3. Contract type (Cost Plus Fixed Fee) warrants scrutiny for cost control and efficiency. 4. Performance period of over 1.5 years indicates a substantial operational requirement. 5. The nature of the service points to a specialized niche within the broader aviation support sector. 6. Contracting agency's reliance on a single awardee for this duration highlights the importance of contractor performance.

Value Assessment

Rating: fair

Benchmarking the value-for-money for this specific contract is challenging without detailed cost breakdowns and performance metrics. The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to higher costs compared to fixed-price contracts if not managed tightly. Comparing it to similar contracts for overseas air transportation support would require access to detailed pricing structures and scope of work for those contracts. The raw dollar amount of $199 million over 473 days suggests a substantial operational cost, averaging over $421,000 per day.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. This approach generally promotes price discovery and allows the government to select from a range of qualified vendors. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competitive environment was intended.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is expected to drive down prices through market forces and encourage the most cost-effective solutions.

Public Impact

The primary beneficiaries are likely U.S. government personnel and operations requiring air transportation services overseas. Services delivered include essential support activities for air transportation, crucial for logistical and operational continuity. Geographic impact is global, focusing on overseas locations where U.S. government air assets operate. Workforce implications may include direct and indirect employment opportunities within the aviation support industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

CPFF contract type requires careful oversight to prevent cost overruns and ensure efficiency.
Lack of specific performance metrics makes it difficult to assess the true value for money.
Reliance on a single contractor for an extended period could pose risks if performance degrades.

Positive Signals

Awarded under full and open competition, suggesting a competitive process.
Contractor has a history of government contracting, implying some level of established capability.
The contract addresses a critical operational need for overseas air transportation support.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on aviation support services. The market for such services is characterized by specialized technical expertise and often involves significant regulatory compliance. Comparable spending benchmarks would typically be found within government budgets allocated to logistics, transportation, and base operations support in overseas environments. The size of this contract indicates a significant requirement for these specialized services.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions. Given the nature and scale of overseas air transportation support, it is likely that prime contractors are large businesses. However, there may be opportunities for small businesses to participate as subcontractors to AAR Government Services, Inc., depending on the specific requirements and subcontracting plans outlined in the contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting agency, the Department of State, and potentially the relevant Inspector General's office. Accountability measures would be defined by the contract's terms and conditions, including performance standards and reporting requirements. Transparency is facilitated by the contract award notice, but detailed performance and cost data may not be publicly available.

Related Government Programs

Overseas Base Operations Support
Logistics and Transportation Services
Government Aviation Support Contracts
Department of State Foreign Affairs Support

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight.
Potential for cost overruns inherent in CPFF structure.
Lack of specific performance metrics in award data.
Limited insight into the number of bidders in the competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $199.1 million to AAR GOVERNMENT SERVICES, INC.. OVERSEAS CONTRACT

Who is the contractor on this award?

The obligated recipient is AAR GOVERNMENT SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $199.1 million.

What is the period of performance?

Start: 2018-06-01. End: 2019-09-17.

What is the track record of AAR Government Services, Inc. with similar government contracts?

AAR Government Services, Inc. has a significant history of performing contracts for various U.S. government agencies, including the Department of Defense and the Department of State. Their portfolio often includes aviation-related services, such as aircraft maintenance, logistics support, and specialized operational services. Analyzing their past performance on similar Cost Plus Fixed Fee contracts would be crucial to understanding their ability to manage costs effectively and deliver services within budget and schedule. A review of past performance evaluations and any reported contract disputes or terminations would provide further insight into their reliability and capability as a government contractor.

How does the daily cost of this contract compare to industry benchmarks for similar overseas air transportation support?

The daily cost for this contract averages approximately $421,000 ($199,134,202.54 / 473 days). Benchmarking this figure against industry standards for overseas air transportation support is complex due to the highly variable nature of such services, which can include ground handling, air traffic control support, fuel management, and maintenance. Factors like geographic location, security environment, specific aircraft types supported, and the scope of services significantly influence costs. Without a detailed breakdown of the services provided and the specific operational context, a direct comparison is difficult. However, this daily rate suggests a substantial operational expenditure, necessitating rigorous cost management and performance monitoring by the Department of State.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude?

The primary risks associated with a CPFF contract of this magnitude ($199 million) revolve around cost control and contractor incentive. While the fixed fee provides the contractor with a defined profit margin, the 'cost plus' element means the government bears the risk of actual costs incurred. If not managed diligently, this can lead to cost overruns, as the contractor may have less incentive to control expenses compared to a fixed-price contract. Key risks include potential for scope creep, inadequate cost accounting by the contractor, and insufficient government oversight to ensure that all costs are reasonable, allocable, and necessary. The government must have robust mechanisms in place to audit costs and ensure the contractor is operating efficiently to achieve the best value.

What is the historical spending pattern for overseas air transportation support by the Department of State?

Analyzing the historical spending patterns for overseas air transportation support by the Department of State is essential for contextualizing the $199 million award to AAR Government Services. This requires examining past contract awards for similar services over several fiscal years. Key metrics to track would include the total annual expenditure, the number and value of contracts awarded, the types of services procured (e.g., fixed-wing, rotary-wing, ground support), and the primary contracting vehicles used (e.g., IDIQs, sole-source, full and open competition). Understanding these trends can reveal whether spending has been increasing or decreasing, whether reliance on specific contractors has changed, and if there are opportunities for greater cost efficiencies or consolidation of services.

How does the duration of this contract (473 days) align with typical contract lengths for similar services?

The duration of 473 days (approximately 1 year and 3.5 months) for this overseas air transportation support contract is relatively standard for many government service contracts. Such durations allow for operational continuity while providing the government flexibility to re-evaluate needs and market conditions. Longer-term contracts (multiple years) might offer greater stability for the contractor and potentially better long-term pricing, but they also lock the government into a specific provider for an extended period. Shorter contracts (less than a year) might be used for more volatile requirements or during initial phases of service. The 473-day term suggests a need for sustained support without committing to a very long-term engagement, balancing stability with the opportunity for future competition or adjustments.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Aarcorp

Address: 1100 N WOOD DALE RD, WOOD DALE, IL, 60191

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $221,430,874

Exercised Options: $220,797,874

Current Obligation: $199,134,203

Actual Outlays: $1,515,965

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $4,755,040

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SAQMMA16D0136

IDV Type: IDC

Timeline