Forest Service awarded $29.2M for exclusive fixed-wing air transport, raising value-for-money questions

Contract Overview

Contract Amount: $29,223,588 ($29.2M)

Contractor: Sierra Pacific Airlines, Inc

Awarding Agency: Department of Agriculture

Start Date: 2012-07-20

End Date: 2017-11-15

Contract Duration: 1,944 days

Daily Burn Rate: $15.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::CT::IGF CRITICAL FUNCTION NIFC JET TRANSPORT SERVICE EXCLUSIVE USE- FIXED WING

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85743

State: Arizona Government Spending

Plain-Language Summary

Department of Agriculture obligated $29.2 million to SIERRA PACIFIC AIRLINES, INC for work described as: IGF::CT::IGF CRITICAL FUNCTION NIFC JET TRANSPORT SERVICE EXCLUSIVE USE- FIXED WING Key points: 1. The contract's fixed-price with economic price adjustment structure may expose the government to cost overruns. 2. A single awardee for exclusive use suggests limited competition and potentially higher pricing. 3. The contract duration of 1944 days (over 5 years) indicates a long-term commitment with potential for price creep. 4. The exclusion of sources in the competition method warrants scrutiny regarding justification and fairness. 5. The service falls under nonscheduled chartered passenger air transportation, a niche but critical operational need. 6. The contract's value is significant within the context of specialized air transport services for federal agencies.

Value Assessment

Rating: questionable

The contract value of $29.2 million for exclusive fixed-wing air transport over approximately five years appears high, especially given the 'full and open competition after exclusion of sources' method. Without more data on the specific flight hours, routes, and aircraft types, it's difficult to benchmark precisely. However, exclusive use contracts often carry a premium. The economic price adjustment clause adds another layer of potential cost escalation, making the overall value proposition questionable without clear justification for these terms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'full and open competition after exclusion of sources.' This specific procurement method is unusual and suggests that while the competition was intended to be open, certain sources were excluded. The details of this exclusion are critical to understanding the true level of competition. If the exclusion was narrowly defined, it could significantly limit the number of potential bidders, impacting price discovery and potentially leading to a higher award price than a truly open competition.

Taxpayer Impact: The exclusion of sources, even if justified, limits the potential for competitive bidding, which could result in taxpayers paying more than they would in a broader, more inclusive competition.

Public Impact

The primary beneficiaries are the US Forest Service, enabling critical operations such as wildfire suppression, resource management, and personnel transport in remote areas. The service delivered is exclusive fixed-wing air transportation, ensuring dedicated capacity for urgent or sensitive missions. The geographic impact is primarily within Arizona (ST: AZ, SN: ARIZONA), where the Forest Service operates significant land holdings. Workforce implications include the potential reliance on specialized pilots and aviation support staff employed by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition method raises concerns about fairness and potentially limiting competitive pricing.
The 'fixed price with economic price adjustment' clause introduces risk of cost increases beyond initial projections.
Exclusive use contracts can be less cost-effective than on-demand services if utilization is not consistently high.
The long contract duration (1944 days) may lock the government into potentially suboptimal pricing if market rates decrease.

Positive Signals

The contract ensures dedicated air transport capacity, crucial for time-sensitive Forest Service operations.
Awarding to a single contractor for exclusive use can guarantee availability and reliability for critical missions.
The contract specifies a fixed-wing aircraft, indicating a need for speed and range beyond helicopters or other aircraft types.

Sector Analysis

This contract falls within the Air Transportation Services sector, specifically nonscheduled chartered passenger air transportation. The market for specialized government aviation services is often characterized by a limited number of qualified providers due to stringent safety, operational, and regulatory requirements. Comparable spending benchmarks are difficult to establish without detailed operational parameters, but government contracts for dedicated aviation support can range from tens to hundreds of millions of dollars annually, depending on the scope and duration.

Small Business Impact

The contract was not set aside for small businesses (SS: false, SB: false). Given the specialized nature of exclusive fixed-wing air transport, it is likely that the pool of eligible small businesses capable of meeting the stringent requirements is limited. There is no explicit mention of subcontracting plans for small businesses, suggesting that the primary contractor will likely perform the majority of the services directly.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Agriculture's Office of Inspector General (OIG), which is responsible for auditing and investigating federal programs to ensure efficiency and prevent fraud. The Forest Service contracting officers and program managers are responsible for day-to-day oversight, ensuring compliance with contract terms, performance standards, and delivery schedules. Transparency is facilitated through contract databases like FPDS, though detailed operational performance data may not always be publicly available.

Related Government Programs

Wildfire Suppression Support
Federal Aviation Services
Department of Agriculture Aviation Management
Nonscheduled Air Charter Services
Fixed-Wing Aircraft Leases

Risk Flags

Competition Method Concerns
Economic Price Adjustment Risk
Potential for Underutilization
Long-Term Commitment Lock-in

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $29.2 million to SIERRA PACIFIC AIRLINES, INC. IGF::CT::IGF CRITICAL FUNCTION NIFC JET TRANSPORT SERVICE EXCLUSIVE USE- FIXED WING

Who is the contractor on this award?

The obligated recipient is SIERRA PACIFIC AIRLINES, INC.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Forest Service).

What is the total obligated amount?

The obligated amount is $29.2 million.

What is the period of performance?

Start: 2012-07-20. End: 2017-11-15.

What specific justification was provided for excluding certain sources from the competition?

The provided data indicates the contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This procurement method requires a formal justification for excluding any potential sources. Typically, such exclusions are based on factors like the need for specialized capabilities, proprietary technology, or urgent requirements where only a limited number of contractors can realistically meet the demand within the necessary timeframe. Without access to the specific contract file or justification documentation, it is impossible to determine the precise reasons for excluding sources. This lack of transparency regarding the exclusion criteria raises concerns about whether the competition was as broad as it could have been, potentially impacting the final award price and overall value for taxpayers.

How does the economic price adjustment (EPA) clause typically impact contract costs for aviation services?

An Economic Price Adjustment (EPA) clause in a contract allows for adjustments to the contract price based on fluctuations in specific economic factors, such as fuel costs, labor rates, or material prices. For aviation services, EPAs are often tied to indices for jet fuel, pilot salaries, and aircraft maintenance costs. While EPAs can protect contractors from unforeseen cost increases and ensure service continuity, they also shift some of the price risk to the government. If market prices for these factors rise significantly during the contract period, the government's total expenditure could exceed the initially estimated fixed price. The specific indices and adjustment formulas within the EPA clause are critical for assessing the potential financial impact on the government.

What is the typical utilization rate for exclusive-use fixed-wing aircraft in federal service, and how does it affect value?

Utilization rates for exclusive-use federal aircraft vary significantly depending on the agency's mission and operational tempo. For services like wildfire support or critical resource management, exclusive use guarantees availability, which is paramount. However, if the aircraft is not utilized for a substantial portion of the contract period, the cost per flight hour can be considerably higher compared to on-demand charter services. Federal agencies aim to balance guaranteed availability with cost-efficiency. Without specific utilization data for this Sierra Pacific Airlines contract, it's difficult to definitively assess if the exclusive-use premium represents good value. A thorough analysis would compare the guaranteed availability benefits against the actual flight hours logged and the cost of alternative, less exclusive arrangements.

Can the $29.2 million contract value be benchmarked against similar Forest Service aviation contracts?

Benchmarking this $29.2 million contract requires detailed comparison with similar Forest Service aviation contracts, considering factors like aircraft type (fixed-wing vs. rotary), mission profile (e.g., firefighting, transport, surveillance), duration, geographic coverage, and exclusivity. The National Interagency Fire Center (NIFC) and the Forest Service Aviation Management Directorate manage a large fleet and numerous contracts. However, specific contract details, especially those involving exclusive use and economic price adjustments, are often unique. While $29.2 million over approximately five years for exclusive fixed-wing transport is substantial, its value proposition can only be truly assessed by comparing it against contracts for comparable services, factoring in the specific operational requirements and market conditions at the time of award.

What are the potential risks associated with a 5-year contract for specialized air transport?

A 5-year contract for specialized air transport carries several potential risks. Firstly, technological advancements in aviation could render the contracted aircraft less efficient or suitable over time. Secondly, market conditions, such as fuel prices or availability of qualified personnel, can fluctuate significantly, potentially impacting the contractor's costs and, through the EPA clause, the government's expenses. Thirdly, the Forest Service's mission requirements might evolve, potentially making the exclusive-use nature of the contract less optimal or even redundant. Finally, long-term contracts can reduce flexibility, making it harder for the government to adapt to changing needs or capitalize on more cost-effective solutions that might emerge in the market.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Passenger Air Transportation

Product/Service Code: NATURAL RESOURCES MANAGEMENT › NATURAL RESOURCE CONSERVERVAT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: AG-024B-S-12-9024

Offers Received: 1

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

Evaluated Preference: NONE

Contractor Details

Address: 7700 N BUSINESS PARK DR, TUCSON, AZ, 85743

Business Categories: Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $29,223,588

Exercised Options: $29,223,588

Current Obligation: $29,223,588

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline