DoD's $25.6M contract for HSC-2 maintenance awarded to Kay and Associates, Inc. after exclusion of sources

Contract Overview

Contract Amount: $25,560,507 ($25.6M)

Contractor: KAY and Associates, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-01-25

End Date: 2021-08-02

Contract Duration: 1,285 days

Daily Burn Rate: $19.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MAINTENANCE SUPPORT OF HSC-2 AT NORFOLK VA

Place of Performance

Location: BUFFALO GROVE, LAKE County, ILLINOIS, 60089

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $25.6 million to KAY AND ASSOCIATES, INC. for work described as: MAINTENANCE SUPPORT OF HSC-2 AT NORFOLK VA Key points: 1. The contract value of $25.6 million over approximately 3.5 years suggests a significant investment in specialized aircraft maintenance. 2. The 'after exclusion of sources' competition type raises questions about the breadth of market engagement and potential for price optimization. 3. A firm fixed-price contract structure indicates that the government has transferred most of the cost risk to the contractor. 4. The duration of the contract (1285 days) points to a long-term need for these specific maintenance services. 5. The North American Industry Classification System (NAICS) code 336411 for Aircraft Manufacturing suggests a focus on complex aviation components or systems. 6. The award to Kay and Associates, Inc. represents a substantial commitment to a single provider for critical support services.

Value Assessment

Rating: fair

Benchmarking the value of this $25.6 million contract is challenging without specific details on the scope of maintenance services for the HSC-2 aircraft. However, the duration of over three years suggests a substantial, ongoing requirement. The firm fixed-price nature implies that the contractor bears the risk of cost overruns, which can be a positive indicator for the government if the price is competitive. Without comparable contract data for similar specialized aircraft maintenance, a definitive value-for-money assessment is difficult.

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 the competition was intended to be open, specific sources were excluded, potentially limiting the pool of bidders. The number of bidders is not specified, but the exclusion clause suggests a deliberate narrowing of the competitive field. This approach can sometimes be justified for specialized services but may reduce the pressure on pricing compared to truly open competition.

Taxpayer Impact: The limited competition may have resulted in a higher price for taxpayers than if a broader range of qualified vendors had been able to bid. It also suggests that the government may have had specific reasons for excluding certain potential offerors.

Public Impact

The primary beneficiaries are the U.S. Navy personnel operating and maintaining the HSC-2 helicopter fleet, ensuring operational readiness. The services delivered include critical maintenance and support for the HSC-2 aircraft, vital for naval aviation missions. The geographic impact is likely concentrated around naval air stations where the HSC-2 is based, such as Norfolk, VA. Workforce implications include the employment of skilled aviation mechanics and technicians by Kay and Associates, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have restricted price discovery and potentially led to a higher cost for taxpayers.
The exclusion of sources, while potentially justified, warrants scrutiny to ensure it did not unduly limit market access for qualified small businesses.
Lack of detailed performance metrics in the provided data makes it difficult to assess the contractor's past performance effectiveness.

Positive Signals

The firm fixed-price contract structure shifts cost overrun risk to the contractor, which is generally favorable for the government.
The contract duration suggests a stable, long-term need for these specialized maintenance services, indicating a well-defined requirement.
Awarding to a single contractor for a defined period can ensure continuity of essential support operations.

Sector Analysis

The contract falls within the aerospace and defense sector, specifically focusing on aircraft maintenance and support. The NAICS code 336411, 'Aircraft Manufacturing,' suggests a deep technical requirement, possibly related to complex systems or components rather than general upkeep. The total contract value of $25.6 million over approximately 3.5 years represents a significant, albeit niche, expenditure within the broader defense maintenance market. Comparable spending benchmarks would typically involve other contracts for specialized rotary-wing aircraft maintenance.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a primary set-aside consideration for this contract. This suggests the requirement was likely fulfilled by large businesses or that subcontracting opportunities for small businesses were not explicitly mandated or highlighted in this award notice. Further analysis would be needed to determine if Kay and Associates, Inc. utilized small business subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Department of Defense agency (Department of the Air Force, in this case, though the end-user is likely Navy for HSC-2). Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified services. Transparency is facilitated through contract award databases, though detailed performance reporting is often internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Aviation Maintenance Programs
HSC Helicopter Support Contracts
Defense Logistics Agency (DLA) Aviation Support
Aircraft Component Repair Services
Rotary-Wing Aircraft Maintenance Contracts

Risk Flags

Limited competition raises concerns about potential price inflation.
Exclusion of sources requires justification to ensure fairness and market access.
Lack of detailed performance data hinders objective assessment of value.
Reliance on a single contractor for specialized services poses long-term risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.6 million to KAY AND ASSOCIATES, INC.. MAINTENANCE SUPPORT OF HSC-2 AT NORFOLK VA

Who is the contractor on this award?

The obligated recipient is KAY AND ASSOCIATES, INC..

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 $25.6 million.

What is the period of performance?

Start: 2018-01-25. End: 2021-08-02.

What specific maintenance tasks are covered under this $25.6 million contract for the HSC-2 aircraft?

The provided data does not detail the specific maintenance tasks covered. However, given the NAICS code 336411 (Aircraft Manufacturing), the scope likely extends beyond routine servicing to include more complex component-level maintenance, repair, overhaul, or modification of the HSC-2 helicopter or its critical systems. This could encompass engine maintenance, avionics repair, structural integrity checks, or specialized system support. A thorough review of the contract's Statement of Work (SOW) would be necessary to ascertain the precise services rendered and ensure they align with the stated value and duration.

How does the 'full and open competition after exclusion of sources' procurement method impact cost-effectiveness compared to unrestricted full and open competition?

The 'full and open competition after exclusion of sources' method implies that while the competition was intended to be broad, certain potential bidders were deliberately excluded. This exclusion, if not rigorously justified by unique capabilities or security requirements, can limit the number of competitive bids received. A smaller pool of bidders may lead to less aggressive pricing compared to a scenario where all capable sources could participate. While it can ensure specific expertise, it potentially sacrifices some of the price discovery benefits inherent in unrestricted full and open competition, possibly resulting in a higher cost for the government and taxpayers.

What is the historical spending pattern for HSC-2 maintenance support by the Department of Defense?

Historical spending data for HSC-2 maintenance support is not detailed in the provided information. However, the award of a $25.6 million contract over approximately 3.5 years suggests a consistent and significant requirement for this type of support. To understand historical patterns, one would need to analyze prior contracts for HSC-2 maintenance, potentially looking at spending levels, contract durations, and incumbent contractors over the lifecycle of the aircraft platform. This would reveal trends in demand, pricing, and contractor performance over time.

What are the key performance indicators (KPIs) used to evaluate Kay and Associates, Inc.'s performance under this contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. Typically, for aircraft maintenance contracts, KPIs would focus on metrics such as aircraft availability rates, turnaround time for maintenance tasks, quality of repairs (e.g., defect rates), adherence to schedules, and compliance with technical orders and safety regulations. The firm fixed-price nature suggests that meeting these performance standards is crucial for the contractor to achieve profitability, and failure to do so could result in penalties or contract termination.

What is the risk profile associated with Kay and Associates, Inc. as the sole provider for this maintenance contract?

The primary risk associated with a single provider, even if selected through a competitive process, is the potential for vendor lock-in and reduced leverage in future negotiations. If Kay and Associates, Inc. is the sole entity capable of performing this highly specialized maintenance, the government may face higher costs in subsequent contract renewals or modifications. Additionally, the government is reliant on the contractor's financial stability and operational capacity. Mitigating this risk involves robust contract management, clear performance expectations, and potentially developing alternative support strategies or fostering competition in the long term.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 165 N ARLINGTON HEIGHTS RD STE 150, BUFFALO GROVE, IL, 60089

Business Categories: Category Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $30,542,609

Exercised Options: $30,542,609

Current Obligation: $25,560,507

Actual Outlays: $2,070,807

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810817D0003

IDV Type: IDC

Timeline