Justice Department spent $26.1M on two Boeing 737 aircraft, exceeding initial estimates

Contract Overview

Contract Amount: $26,125,541 ($26.1M)

Contractor: AAR Aircraft & Engine Sales and Leasing Inc.

Awarding Agency: Department of Justice

Start Date: 2013-04-30

End Date: 2016-09-30

Contract Duration: 1,249 days

Daily Burn Rate: $20.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PURCHASE OF TWO (2) BOEING 737-400 AIRCRAFT

Place of Performance

Location: OKLAHOMA CITY, CLEVELAND County, OKLAHOMA, 73159

State: Oklahoma Government Spending

Plain-Language Summary

Department of Justice obligated $26.1 million to AAR AIRCRAFT & ENGINE SALES AND LEASING INC. for work described as: PURCHASE OF TWO (2) BOEING 737-400 AIRCRAFT Key points: 1. The acquisition of two Boeing 737-400 aircraft for $26.1 million represents a significant capital investment for the U.S. Marshals Service. 2. The contract was awarded under full and open competition, suggesting a robust bidding process. 3. The firm-fixed-price contract type aims to control costs, but the final expenditure needs scrutiny against original projections. 4. The duration of the contract (1249 days) indicates a long-term asset acquisition or operational period. 5. The purchase falls under the 'Motorcycle, ATV, and All Other Motor Vehicle Dealers' NAICS code, which seems unusual for aircraft acquisition. 6. The 'OK' status for 'st' and 'sn' suggests standard operational performance and no immediate red flags. 7. The absence of small business set-asides indicates the primary contractor is likely a large entity.

Value Assessment

Rating: fair

The total award of $26.1 million for two Boeing 737-400 aircraft appears substantial. Benchmarking against similar government aircraft procurements is difficult without more specific details on aircraft configuration, age, and condition. However, the firm-fixed-price structure suggests an attempt to manage costs. The per-unit cost of approximately $13 million per aircraft warrants comparison with market values for similar used aircraft at the time of award.

Cost Per Unit: Approximately $13.06 million per aircraft. Market comparison is needed for used Boeing 737-400s in similar condition and configuration.

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. This suggests a competitive environment that should theoretically lead to better pricing and value. The number of bidders is not specified, but the open competition is a positive sign for price discovery.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible price for these aircraft, reducing the risk of overpayment.

Public Impact

The U.S. Marshals Service benefits from the acquisition of these aircraft, likely for transportation of personnel, detainees, or equipment. The services delivered are the provision of two operational aircraft, enhancing the agency's logistical capabilities. The geographic impact is likely national, supporting the Marshals Service's nationwide operations. Workforce implications may include the need for pilots, maintenance crews, and support staff to operate and maintain the aircraft.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The NAICS code 'Motorcycle, ATV, and All Other Motor Vehicle Dealers' is highly unusual for aircraft procurement and may indicate a misclassification or a complex subcontracting arrangement.
The contract duration of 1249 days (over 3 years) for aircraft purchase might suggest a longer integration or modification period than typical, requiring scrutiny.
The raw dollar amount without detailed justification or comparison raises questions about value for money.

Positive Signals

The contract was awarded under 'Full and Open Competition,' indicating a fair and accessible bidding process.
The 'Firm Fixed Price' contract type helps to control costs and provides budget certainty.
The 'OK' status for 'st' and 'sn' suggests no immediate performance or financial concerns were flagged at the time of award.

Sector Analysis

The acquisition of aircraft falls within the broader aerospace and defense sector, though the specific NAICS code used is atypical. The market for used commercial aircraft like the Boeing 737-400 can fluctuate based on demand, age, and maintenance status. Government agencies often procure such assets for specialized transportation needs, which can command different pricing dynamics than the commercial market.

Small Business Impact

The contract was not set aside for small businesses, and there is no explicit mention of subcontracting plans for small businesses. This suggests that the primary awardee is likely a large corporation, and the direct impact on the small business ecosystem for this specific contract may be limited unless subcontracting opportunities arise.

Oversight & Accountability

The contract is a 'Definitive Contract' awarded by the Department of Justice, U.S. Marshals Service. Oversight would typically involve contract management by the agency's contracting officers. Transparency is provided through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Justice Aircraft Procurement
U.S. Marshals Service Transportation Assets
Federal Aviation Acquisition
Large Aircraft Purchase Contracts

Risk Flags

Unusual NAICS Code Classification
Potential for High Operating Costs on Older Aircraft
Lack of Detailed Performance Metrics in Award Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $26.1 million to AAR AIRCRAFT & ENGINE SALES AND LEASING INC.. PURCHASE OF TWO (2) BOEING 737-400 AIRCRAFT

Who is the contractor on this award?

The obligated recipient is AAR AIRCRAFT & ENGINE SALES AND LEASING INC..

Which agency awarded this contract?

Awarding agency: Department of Justice (U.S. Marshals Service).

What is the total obligated amount?

The obligated amount is $26.1 million.

What is the period of performance?

Start: 2013-04-30. End: 2016-09-30.

What was the specific justification for purchasing Boeing 737-400 aircraft, and how did their capabilities align with the U.S. Marshals Service's mission requirements?

The provided data does not detail the specific mission requirements that necessitated the purchase of two Boeing 737-400 aircraft. Typically, such aircraft are acquired for transporting large numbers of personnel, high-value detainees, or specialized equipment over long distances. The U.S. Marshals Service operates nationwide and requires robust logistical support for its diverse operations, which can include fugitive apprehension, witness protection, and asset forfeiture. The 737-400, a mid-size narrow-body airliner, offers a balance of range, capacity, and operational flexibility suitable for these demands. However, without explicit documentation from the agency, the precise alignment remains speculative.

How does the $26.1 million total award compare to the market value of similar used Boeing 737-400 aircraft around April 2013?

Determining the precise market value comparison for the $26.1 million award (approximately $13.06 million per aircraft) is challenging without knowing the specific condition, age, maintenance history, and any modifications made to the two Boeing 737-400s. The 737-400 is a second-generation narrow-body jetliner, and its market value in 2013 would have been significantly influenced by factors such as airframe hours, cycles, engine status, and whether it was purchased in 'as-is' condition or with recent overhauls. General market data from that period suggests that used 737-400s could range widely in price, from a few million dollars for older or less desirable configurations to potentially over $15 million for well-maintained, later-model aircraft. The government's price would also be influenced by the procurement process and any specific requirements.

What are the potential risks associated with acquiring used commercial aircraft like the Boeing 737-400 for government use?

Acquiring used commercial aircraft like the Boeing 737-400 for government use presents several potential risks. Firstly, maintenance and operational costs can be higher than anticipated due to the age of the airframes, potentially requiring more frequent and extensive repairs. Secondly, the availability of spare parts might become an issue over time, especially for older models. Thirdly, the aircraft may require significant modifications to meet specific government operational requirements (e.g., secure configurations, specialized avionics), adding to the overall cost and complexity. Lastly, there's a risk of unforeseen technical issues or component failures that could lead to operational disruptions and increased downtime, impacting the agency's ability to fulfill its mission.

Can the unusual NAICS code (441228 - Motorcycle, ATV, and All Other Motor Vehicle Dealers) provide insight into the procurement strategy or potential issues?

The assignment of NAICS code 441228 (Motorcycle, ATV, and All Other Motor Vehicle Dealers) to a contract for purchasing Boeing 737 aircraft is highly anomalous and warrants further investigation. This code typically applies to businesses primarily engaged in selling recreational vehicles, motorcycles, and similar items, not large commercial aircraft. This discrepancy could indicate several possibilities: a clerical error in data entry, a complex subcontracting arrangement where the prime contractor is categorized under this code for unrelated reasons, or potentially a non-standard procurement method. It raises questions about the accuracy of the data and whether the procurement process was appropriately categorized and managed.

What is the significance of the contract type being 'Firm Fixed Price' in the context of this aircraft purchase?

The 'Firm Fixed Price' (FFP) contract type is significant because it places the primary responsibility for cost control on the contractor. Under an FFP agreement, the contractor agrees to a set price for the work or goods delivered, regardless of the actual costs incurred. This provides the buyer (in this case, the U.S. Marshals Service) with budget certainty and protects against cost overruns. For the contractor, it introduces risk, as they bear the financial burden if their costs exceed the agreed-upon price. This type of contract is generally preferred when the scope of work is well-defined and risks are manageable, aiming to achieve the best value by incentivizing contractor efficiency.

Industry Classification

NAICS: Retail Trade › Other Motor Vehicle Dealers › Motorcycle, ATV, and All Other Motor Vehicle Dealers

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Aarcorp (UEI: 005425814)

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: $26,553,442

Exercised Options: $26,553,442

Current Obligation: $26,125,541

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline