DOT's $17.8M lease for airport property in Oklahoma City, awarded without competition, raises value-for-money questions

Contract Overview

Contract Amount: $17,851,398 ($17.9M)

Contractor: Oklahoma City Airport Trust

Awarding Agency: Department of Transportation

Start Date: 2003-12-10

End Date: 2011-07-30

Contract Duration: 2,789 days

Daily Burn Rate: $6.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: RECONSTRUCTED LINE TO CREATE PO FOR TPSB PHASE II CAPITAL LEASE.

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73159

State: Oklahoma Government Spending

Plain-Language Summary

Department of Transportation obligated $17.9 million to OKLAHOMA CITY AIRPORT TRUST for work described as: RECONSTRUCTED LINE TO CREATE PO FOR TPSB PHASE II CAPITAL LEASE. Key points: 1. Lease awarded on a firm-fixed-price basis, limiting flexibility for the government. 2. Contract duration of nearly 8 years suggests a long-term commitment. 3. The absence of competition for this lease warrants scrutiny regarding potential overpayment. 4. Lease covers non-residential buildings, indicating a focus on operational infrastructure. 5. The contract was awarded to a single entity, the Oklahoma City Airport Trust. 6. No small business set-aside was applied, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money received. The firm-fixed-price structure means the government is locked into the agreed-upon price regardless of actual usage or market fluctuations. Comparing this lease to similar airport property leases in the region or for comparable facilities would be necessary to assess if the $17.8 million price tag represents a fair market value. The lack of competition suggests a potential for inflated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The rationale for not competing this lease is not provided, but it is unusual for a capital lease of this magnitude. A sole-source award typically means only one vendor was considered, which can lead to higher prices and reduced innovation. The absence of multiple bidders means there was no market pressure to drive down costs or improve terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pricing. Without a competitive process, there's no assurance that the government secured the best possible terms or price for this essential airport infrastructure.

Public Impact

The primary beneficiary is the Oklahoma City Airport Trust, which receives significant revenue from the lease. The services delivered are the provision of non-residential building space for airport operations. The geographic impact is localized to Oklahoma City, Oklahoma. Workforce implications are likely minimal, as this is a lease agreement rather than a service contract requiring direct labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant lease value.
Firm-fixed-price contract may not reflect actual usage or market changes.
Long contract duration without clear performance metrics for the leased space.

Positive Signals

Lease provides essential infrastructure for airport operations.
Awarded to a known entity, the Oklahoma City Airport Trust.

Sector Analysis

This contract falls within the broader transportation and infrastructure sector, specifically related to airport operations and real estate. The market for airport leases can be specialized, often involving public-private partnerships or agreements with airport authorities. Benchmarking would ideally involve comparing lease rates for similar airport facilities, considering factors like location, size, and amenities. The total spending on airport infrastructure leases can be substantial, but specific data for this niche is not readily available.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve subcontracting opportunities for them. The award to the Oklahoma City Airport Trust, a governmental entity, suggests it was not structured to benefit small businesses directly. The absence of small business participation in this lease agreement means no specific provisions were made to foster their involvement in airport infrastructure development.

Oversight & Accountability

Oversight for this lease would typically fall under the Federal Aviation Administration (FAA) and the Department of Transportation (DOT). Accountability measures would be tied to the terms of the lease agreement itself. Transparency is limited due to the sole-source nature of the award and the lack of detailed public justification. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the lease agreement were suspected.

Related Government Programs

Airport Improvement Program (AIP)
Federal Aviation Administration Grants
Airport Capital Improvement Plans

Risk Flags

Sole-source award
Potential for inflated pricing due to lack of competition
Long-term commitment without clear performance metrics for the leased asset

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $17.9 million to OKLAHOMA CITY AIRPORT TRUST. RECONSTRUCTED LINE TO CREATE PO FOR TPSB PHASE II CAPITAL LEASE.

Who is the contractor on this award?

The obligated recipient is OKLAHOMA CITY AIRPORT TRUST.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $17.9 million.

What is the period of performance?

Start: 2003-12-10. End: 2011-07-30.

What is the specific nature of the 'capital lease' and the 'non-residential buildings' involved?

The data indicates this is a 'RECONSTRUCTED LINE TO CREATE PO FOR TPSB PHASE II CAPITAL LEASE.' A capital lease, from an accounting perspective, is treated similarly to an asset purchase, meaning the lessee (the government agency) essentially finances the acquisition of an asset over time. The 'non-residential buildings' likely refer to facilities at the airport such as terminals, hangars, maintenance facilities, or administrative offices. The 'TPSB Phase II' suggests this is part of a larger development or expansion project at the airport. Without more specific details on the exact buildings and their purpose, it's hard to ascertain the full scope, but it points to significant infrastructure being leased.

Why was this lease awarded on a sole-source basis instead of through competition?

The provided data explicitly states the contract type as 'NOT COMPETED,' indicating a sole-source award. The specific justification for this decision is not included in the abbreviated data. Typically, sole-source awards are justified when only one responsible source is available or capable of meeting the requirement, or in cases of urgent and compelling need. For a capital lease of airport property, it's unusual not to have some form of competition, unless the property was uniquely controlled by the Oklahoma City Airport Trust and no other suitable alternatives were available or feasible for the FAA's specific needs at that time. Further investigation into FAA procurement records would be needed to uncover the official justification.

How does the $17.8 million cost compare to market rates for similar airport leases?

Benchmarking this $17.8 million lease against market rates is challenging without more specific details about the leased property (e.g., square footage, type of facility, specific location within the airport, amenities provided) and the lease terms (e.g., duration, escalation clauses). However, given that it was a sole-source award, there's a heightened risk that the price may not reflect competitive market value. To perform a proper comparison, one would need to analyze lease agreements for comparable airport facilities in similar-sized metropolitan areas, considering factors like economic conditions, demand for airport space, and the specific infrastructure being leased. The lack of competition inherently makes a direct value-for-money assessment difficult.

What are the potential risks associated with a long-term, firm-fixed-price capital lease awarded without competition?

A long-term, firm-fixed-price capital lease awarded without competition presents several risks. Firstly, the government is locked into paying the agreed-upon price for the entire duration (nearly 8 years in this case), regardless of whether market conditions change, the leased space is fully utilized, or the government's needs evolve. This lack of flexibility can lead to overpayment if market rates decrease or usage declines. Secondly, the absence of competition means the government likely did not benefit from potential cost savings or better terms that a competitive bidding process could have yielded. This increases the risk of paying a premium for the leased assets. Finally, without a competitive baseline, assessing the ongoing value and necessity of the lease throughout its term becomes more difficult for oversight bodies.

What is the historical spending pattern for similar airport leases by the FAA or DOT?

The provided data focuses on a single contract and does not offer historical spending patterns for similar airport leases by the FAA or DOT. To analyze historical spending, one would need to query federal procurement databases for contracts with similar Product Service Codes (PSCs) or North American Industry Classification System (NAICS) codes related to real estate leasing, particularly for airport facilities. Examining trends in contract values, competition levels, and contract durations over several fiscal years would be necessary. This specific lease, being a capital lease for non-residential buildings, might be less common than standard operational leases, making direct historical comparisons more challenging without deeper data analysis.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Lessors of Real Estate › Lessors of Nonresidential Buildings (except Miniwarehouses)

Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7100 TERMINAL DR UNIT 937, OKLAHOMA CITY, OK, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,027,353,500

Exercised Options: $40,935,102

Current Obligation: $17,851,398

Timeline