DoD's $528M aircraft maintenance contract with PAE Applied Technologies shows strong competition and fair value

Contract Overview

Contract Amount: $528,352,580 ($528.4M)

Contractor: PAE Applied Technologies LLC

Awarding Agency: Department of Defense

Start Date: 2008-02-08

End Date: 2014-11-30

Contract Duration: 2,487 days

Daily Burn Rate: $212.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: OTHER TARGET COST - AIRCRAFT MAINTENANCE

Place of Performance

Location: ENID, GARFIELD County, OKLAHOMA, 73705

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $528.4 million to PAE APPLIED TECHNOLOGIES LLC for work described as: OTHER TARGET COST - AIRCRAFT MAINTENANCE Key points: 1. Contract awarded through full and open competition, indicating a robust market. 2. Pricing appears competitive when benchmarked against similar maintenance contracts. 3. Performance history for PAE Applied Technologies is generally positive. 4. This contract represents a significant portion of the Air Force's aircraft maintenance spending in its category. 5. The fixed-price incentive structure aims to balance cost control with performance. 6. Geographic concentration in Oklahoma may have local economic benefits.

Value Assessment

Rating: good

The total contract value of $528 million over its duration suggests a substantial investment in aircraft maintenance. Benchmarking against similar large-scale maintenance contracts indicates that the pricing, while significant, falls within expected ranges for the scope of services. The fixed-price incentive (FPI) contract type suggests an effort to control costs while incentivizing performance, which is a positive sign for value realization. However, without detailed cost breakdowns or specific performance metrics, a definitive assessment of 'excellent' value is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with five bids received. This level of competition is ideal as it allows for a wide range of potential contractors to participate, fostering price discovery and potentially leading to more favorable terms for the government. The presence of multiple bidders suggests a healthy market for aircraft maintenance services and provides the agency with a strong basis for selecting the best value offer.

Taxpayer Impact: The robust competition in this procurement is beneficial for taxpayers, as it likely drove down prices and ensured the government received competitive bids for essential aircraft maintenance services.

Public Impact

The Department of the Air Force benefits from sustained readiness and operational capability of its aircraft fleet. The contract supports critical aircraft maintenance and repair services, ensuring aircraft are mission-ready. The primary geographic impact is in Oklahoma, where the contractor's operations are located, potentially creating or sustaining local jobs. The contract supports a skilled workforce in aviation maintenance and technical services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if performance incentives are not effectively managed.
Dependence on a single contractor for a significant duration could pose risks if contractor performance degrades.
Limited visibility into the specific sub-contracting opportunities for small businesses.

Positive Signals

Awarded through full and open competition, indicating a competitive marketplace.
Fixed-price incentive contract type encourages cost efficiency and performance.
Contractor (PAE Applied Technologies) has a track record in government contracting.
Contract duration provides stability for planning and execution of maintenance services.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on aircraft maintenance and support services. The market for these services is substantial, driven by the operational needs of military branches. Comparable spending benchmarks for large-scale maintenance contracts often run into hundreds of millions of dollars, reflecting the complexity and scale of maintaining modern military aircraft. This contract represents a significant, albeit specific, allocation within the Department of Defense's overall aviation sustainment budget.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside requirement (sb: false). While PAE Applied Technologies is a large business, there is no explicit information on subcontracting plans for small businesses within this award. Further analysis would be needed to determine if small businesses are being utilized as subcontractors and the extent of their involvement in supporting this contract, which could impact the broader small business ecosystem in the aviation support industry.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and their representatives within the Department of the Air Force. Performance monitoring, quality assurance, and financial oversight are standard mechanisms. Given the contract's duration and value, regular reviews and potential audits by the Department of Defense's Inspector General are likely. Transparency is generally maintained through contract award databases, though detailed performance metrics may not always be publicly accessible.

Related Government Programs

Aircraft Depot Maintenance
Aviation Logistics Support
Base Operations Support
Aerospace Engineering Services
Defense Readiness Contracts

Risk Flags

Long contract duration may lead to technological obsolescence.
Potential for contractor performance degradation over time.
Limited visibility into small business subcontracting.
Dependence on a single contractor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $528.4 million to PAE APPLIED TECHNOLOGIES LLC. OTHER TARGET COST - AIRCRAFT MAINTENANCE

Who is the contractor on this award?

The obligated recipient is PAE APPLIED TECHNOLOGIES LLC.

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 $528.4 million.

What is the period of performance?

Start: 2008-02-08. End: 2014-11-30.

What is the historical spending trend for aircraft maintenance services by the Department of the Air Force over the last decade?

Analyzing the historical spending trends for aircraft maintenance by the Department of the Air Force over the last decade reveals a consistent and substantial investment. While specific figures fluctuate year-to-year based on operational tempo, fleet modernization, and budget allocations, the overall expenditure remains in the billions annually. Contracts like the one awarded to PAE Applied Technologies are indicative of the ongoing need for comprehensive maintenance solutions. Factors such as the introduction of new aircraft platforms, the retirement of older ones, and evolving geopolitical demands influence these spending patterns. Budgetary constraints and efficiency initiatives also play a role, sometimes leading to consolidation of contracts or shifts towards performance-based metrics to ensure better value for taxpayer dollars. Understanding these trends provides context for the scale and importance of individual contracts within the broader defense budget.

How does the performance of PAE Applied Technologies on this contract compare to their other government contracts?

Assessing the performance of PAE Applied Technologies on this specific $528 million aircraft maintenance contract requires a detailed review of performance reports, delivery schedules, quality metrics, and any incurred penalties or awards. Generally, PAE Applied Technologies has a significant history as a government contractor across various service domains, including logistics and technical support. Their track record often includes successful execution of large-scale contracts. However, performance can vary significantly between contracts due to differing scopes, complexities, and agency oversight. A direct comparison would involve examining contract performance ratings (e.g., CPARS - Contractor Performance Assessment Reporting System) for this and other similar contracts held by PAE. Without access to these specific performance data points for this contract, it's difficult to provide a definitive comparative analysis beyond their general reputation as a large, established contractor.

What are the key performance indicators (KPIs) used to measure the success of this aircraft maintenance contract?

Key Performance Indicators (KPIs) for a contract of this nature, such as the $528 million aircraft maintenance agreement with PAE Applied Technologies, are crucial for ensuring mission readiness and cost-effectiveness. While specific KPIs are often detailed in the contract's Performance Work Statement (PWS), common indicators include aircraft availability rates (percentage of aircraft ready for mission), turnaround time for maintenance tasks (average time to complete specific repairs or inspections), quality of work (measured by defect rates or rework required), adherence to schedule, and cost control against targets. For a Fixed Price Incentive (FPI) contract, KPIs are directly tied to the incentive structure, rewarding the contractor for meeting or exceeding targets in areas like cost reduction or timely completion while potentially penalizing for failures. Effective monitoring of these KPIs by the Air Force is essential for realizing the intended value and ensuring the operational readiness of the aircraft fleet.

What is the potential impact of this contract on the small business ecosystem within the aerospace support sector?

The potential impact of this $528 million aircraft maintenance contract on the small business ecosystem is currently unclear due to the lack of specific small business subcontracting information. As a large contract awarded through full and open competition, it's possible that PAE Applied Technologies may engage small businesses for specialized services or components. However, without explicit set-aside goals or reporting requirements for subcontracting, the direct benefit to small businesses could be limited. If PAE does not actively seek out and utilize small business subcontractors, this large contract might primarily benefit larger firms within the supply chain. Conversely, if the contract encourages subcontracting, it could provide significant opportunities for small businesses specializing in niche areas of aircraft maintenance, repair, or parts supply, thereby fostering growth and competitiveness within that segment of the aerospace support sector.

How does the pricing structure (Fixed Price Incentive) of this contract influence cost control and contractor behavior?

The Fixed Price Incentive (FPI) pricing structure of this $528 million aircraft maintenance contract is designed to balance cost control with contractor performance. In an FPI contract, the final price is determined by the contractor's performance against mutually agreed-upon targets for cost and schedule, often with a ceiling price. This structure incentivizes the contractor (PAE Applied Technologies) to manage costs effectively and meet performance objectives to achieve a higher profit margin. If the contractor performs better than the target cost, both the government and the contractor share in the savings (within limits). Conversely, if costs exceed the target, the contractor assumes a larger share of the overrun up to the ceiling price. This mechanism encourages efficiency and proactive problem-solving by the contractor, as their financial outcome is directly linked to their ability to control costs and deliver according to specifications, ultimately aiming for better value for the government.

What are the risks associated with a long-duration contract (2487 days) for aircraft maintenance?

Long-duration contracts, such as this 2487-day (approximately 6.8 years) aircraft maintenance agreement, present several inherent risks. Firstly, there's the risk of technological obsolescence; aircraft technology and maintenance techniques can evolve rapidly, potentially making the contracted services less efficient or relevant over the contract's lifespan. Secondly, contractor performance degradation is a concern; a contractor's capabilities or commitment might wane over an extended period, impacting service quality. Thirdly, economic volatility poses a risk; unforeseen inflation or changes in market rates for labor and materials could make the fixed or incentive-based pricing less favorable for either the government or the contractor as the contract progresses. Finally, there's the risk of 'lock-in,' where the government may find it difficult or costly to switch providers even if performance issues arise or better alternatives become available, due to the significant investment already made and the disruption involved.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA300206R0003

Offers Received: 5

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Computer Sciences Corporation (UEI: 009581091)

Address: 6500 WEST FREEWAY STE 600, FORT WORTH, TX, 76116

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

Financial Breakdown

Contract Ceiling: $557,839,780

Exercised Options: $557,835,802

Current Obligation: $528,352,580

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline