Vertex Aerospace awarded $115.8M for KC-10 airframe contract logistics support, spanning over six years

Contract Overview

Contract Amount: $115,769,014 ($115.8M)

Contractor: Vertex Aerospace LLC

Awarding Agency: Department of Defense

Start Date: 2016-07-01

End Date: 2022-08-31

Contract Duration: 2,252 days

Daily Burn Rate: $51.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF KC/KDC-10 AIRFRAME CONTRACT LOGISTICS SUPPORT (CLS) TRANSITION/PHASE-IN

Place of Performance

Location: MADISON, MADISON County, MISSISSIPPI, 39110

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $115.8 million to VERTEX AEROSPACE LLC for work described as: IGF::OT::IGF KC/KDC-10 AIRFRAME CONTRACT LOGISTICS SUPPORT (CLS) TRANSITION/PHASE-IN Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract's duration of over six years indicates a long-term need for these services. 3. Awarded as a Firm Fixed Price contract, which shifts cost risk to the contractor. 4. The contract value of $115.8 million represents significant investment in aircraft sustainment. 5. The primary contractor, Vertex Aerospace LLC, is responsible for critical logistics support. 6. The contract falls under the Other Support Activities for Air Transportation NAICS code.

Value Assessment

Rating: good

The contract value of $115.8 million for over six years of logistics support for KC-10 airframes appears reasonable given the complexity of maintaining aging aircraft. Benchmarking against similar long-term sustainment contracts for large military aircraft suggests that this level of investment is typical for ensuring operational readiness. The firm fixed-price nature of the contract also provides cost predictability for the government, although it may limit flexibility if unforeseen issues arise.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but the competitive nature of the award process is expected to drive price discovery and potentially lead to more favorable terms for the government compared to sole-source or limited competition contracts.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market where multiple companies vie for the contract, which can lead to lower prices and better service quality due to competitive pressures.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the KC-10 Extender aircraft, ensuring their continued operational capability. Services delivered include critical logistics support, maintenance, and sustainment activities for the KC-10 airframe. The geographic impact is likely centered around bases where KC-10 aircraft are stationed and maintained, primarily within the United States. Workforce implications include employment opportunities for skilled technicians, logistics specialists, and support personnel within Vertex Aerospace and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term sustainment contracts can sometimes face scope creep if not managed carefully.
Reliance on a single contractor for critical logistics could pose a risk if the contractor experiences financial or operational difficulties.
The aging nature of the KC-10 fleet may present unforeseen maintenance challenges and cost increases.

Positive Signals

The firm fixed-price contract structure transfers significant cost risk to the contractor.
Awarding through full and open competition suggests a robust selection process and potential for competitive pricing.
The contract's duration indicates a stable, long-term commitment to supporting a vital military asset.

Sector Analysis

The aerospace and defense industry is characterized by long-term, high-value contracts for aircraft manufacturing, maintenance, and support. This contract for KC-10 airframe logistics support fits within the broader sector of aviation sustainment services. The market for such services is substantial, driven by government defense spending and the need to maintain aging fleets. Comparable spending benchmarks for similar aircraft sustainment programs often run into hundreds of millions or even billions of dollars over the life of the contract.

Small Business Impact

The provided data indicates that small business participation (sb) was false and there was no small business set-aside (ss). This suggests that the contract was not specifically targeted towards small businesses. While Vertex Aerospace LLC is the prime contractor, there may be opportunities for small businesses to participate as subcontractors, depending on Vertex's subcontracting plan and the nature of the services required. The impact on the small business ecosystem would depend on whether subcontracting opportunities are actively pursued and awarded.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. Accountability measures are embedded within the firm fixed-price structure, which incentivizes the contractor to manage costs effectively. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance metrics and oversight reports may not always be publicly accessible.

Related Government Programs

Air Force Materiel Command
KC-10 Sustainment Programs
Defense Logistics Agency
Aircraft Maintenance and Repair Services
Aerospace Support Contracts

Risk Flags

Contract duration exceeds 6 years
Potential for cost overruns due to aging aircraft
Reliance on a single prime contractor for critical support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $115.8 million to VERTEX AEROSPACE LLC. IGF::OT::IGF KC/KDC-10 AIRFRAME CONTRACT LOGISTICS SUPPORT (CLS) TRANSITION/PHASE-IN

Who is the contractor on this award?

The obligated recipient is VERTEX AEROSPACE LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $115.8 million.

What is the period of performance?

Start: 2016-07-01. End: 2022-08-31.

What is Vertex Aerospace LLC's track record with similar large-scale defense logistics contracts?

Vertex Aerospace LLC has a history of supporting various military aircraft platforms. While specific details on their track record with contracts of this exact scale and duration for the KC-10 are not detailed in the provided data, the company's involvement in defense logistics suggests experience in managing complex supply chains and maintenance operations. Further investigation into their past performance on similar contracts, including any performance reviews or awards, would provide a more comprehensive understanding of their capabilities and reliability in fulfilling such significant sustainment requirements.

How does the $115.8 million contract value compare to historical spending on KC-10 sustainment?

The $115.8 million awarded to Vertex Aerospace represents a significant investment over its approximately six-year duration. To provide a precise comparison to historical spending, one would need access to historical contract data specifically for KC-10 sustainment, including previous contracts awarded to other entities or Vertex itself. However, given the KC-10's role as a critical aerial refueling and transport aircraft, sustained investment in its maintenance and logistics is expected. The annual average spending under this contract is roughly $19.3 million, which can be benchmarked against previous annual sustainment costs to assess if this represents an increase, decrease, or stable level of expenditure.

What are the primary risks associated with a firm fixed-price contract for aircraft logistics support?

The primary risk with a firm fixed-price (FFP) contract for aircraft logistics support is that the contractor, Vertex Aerospace LLC, bears the burden of cost overruns. If unforeseen maintenance issues arise due to the aging nature of the KC-10 fleet, or if material costs increase significantly, Vertex may face reduced profit margins or even losses unless these factors were adequately anticipated in their pricing. Conversely, the government benefits from cost certainty. However, there's a potential risk that the contractor might cut corners on quality or service to protect their profit margin if cost pressures become too high, necessitating robust government oversight to ensure contract compliance and performance standards are met.

How effective is full and open competition in ensuring value for money in defense logistics contracts?

Full and open competition is generally considered the most effective method for ensuring value for money in defense logistics contracts. By allowing all responsible sources to bid, the government maximizes the potential for receiving competitive pricing and innovative solutions. This process encourages multiple contractors to offer their best terms, driving down costs and improving service quality. While the specific number of bidders for this KC-10 contract isn't provided, the mechanism itself is designed to prevent monopolies and ensure that taxpayer funds are used efficiently. Effective competition typically leads to a more favorable price-performance ratio compared to sole-source or limited competition awards.

What are the potential performance implications of supporting aging KC-10 airframes?

Supporting aging airframes like the KC-10 presents inherent performance challenges and potential risks. As aircraft age, components may experience increased wear and tear, leading to a higher frequency of maintenance requirements and a greater likelihood of unexpected failures. This can result in increased operational costs, potential delays in aircraft availability, and a need for more specialized or hard-to-find replacement parts. The contractor, Vertex Aerospace, must have robust systems in place to manage these aging-related issues, including proactive maintenance strategies, efficient supply chain management for parts, and skilled technicians capable of addressing complex, age-related repairs to ensure the KC-10 fleet remains mission-capable.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vertex Aerospace Services Corp.

Address: 555 INDUSTRIAL DR S, MADISON, MS, 39110

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

Financial Breakdown

Contract Ceiling: $115,769,014

Exercised Options: $115,769,014

Current Obligation: $115,769,014

Actual Outlays: $53,307

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA810516D0003

IDV Type: IDC

Timeline