DoD's $19.5M air cargo contract awarded to National Air Cargo Group, Inc. for scheduled freight

Contract Overview

Contract Amount: $19,517,702 ($19.5M)

Contractor: National AIR Cargo Group, Inc

Awarding Agency: Department of Defense

Start Date: 2011-02-28

End Date: 2011-02-28

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Plain-Language Summary

Department of Defense obligated $19.5 million to NATIONAL AIR CARGO GROUP, INC for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS Key points: 1. The contract value of $19.5 million represents a significant investment in air cargo logistics. 2. Competition dynamics for this contract are assessed to understand pricing efficiency. 3. Risk indicators are evaluated based on contractor performance and contract type. 4. Performance context is provided by comparing this award to similar transportation services. 5. The contract positions the Department of Defense within the broader air cargo sector.

Value Assessment

Rating: fair

The contract value of $19.5 million for scheduled freight air transportation appears within a reasonable range for large-scale government logistics. However, without specific details on the volume of shipments, routes, and service level agreements, a precise value-for-money assessment is challenging. Benchmarking against similar USTRANSCOM contracts for air cargo services would provide a clearer picture of whether this price reflects competitive market rates or potential overpayment. The firm fixed-price nature suggests cost certainty for the government, but the absence of detailed cost breakdowns limits deeper analysis.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. The presence of 9 bids suggests a reasonably competitive environment, which typically drives down prices and encourages innovation. 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 in securing the best value for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a marketplace where contractors vie for government business, leading to more cost-effective solutions and potentially lower overall spending on services.

Public Impact

The Department of Defense benefits through the reliable and efficient transportation of consolidated shipments. Scheduled freight air transportation services are delivered, ensuring timely movement of goods. The geographic impact is likely widespread, supporting military operations globally. Workforce implications may include support staff for logistics management and oversight.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation if contract terms are not strictly managed.
Dependence on a single contractor for critical transportation needs.
Ensuring compliance with all service level agreements and delivery timelines.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Firm fixed-price contract provides cost certainty for the government.
Contractor has experience in air cargo services, indicating capability.

Sector Analysis

The air cargo industry is a vital component of global logistics, supporting both commercial and government operations. This contract falls within the broader transportation and logistics sector, which is characterized by complex supply chains and significant government spending. Benchmarking this award against other large-scale government transportation contracts, particularly those managed by USTRANSCOM, would provide context on market rates and typical contract values for similar services.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears minimal. However, the prime contractor may engage small businesses as subcontractors, which would need to be assessed through further subcontracting plan analysis.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of USTRANSCOM, with specific contracting officers and program managers responsible for monitoring performance, ensuring compliance with terms, and managing payments. Transparency is generally maintained through contract databases, but detailed operational oversight mechanisms are internal to the agency.

Related Government Programs

Military Sealift Command (MSC) contracts
Air Mobility Command (AMC) airlift services
Defense Logistics Agency (DLA) transportation contracts

Risk Flags

Contract value may be high relative to specific service scope.
Limited public information on detailed performance metrics.
Potential for cost overruns if market conditions change unfavorably for the contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.5 million to NATIONAL AIR CARGO GROUP, INC. CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Who is the contractor on this award?

The obligated recipient is NATIONAL AIR CARGO GROUP, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $19.5 million.

What is the period of performance?

Start: 2011-02-28. End: 2011-02-28.

What is the historical spending pattern for consolidated transportation shipments by decentralized ordering officers within the Department of Defense?

Analyzing historical spending for consolidated transportation shipments by decentralized ordering officers within the Department of Defense reveals trends in logistics expenditure. Over the past decade, spending in this category has fluctuated based on operational tempo, geopolitical events, and shifts in procurement strategies. For instance, periods of increased military engagement abroad often correlate with higher spending on air and sea freight. The data for this specific contract, awarded in 2011 for approximately $19.5 million, should be viewed within the context of broader defense logistics budgets. Comparing this award to similar contracts from preceding and subsequent years can highlight changes in pricing, service providers, and the volume of shipments managed. Understanding these patterns is crucial for forecasting future needs and ensuring efficient resource allocation within the defense transportation network.

How does the awarded price of $19.5 million compare to market rates for similar scheduled freight air transportation services?

The awarded price of $19.5 million for scheduled freight air transportation services needs to be benchmarked against prevailing market rates to assess its competitiveness. Factors influencing market rates include the volume and weight of shipments, the specific routes and destinations, the urgency of delivery, and the type of aircraft used. Given that this contract was awarded under full and open competition with 9 bids, it suggests a degree of market competitiveness. However, without granular data on the specific services rendered (e.g., cost per ton-mile, per flight hour, or per shipment), a precise comparison is difficult. Generally, government contracts aim to secure rates comparable to or better than commercial equivalents, leveraging bulk purchasing power. Further analysis would require access to detailed bid data and commercial rate sheets for comparable services during the contract period.

What are the key performance indicators (KPIs) used to evaluate the performance of National Air Cargo Group, Inc. under this contract?

Key Performance Indicators (KPIs) for evaluating National Air Cargo Group, Inc. under this contract would typically focus on aspects critical to successful air freight operations. These likely include on-time pickup and delivery rates, cargo damage or loss rates, adherence to flight schedules, fuel efficiency, and compliance with safety and security regulations. For a firm fixed-price contract, meeting delivery timelines and maintaining cargo integrity are paramount. USTRANSCOM would monitor these KPIs through performance reports submitted by the contractor and potentially through independent audits or inspections. Consistent failure to meet these KPIs could result in penalties, contract modifications, or affect future contract awards for National Air Cargo Group, Inc.

What is the track record of National Air Cargo Group, Inc. in fulfilling similar government transportation contracts?

National Air Cargo Group, Inc. has a history of fulfilling government transportation contracts, including those with the Department of Defense and other federal agencies. Their experience typically encompasses various types of air cargo services, ranging from scheduled freight to charter operations, often supporting military logistics and humanitarian aid missions. Assessing their track record involves reviewing past performance evaluations, on-time delivery statistics, safety records, and any instances of contract disputes or penalties. A positive track record generally indicates reliability and capability, which are crucial for securing and successfully executing large-scale government contracts. Conversely, a history of performance issues could raise concerns about their ability to meet the demands of this specific $19.5 million contract.

What are the potential risks associated with a firm fixed-price contract for air transportation services?

Firm fixed-price (FFP) contracts for air transportation services offer cost certainty to the government but can introduce risks for both parties. For the government, the primary risk is that the contractor may cut corners on service quality or safety to maximize profit if the initial price was set too low or if unforeseen operational challenges arise. Conversely, if the initial price was set too high, the government may overpay. For the contractor, the risk lies in absorbing cost overruns due to factors like unexpected fuel price increases, adverse weather conditions impacting flight schedules, or unforeseen maintenance issues. In this specific $19.5 million contract, the success of the FFP structure hinges on accurate initial cost estimation and effective risk management by National Air Cargo Group, Inc. to ensure service quality is maintained throughout the contract duration.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HTC71109R0022

Offers Received: 9

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: National AIR Cargo, Inc. (UEI: 783730641)

Address: 835 WILLOW RUN AIRPORT, YPSILANTI, MI, 48198

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

Financial Breakdown

Contract Ceiling: $19,517,702

Exercised Options: $19,517,702

Current Obligation: $19,517,702

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71110DW004

IDV Type: IDC

Timeline