Department of Defense leases 4 MI-8MTV/MI-17S aircraft for $18.7M, with a 2-year term

Contract Overview

Contract Amount: $18,675,149 ($18.7M)

Contractor: Simplex Corporation

Awarding Agency: Department of Defense

Start Date: 2010-07-14

End Date: 2012-09-30

Contract Duration: 809 days

Daily Burn Rate: $23.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LEASE OF AIRCRAFT: MI-8MTV/MI-17S (#1, TAIL #N176RU; #2, TAIL #N175RU; #3, TAIL #N172RU; #4, TAIL #)

Place of Performance

Location: HURLBURT FIELD, OKALOOSA County, FLORIDA, 32544

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $18.7 million to SIMPLEX CORPORATION for work described as: LEASE OF AIRCRAFT: MI-8MTV/MI-17S (#1, TAIL #N176RU; #2, TAIL #N175RU; #3, TAIL #N172RU; #4, TAIL #) Key points: 1. The lease agreement for these specialized aircraft represents a significant investment in air transport capabilities. 2. Competition dynamics for this lease appear complex, involving exclusion of sources, which warrants further investigation into the rationale. 3. The firm-fixed-price contract structure suggests predictable costs, but the overall value proposition needs benchmarking against similar leases. 4. Performance context is limited without details on operational use, flight hours, or specific mission requirements. 5. This contract falls within the broader category of transportation equipment rental and leasing, serving critical logistical needs. 6. The duration of the lease is substantial, indicating a long-term requirement for these assets.

Value Assessment

Rating: fair

The total value of $18.7 million for a lease of four MI-8MTV/MI-17S aircraft over approximately 2 years (809 days) requires careful benchmarking. Without specific details on the aircraft's condition, operational hours, or included services (e.g., maintenance, crew), a precise value-for-money assessment is challenging. However, the lease of specialized aircraft can be costly due to unique operational requirements and limited market availability. Comparing this to similar leases for comparable aircraft types and durations would be necessary to determine if the pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while a competitive process was intended, certain sources were excluded from the outset. The specific reasons for this exclusion are not provided but could relate to specialized capabilities, security requirements, or prior relationships. The limited nature of the competition may have implications for the final price and the range of available options.

Taxpayer Impact: Excluding potential bidders can limit price discovery, potentially leading to higher costs for taxpayers if the remaining pool of competitors is small or if the excluded sources offered more competitive pricing.

Public Impact

The Department of Defense benefits from access to specialized rotary-wing aircraft for logistical and operational support. These aircraft are likely utilized for troop transport, cargo delivery, or other critical mission requirements in various operational theaters. The geographic impact is likely tied to the deployment locations of the Air Force units utilizing these leased aircraft, potentially domestic or international. The contract supports the aviation sector by providing revenue to the leasing company and potentially supporting maintenance and operational personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition method raises concerns about the breadth of competition and potential for higher costs.
Lack of detailed performance metrics or operational context makes it difficult to assess the true value and effectiveness of the lease.
The specific model of aircraft (MI-8MTV/MI-17S) suggests a niche requirement, and understanding the necessity for this particular type is important.

Positive Signals

The firm-fixed-price contract provides cost certainty for the government, mitigating risks associated with cost overruns.
The lease duration of over two years suggests a stable, long-term requirement, allowing for consistent operational planning.
The award to SIMPLEX CORPORATION indicates a known entity providing these specialized services.

Sector Analysis

The market for specialized aircraft leasing, particularly for military-grade or robust utility helicopters like the MI-8/MI-17 series, is a niche segment within the broader aerospace and defense industry. This sector is characterized by high barriers to entry due to capital investment, regulatory compliance, and specialized operational expertise. The Department of Defense is a significant customer for such services, often requiring unique configurations or capabilities not readily available in the civilian market. Benchmarking this lease would involve comparing rates against other government contracts for similar aircraft or against commercial rates for comparable heavy-lift helicopters, adjusted for mission profile and lease terms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem from this specific contract is likely minimal. However, the prime contractor, SIMPLEX CORPORATION, may engage small businesses for support services, though this is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, a component of the Department of Defense. The firm-fixed-price nature of the contract simplifies some aspects of oversight by focusing on delivery and adherence to terms rather than cost management. Accountability measures would include performance reviews, adherence to lease terms, and potential penalties for non-compliance. Transparency is facilitated by contract databases, but detailed operational reporting or specific oversight committee reviews are not evident from the provided data.

Related Government Programs

Department of Defense Aircraft Leasing
Air Force Transportation Services
Rotary-Wing Aircraft Procurement
Commercial Air Transportation Equipment Rental and Leasing
Foreign Military Sales Support Aircraft

Risk Flags

Limited competition due to source exclusion.
Lack of detailed performance metrics.
Potential for above-market pricing due to limited competition.
Need for further justification of aircraft type selection.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.7 million to SIMPLEX CORPORATION. LEASE OF AIRCRAFT: MI-8MTV/MI-17S (#1, TAIL #N176RU; #2, TAIL #N175RU; #3, TAIL #N172RU; #4, TAIL #)

Who is the contractor on this award?

The obligated recipient is SIMPLEX CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $18.7 million.

What is the period of performance?

Start: 2010-07-14. End: 2012-09-30.

What is the track record of SIMPLEX CORPORATION in providing aircraft leasing services to the federal government, particularly for specialized aircraft like the MI-8/MI-17 series?

Assessing SIMPLEX CORPORATION's track record requires a deeper dive into federal procurement databases beyond this single contract. Information such as past performance reviews, other awarded contracts (especially for similar aircraft or services), and any history of contract disputes or performance issues would be crucial. Without this broader context, it's difficult to gauge their reliability and experience specifically with the MI-8/MI-17 series or similar complex leasing arrangements. A review of their contract history could reveal patterns in pricing, competition levels, and successful delivery, providing a more robust understanding of their capabilities and suitability as a government contractor.

How does the per-day lease cost of these MI-8/MI-17S aircraft compare to market rates for similar heavy-lift helicopters, considering the lease duration and services included?

The total lease cost of $18.7 million over approximately 809 days equates to roughly $23,146 per day per aircraft. Benchmarking this requires comparing it to daily lease rates for comparable heavy-lift helicopters (e.g., Mi-17, CH-47 Chinook, or similar Western equivalents) in the commercial market or other government contracts. Factors such as the aircraft's age, maintenance status, included crew, operational hours per day, and geographic location significantly influence these rates. If this lease includes comprehensive maintenance and operational support, the daily rate might be considered reasonable. However, if it's a bare-hull lease, this daily cost could be on the higher side, necessitating a thorough market analysis to confirm value for money.

What were the specific reasons for excluding certain sources during the competition for this aircraft lease, and did this exclusion limit the competitive landscape?

The contract's designation as 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' implies that a preliminary assessment led to the disqualification or non-consideration of certain potential bidders. The specific rationale for these exclusions is not detailed in the provided data but could stem from factors such as the unique technical specifications of the MI-8/MI-17S, specialized operational requirements, security clearances, or specific past performance criteria. Understanding these exclusions is vital because it directly impacts the level of competition. If only a few sources remained after exclusions, it could suggest a limited competitive landscape, potentially leading to less favorable pricing for the government compared to a truly open competition.

What are the primary operational uses and mission requirements driving the need for leasing four MI-8MTV/MI-17S aircraft for the Department of the Air Force?

The MI-8/MI-17 series are known for their robust utility, heavy-lift capabilities, and suitability for operating in challenging environments. For the Department of the Air Force, leasing these aircraft likely supports specialized logistical operations, potentially including troop transport, cargo movement, or support for special operations forces. Their ability to operate from austere or unprepared landing zones makes them valuable in scenarios where fixed-wing aircraft or standard helicopters may not be suitable. The requirement for four specific airframes suggests a consistent and significant operational demand that necessitates dedicated leased assets rather than relying solely on organic fleet capabilities or standard procurement processes.

What is the historical spending pattern for leasing similar types of specialized aircraft by the Department of Defense or the Air Force over the past five years?

Analyzing historical spending on similar aircraft leases by the DoD and Air Force would provide crucial context for this $18.7 million contract. This would involve identifying contracts for MI-8/MI-17s or comparable heavy-lift utility helicopters, noting their duration, total value, and competition levels. A trend of increasing or decreasing spending in this niche could indicate shifts in operational needs, budget priorities, or market availability. Understanding past pricing and contract structures would also help determine if the current lease represents a favorable deal or if costs have escalated. Without this historical data, it's challenging to assess if this specific lease is an anomaly or part of a consistent procurement strategy.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Commercial and Industrial Machinery and Equipment Rental and Leasing › Commercial Air, Rail, and Water Transportation Equipment Rental and Leasing

Product/Service Code: LEASE/RENT EQUIPMENT › LEASE OR RENTAL OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA002110R0004

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1890 S OCEAN DR UNIT 2007E, HALLANDALE, FL, 25

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

Financial Breakdown

Contract Ceiling: $64,562,949

Exercised Options: $18,675,149

Current Obligation: $18,675,149

Contract Characteristics

Cost or Pricing Data: NO

Timeline