State Department aviation services contract valued at $449M over 3 years, awarded to AAR Government Services

Contract Overview

Contract Amount: $449,044,826 ($449.0M)

Contractor: AAR Government Services, Inc.

Awarding Agency: Department of State

Start Date: 2021-06-01

End Date: 2024-05-31

Contract Duration: 1,095 days

Daily Burn Rate: $410.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: ESTABLISHED OPTION YEAR THREE AVIATION SERVICE CONTRACTOR LINE ITEM NUMBERS (CLINS) FOR EACH WORLDWIDE LOCATION---LABOR, OTHER DIRECT COST (ODC) AND MATERIAL LINE ITEMS.

Place of Performance

Location: PATRICK AFB, BREVARD County, FLORIDA, 32925

State: Florida Government Spending

Plain-Language Summary

Department of State obligated $449.0 million to AAR GOVERNMENT SERVICES, INC. for work described as: ESTABLISHED OPTION YEAR THREE AVIATION SERVICE CONTRACTOR LINE ITEM NUMBERS (CLINS) FOR EACH WORLDWIDE LOCATION---LABOR, OTHER DIRECT COST (ODC) AND MATERIAL LINE ITEMS. Key points: 1. Contract provides essential aviation support services across worldwide locations. 2. Pricing structure is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. The contract was awarded through full and open competition, suggesting a competitive bidding process. 4. Performance period spans three years, indicating a medium-term commitment for these services. 5. The contractor, AAR Government Services, has a significant role in supporting government aviation needs. 6. The contract's scope includes labor, other direct costs, and materials, covering a broad range of expenses.

Value Assessment

Rating: fair

The contract's total value of $449 million over three years averages to approximately $149.7 million annually. Without specific benchmarks for similar worldwide aviation support contracts, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) pricing structure carries inherent risks of cost escalation if not rigorously monitored. Benchmarking against industry standards for similar services would be necessary to determine if the pricing is competitive and represents good value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that all responsible sources were permitted to submit bids. The number of bidders is not specified, but this method generally fosters price discovery and encourages competitive pricing. The agency sought proposals from a wide range of potential contractors, aiming to secure the best value.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is expected to drive down costs through market forces and encourage innovation among bidders.

Public Impact

The Department of State benefits from reliable aviation support services essential for its global operations. Services delivered include labor, other direct costs, and materials for aviation operations. The contract has a worldwide geographic impact, supporting operations in various international locations. The contract supports the aviation sector workforce through employment opportunities with the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can incentivize contractors to increase costs to maximize profit, requiring robust oversight.
Lack of specific performance metrics or KPIs in the provided data makes it difficult to assess service quality and efficiency.
The global nature of the services introduces logistical and geopolitical risks that could impact delivery and cost.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that likely secured a reasonable price.
The contractor, AAR Government Services, is an established entity in the aviation support sector, implying experience and capability.
The contract covers a comprehensive range of aviation support elements (labor, ODC, materials), indicating a well-defined scope.

Sector Analysis

This contract falls within the broader aviation services sector, which is critical for government operations, logistics, and defense. The market for aviation support services is substantial, encompassing maintenance, repair, overhaul, and operational support. This contract represents a significant portion of spending for aviation support within the Department of State, highlighting the agency's reliance on specialized contractors for its global aviation infrastructure.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. However, the prime contractor may engage small businesses as subcontractors, but this is not mandated by the contract terms as presented.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of State's contracting officers and program managers. Given the CPFF structure, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and allocable. Transparency would be enhanced through regular reporting requirements and potential reviews by the Government Accountability Office (GAO) or the Department of State's Inspector General, depending on the scope of their jurisdiction.

Related Government Programs

Department of State Aviation Support Contracts
Global Aviation Services
Cost-Plus Contracts
Air Transportation Support

Risk Flags

Cost Overrun Risk (CPFF)
Geopolitical Instability
Logistical Complexity
Regulatory Compliance Across Jurisdictions

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $449.0 million to AAR GOVERNMENT SERVICES, INC.. ESTABLISHED OPTION YEAR THREE AVIATION SERVICE CONTRACTOR LINE ITEM NUMBERS (CLINS) FOR EACH WORLDWIDE LOCATION---LABOR, OTHER DIRECT COST (ODC) AND MATERIAL LINE ITEMS.

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 $449.0 million.

What is the period of performance?

Start: 2021-06-01. End: 2024-05-31.

What is the historical spending trend for aviation services by the Department of State over the past five years?

Analyzing historical spending trends for aviation services by the Department of State is crucial for understanding the context of this $449 million contract. While specific data for the State Department's aviation services spending over the last five years is not provided here, general trends in government contracting suggest increasing reliance on specialized support services. Factors such as geopolitical events, expansion of diplomatic missions, and modernization of fleets can influence spending. A detailed analysis would involve examining past contract awards, their values, and the scope of services provided to identify any patterns of increase or decrease in expenditure. This would help determine if the current contract's value is in line with historical investments or represents a significant shift in budget allocation for aviation support.

How does the Cost Plus Fixed Fee (CPFF) structure of this contract compare to other aviation support contracts awarded by the government?

The Cost Plus Fixed Fee (CPFF) structure is common in government contracting, particularly for services where the scope may evolve or is difficult to define precisely upfront, such as complex aviation support. This structure allows the contractor to recover allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF offers flexibility but carries a higher risk of cost overruns for the government if not managed diligently. Other aviation support contracts might utilize Firm-Fixed-Price (FFP) for well-defined services or Cost Plus Incentive Fee (CPIF) to incentivize performance. The choice of CPFF here suggests the agency prioritized flexibility and contractor reimbursement for incurred costs, balanced by a fixed profit margin, over strict cost certainty.

What are the key performance indicators (KPIs) used to evaluate the performance of AAR Government Services under this contract?

Key Performance Indicators (KPIs) are essential for objectively measuring the contractor's performance and ensuring the government receives the expected value. For an aviation services contract like this, typical KPIs might include aircraft availability rates, on-time maintenance completion, response times for unscheduled events, fuel efficiency, safety incident rates, and compliance with regulatory standards. The specific KPIs for this contract would be detailed in the contract's Performance Work Statement (PWS). Effective monitoring of these KPIs allows the Department of State to assess the contractor's adherence to service levels, identify areas for improvement, and make informed decisions regarding contract renewals or modifications. Without access to the PWS, the exact KPIs cannot be specified.

What is the track record of AAR Government Services in fulfilling similar government aviation support contracts?

AAR Government Services is a well-established entity with a significant track record in providing aviation support services to various government agencies. They have experience in areas such as aircraft maintenance, logistics, component repair, and fleet management. Their past performance on similar contracts, including those with the Department of Defense and other federal agencies, would have been a critical factor in the Department of State's decision-making process during the full and open competition. Assessing their past performance would involve reviewing contract histories for on-time delivery, adherence to budget, quality of service, and any instances of disputes or contract terminations. Generally, companies with a strong history of successful contract completion are favored in the bidding process.

What are the potential risks associated with the worldwide deployment of aviation services under this contract?

The worldwide deployment of aviation services under this contract presents several potential risks. Geopolitical instability in various regions can disrupt operations, affect personnel safety, and impact supply chains for parts and fuel. Logistical challenges are inherent in supporting operations across diverse and potentially remote locations, requiring robust planning for transportation, infrastructure, and personnel deployment. Currency fluctuations and varying local regulations in different countries can also introduce financial and compliance risks. Furthermore, security threats in certain areas necessitate stringent security protocols for personnel and assets. The Department of State must have comprehensive contingency plans in place to mitigate these risks and ensure mission continuity.

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: AAR Government Services Inc.

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: $500,018,141

Exercised Options: $500,018,141

Current Obligation: $449,044,826

Actual Outlays: $290,032,571

Subaward Activity

Number of Subawards: 308

Total Subaward Amount: $86,927,519

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