DoD's $50M aircraft purchase for Orion Air Group, LLC, awarded without competition

Contract Overview

Contract Amount: $50,000,000 ($50.0M)

Contractor: Orion AIR Group, LLC

Awarding Agency: Department of Defense

Start Date: 2011-09-23

End Date: 2011-10-05

Contract Duration: 12 days

Daily Burn Rate: $4.2M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 9355&9358 AIRCRAFT PURCHASE

Place of Performance

Location: NEWPORT NEWS, NEWPORT NEWS (CITY) County, VIRGINIA, 23602

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $50.0 million to ORION AIR GROUP, LLC for work described as: 9355&9358 AIRCRAFT PURCHASE Key points: 1. The contract's value of $50 million represents a significant investment in aircraft acquisition. 2. The sole-source award raises questions about potential price overruns and lack of market pressure. 3. The short duration of 12 months suggests a specific, immediate need rather than a long-term program. 4. The contract falls under the Aircraft Manufacturing NAICS code, indicating a focus on production or modification. 5. The absence of small business set-asides or subcontracting plans is noted. 6. The firm-fixed-price contract type aims to control costs, but the lack of competition limits its effectiveness.

Value Assessment

Rating: questionable

Benchmarking the value of this $50 million aircraft purchase is challenging without detailed specifications and market comparisons. However, the lack of competition inherently limits the ability to assess if the price represents fair market value. A sole-source award often leads to higher costs compared to a competitively bid contract, as the contractor faces less pressure to offer the most economical solution. Further analysis would require understanding the specific aircraft type, its capabilities, and the prevailing market rates for similar acquisitions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Orion Air Group, LLC, was solicited. The justification for this approach is not provided in the data, but sole-source awards typically occur when only one vendor can meet the unique requirements of the government, or in cases of urgent and compelling need. The lack of competition means there was no opportunity for multiple bidders to offer their services, potentially leading to a less favorable price for the government.

Taxpayer Impact: Taxpayers may have paid a premium for this aircraft due to the absence of competitive bidding. Without competing offers, there is no market validation of the price, and the government may not have secured the best possible value.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which will receive the acquired aircraft. The services delivered involve the acquisition of aircraft, crucial for military operations and readiness. The geographic impact is likely concentrated around military bases or operational areas where the aircraft will be deployed. Workforce implications could include support roles for the aircraft's operation and maintenance, though direct job creation from this specific award is not detailed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated pricing.
Sole-source awards can indicate potential barriers to entry for other qualified vendors.
Limited transparency in the procurement process due to non-competitive nature.

Positive Signals

Firm-fixed-price contract type helps to cap potential cost overruns.
Award to a specific contractor suggests they possess unique capabilities or meet a critical need.
The contract is for aircraft acquisition, directly supporting defense capabilities.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. This contract for aircraft acquisition fits within the broader 'Aircraft Manufacturing' industry (NAICS 336411). Spending in this sector is often driven by national security needs and technological advancements. Comparable spending benchmarks would typically involve analyzing other large-scale aircraft procurements by the DoD, considering factors like aircraft type, quantity, and customization.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans. This suggests that the primary contractor, Orion Air Group, LLC, is expected to fulfill the requirements directly or through larger partners. The absence of small business involvement in this specific award means there are no direct benefits or opportunities for the small business ecosystem stemming from this particular contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in the firm-fixed-price structure, which aims to hold the contractor responsible for delivering the aircraft within the agreed price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Air Force Major Weapon System Acquisition
Defense Contract Management Agency (DCMA) Oversight
Aircraft Manufacturing Industry Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Limited transparency regarding justification for non-competition.
Potential for higher costs due to lack of market validation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.0 million to ORION AIR GROUP, LLC. 9355&9358 AIRCRAFT PURCHASE

Who is the contractor on this award?

The obligated recipient is ORION AIR GROUP, 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 $50.0 million.

What is the period of performance?

Start: 2011-09-23. End: 2011-10-05.

What specific type of aircraft was procured under this contract, and what are its intended operational roles?

The provided data does not specify the exact type of aircraft procured under this $50 million contract awarded to Orion Air Group, LLC. The NAICS code 336411, 'Aircraft Manufacturing,' suggests it could range from small tactical aircraft to larger transport or specialized platforms. The intended operational roles would be determined by the Air Force's specific mission requirements, which could include air mobility, reconnaissance, training, or support functions. Without further details on the aircraft's specifications and the contract's statement of work, its precise role remains undefined. This lack of specificity is a common challenge when analyzing high-level contract data.

What is the track record of Orion Air Group, LLC in fulfilling government contracts, particularly for aircraft acquisition?

Information regarding Orion Air Group, LLC's specific track record in fulfilling government contracts, especially for aircraft acquisition, is not detailed in the provided data. As this was a sole-source award, it implies that the Department of the Air Force identified Orion Air Group as capable of meeting the requirement. A comprehensive assessment of their track record would necessitate reviewing past performance evaluations, contract completion history, and any documented issues or successes on previous government engagements. Without access to this historical performance data, it is difficult to definitively assess their reliability and past success in similar procurements.

How does the per-unit cost of this aircraft acquisition compare to similar aircraft procured by the DoD or other government agencies?

The provided data does not include the quantity of aircraft purchased, making a per-unit cost calculation impossible. Therefore, a direct comparison to similar aircraft procured by the DoD or other government agencies cannot be made. Even if the quantity were known, the lack of specific aircraft type and capabilities would hinder a meaningful comparison. Sole-source awards, by their nature, often lack the transparent pricing benchmarks that competitive bidding provides. To perform such a comparison, detailed specifications of the aircraft, its intended mission, and pricing data from comparable competitive procurements would be essential.

What were the specific justifications for awarding this contract on a sole-source basis rather than through full and open competition?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. However, the specific justifications for this determination are not included. Typically, sole-source awards are justified under circumstances such as: only one responsible source being available, urgent and compelling needs that preclude competition, or specific national security requirements. The Department of the Air Force would have had to document and approve these justifications. Without access to the official justification documentation (e.g., a Justification and Approval document), the precise reasons for bypassing competition remain unknown, which limits transparency and accountability.

What are the potential risks associated with a sole-source contract of this magnitude ($50 million) in the defense sector?

A $50 million sole-source contract in the defense sector carries several potential risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive process, as the contractor faces less pressure to offer the most cost-effective solution. Secondly, it can limit innovation, as alternative solutions or technologies from other vendors are not explored. Thirdly, it may indicate a lack of market readiness or a highly specialized requirement that only one firm can meet, potentially creating vendor lock-in. Finally, sole-source awards can sometimes raise concerns about fairness and transparency in the procurement process, potentially impacting public trust and scrutiny.

How does this $50 million aircraft purchase fit into the broader spending patterns for aircraft acquisition within the Department of the Air Force over the past decade?

Analyzing this $50 million aircraft purchase within the broader spending patterns of the Department of the Air Force requires historical spending data for aircraft acquisition. Without that context, it's difficult to ascertain if this award is typical, unusually large, or small. The Air Force consistently procures a wide range of aircraft, from fighters and bombers to transport and training planes, often involving multi-billion dollar programs. A $50 million award could represent a component of a larger program, a standalone acquisition of specialized aircraft, or a mid-life upgrade. Understanding its place requires comparing it to the average size and frequency of similar contracts over the past ten years.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sierra Nevada Company, LLC (UEI: 094373495)

Address: 1001 PROVIDENCE BLVD, NEWPORT NEWS, VA, 03

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $50,000,000

Exercised Options: $50,000,000

Current Obligation: $50,000,000

Contract Characteristics

Cost or Pricing Data: NO

Timeline