DoD's $26M air cargo contract to Evergreen International Airlines shows fair competition and value

Contract Overview

Contract Amount: $25,982,170 ($26.0M)

Contractor: Evergreen International Airlines, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-07-31

End Date: 2011-07-31

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Transportation

Official Description: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Place of Performance

Location: MCMINNVILLE, YAMHILL County, OREGON, 97128

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $26.0 million to EVERGREEN INTERNATIONAL AIRLINES, INC. for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS Key points: 1. The contract value of $25.98M for scheduled freight air transportation appears reasonable given the service provided. 2. Full and open competition was utilized, suggesting a competitive bidding process that likely drove favorable pricing. 3. The fixed-price contract with economic price adjustment introduces some risk related to fuel cost fluctuations. 4. This contract falls within the broader category of transportation and logistics services for the Department of Defense. 5. The sole awardee, Evergreen International Airlines, Inc., was selected through a competitive process. 6. The contract duration was a single day, indicating a specific, short-term operational need.

Value Assessment

Rating: good

The contract value of approximately $26 million for scheduled freight air transportation is within a reasonable range for such services, especially considering the fixed-price nature with economic price adjustments. Benchmarking against similar large-scale air cargo contracts would provide a more precise value assessment, but the initial figure does not raise immediate red flags. The economic price adjustment clause, while standard for fuel-intensive services, warrants monitoring for potential cost overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 8 bidders, as suggested by the 'no' field (likely representing the number of offers or bidders), points to a healthy level of competition. This broad competition is generally expected to lead to more competitive pricing and better value for the government.

Taxpayer Impact: The robust competition for this contract suggests that taxpayer dollars were likely used efficiently, as multiple companies vied to provide the service at the most attractive price point.

Public Impact

The Department of Defense benefits from reliable and scheduled air cargo transportation services. This contract supports the logistical needs of military operations, ensuring timely movement of goods. The services provided are critical for maintaining operational readiness and supply chain integrity. The contract's geographic impact is likely global, given the nature of military deployments and supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs due to the economic price adjustment clause, particularly if fuel prices rise significantly.
Dependence on a single contractor for a critical transportation need, even if awarded competitively.

Positive Signals

Awarded through full and open competition, indicating a competitive market for these services.
The fixed-price element provides some cost certainty, with adjustments only for specific economic factors.
The contract appears to fulfill a specific, defined need for scheduled air freight.

Sector Analysis

This contract falls within the broader aerospace and defense logistics sector, specifically focusing on air cargo transportation. The market for such services is characterized by a mix of large, established carriers and specialized freight forwarders. Spending in this area is crucial for military readiness and global operations. Comparable spending benchmarks would involve analyzing the average cost per ton-mile for military air cargo or the total annual spending on similar transportation services by the DoD.

Small Business Impact

There is no indication that this contract involved small business set-asides or significant subcontracting opportunities for small businesses. The nature of large-scale air cargo operations typically favors larger, established carriers with extensive infrastructure and fleet capabilities. Further analysis would be needed to determine if any subcontracting plans were mandated or voluntarily pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Transportation Command (USTRANSCOM), which is responsible for coordinating people and cargo movement for the DoD. Accountability measures would include performance metrics, delivery schedules, and adherence to contractual terms. Transparency is generally maintained through contract databases, though specific performance details might be sensitive.

Related Government Programs

Military Air Cargo
Logistics and Transportation Services
Department of Defense Procurement
Scheduled Freight Services

Risk Flags

Economic Price Adjustment Clause Risk
Single Awardee Dependence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.0 million to EVERGREEN INTERNATIONAL AIRLINES, INC.. CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Who is the contractor on this award?

The obligated recipient is EVERGREEN INTERNATIONAL AIRLINES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $26.0 million.

What is the period of performance?

Start: 2011-07-31. End: 2011-07-31.

What is the historical spending pattern for scheduled freight air transportation by USTRANSCOM?

Analyzing historical spending for scheduled freight air transportation by USTRANSCOM would involve examining contract awards over several fiscal years. This would reveal trends in contract values, the number of awarded contracts, and the primary contractors utilized. For instance, a review might show an increasing reliance on air cargo due to geopolitical events or a shift towards more fixed-price contracts to manage costs. Understanding these patterns helps contextualize the $26 million award, indicating whether it represents a typical expenditure, an increase, or a decrease in spending for this specific service category. It also highlights the stability or volatility of demand for such services.

How does the price of this contract compare to similar air cargo contracts awarded by the DoD?

To compare the price of this $26 million contract to similar air cargo contracts, one would need to identify comparable awards based on service type (scheduled freight), volume, duration, and geographic scope. Key metrics for comparison include cost per ton-mile, cost per flight hour, or cost per pound. If this contract's per-unit costs are significantly higher or lower than benchmarks derived from similar contracts, it could indicate either exceptional value or potential overpricing. Factors like urgency, specific cargo requirements (e.g., hazardous materials), and route complexity also influence pricing and must be considered in any direct comparison.

What is Evergreen International Airlines, Inc.'s track record with DoD contracts?

Evergreen International Airlines, Inc.'s track record with DoD contracts would be assessed by reviewing their past performance on similar transportation and logistics awards. This includes examining contract values, durations, on-time performance rates, and any instances of contract disputes, penalties, or terminations. A history of successful, timely deliveries and adherence to contractual terms would indicate reliability. Conversely, a pattern of performance issues or financial instability could raise concerns about their capacity to fulfill current and future obligations. Information from sources like the Federal Procurement Data System (FPDS) and past performance reviews would be crucial.

What are the primary risks associated with this fixed-price contract with economic price adjustment?

The primary risks associated with this fixed-price contract with economic price adjustment (FP-EPA) center on fuel price volatility. While the fixed-price component offers some cost certainty, the EPA clause allows for adjustments based on fluctuations in fuel costs. If fuel prices increase significantly beyond projections, the government could end up paying more than initially anticipated, eroding the value proposition. Conversely, if fuel prices decrease, the government might not fully benefit from the savings. Managing this risk requires robust monitoring of fuel markets and potentially negotiating caps on price adjustments to protect the overall budget.

How effective is full and open competition in ensuring value for taxpayer money in air cargo services?

Full and open competition is generally considered a highly effective mechanism for ensuring value for taxpayer money in air cargo services. By allowing all qualified vendors to bid, it fosters a competitive environment where companies strive to offer the best combination of price, quality, and service to win the contract. This process typically drives down prices through market forces and encourages innovation. The presence of multiple bidders, as indicated in this contract (8 bidders), strengthens this effect. However, the effectiveness can be influenced by the complexity of the service, the number of capable providers, and the clarity of the solicitation requirements.

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: HTC71108R0019

Offers Received: 8

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Evergreen Holdings, Inc (UEI: 097009625)

Address: 3850 NE THREE MILE LN, MCMINNVILLE, OR, 97128

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $25,982,170

Exercised Options: $25,982,170

Current Obligation: $25,982,170

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71108D5024

IDV Type: IDC

Timeline