Department of Defense awards $44.75M contract for aircraft manufacturing to Learjet Inc

Contract Overview

Contract Amount: $44,750,000 ($44.8M)

Contractor: Learjet Inc

Awarding Agency: Department of Defense

Start Date: 2012-08-28

End Date: 2012-10-19

Contract Duration: 52 days

Daily Burn Rate: $860.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 4TH BD PURCHASE

Place of Performance

Location: WICHITA, SEDGWICK County, KANSAS, 67209

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $44.8 million to LEARJET INC for work described as: 4TH BD PURCHASE Key points: 1. Contract awarded on a firm fixed-price basis, indicating clear cost expectations. 2. The contract was not competed, raising questions about potential price efficiencies. 3. Awarded to a single bidder, suggesting limited market engagement for this specific requirement. 4. The duration of the contract is 52 weeks, suggesting a short-term need. 5. The base year award amount is substantial, requiring careful value assessment. 6. The contract falls under the Aircraft Manufacturing NAICS code.

Value Assessment

Rating: questionable

The contract's value of $44.75 million for a 52-week duration warrants scrutiny, especially given the lack of competition. Without comparable contract data or a competitive bidding process, it is difficult to benchmark the pricing effectively. The base year award amount of $8.6 million suggests a significant investment, and the absence of competitive pressure could mean taxpayers did not receive the best possible price. Further analysis would be needed to determine if this price aligns with market rates for similar aircraft manufacturing services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. The Department of the Air Force likely determined that only Learjet Inc. could fulfill the specific requirements of this contract. The lack of competition limits the opportunity for price discovery and may prevent the government from realizing cost savings that could have been achieved through a competitive process.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium for the goods or services procured. Without multiple bids, there is less pressure on the contractor to offer the most competitive price.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically the Air Force, receiving aircraft manufacturing services. The services delivered are related to aircraft manufacturing, crucial for military readiness and operations. The geographic impact is centered around the contractor's location in Kansas (KS). Workforce implications include employment opportunities within Learjet Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award raises concerns about the thoroughness of market research.
Firm fixed-price contract with a large award amount requires diligent performance monitoring.

Positive Signals

Award to an established manufacturer like Learjet Inc. may indicate specialized capabilities.
Firm fixed-price contract provides cost certainty for the government.

Sector Analysis

The aircraft manufacturing sector is a critical component of the aerospace industry, supporting both commercial and defense needs. This contract falls under the NAICS code 336411, which covers the manufacturing of aircraft. The defense segment of this sector is characterized by high barriers to entry, specialized technology, and significant government investment. Comparable spending benchmarks are difficult to establish without more specific details on the aircraft type and scope of manufacturing, but the defense aerospace market is known for substantial contract values.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information regarding subcontracting plans for small businesses. The award to a large, established manufacturer like Learjet Inc. suggests that the primary focus was on specialized capabilities rather than fostering small business participation through this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management offices. The firm fixed-price nature of the contract provides some level of cost control, but performance monitoring is still crucial. Transparency regarding the justification for the sole-source award would be important for public accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Procurement
Defense Manufacturing Contracts
Aerospace Industry Spending
Air Force Equipment Acquisition

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited transparency on specific aircraft manufacturing details.
Requires diligent performance monitoring despite fixed-price structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.8 million to LEARJET INC. 4TH BD PURCHASE

Who is the contractor on this award?

The obligated recipient is LEARJET 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 $44.8 million.

What is the period of performance?

Start: 2012-08-28. End: 2012-10-19.

What is the specific type of aircraft being manufactured under this contract?

The provided data does not specify the exact type of aircraft being manufactured. The contract falls under NAICS code 336411 (Aircraft Manufacturing), and the awardee is Learjet Inc., known for producing business jets. However, without further details, it's impossible to determine if this contract is for new production, modifications, or specific components of a particular aircraft model. Understanding the aircraft type would be crucial for assessing the value and necessity of the $44.75 million award.

What was the justification for awarding this contract on a sole-source basis?

The data indicates the contract was 'NOT COMPETED' and awarded to 'LEARJET INC'. The specific justification for this sole-source award is not provided in the data. Typically, sole-source contracts are justified when only one responsible source is available or capable of meeting the government's needs, such as possessing unique technology, proprietary data, or specialized expertise. The Department of the Air Force would have documented this justification, which would be essential for understanding why competition was bypassed and for assessing potential impacts on price and value.

How does the base year award of $8.6 million compare to market rates for similar aircraft manufacturing services?

Benchmarking the base year award of $8.6 million against market rates for similar aircraft manufacturing services is challenging without more specific details about the scope of work, the type of aircraft, and the required specifications. Learjet Inc. is a known entity in the aerospace sector, but the 'Aircraft Manufacturing' NAICS code is broad. To perform a meaningful comparison, one would need data on the per-unit cost of comparable aircraft, the complexity of manufacturing processes involved, and the prevailing labor and material costs in the industry. The lack of competition further complicates a direct price-to-value assessment.

What are the potential risks associated with a sole-source, firm-fixed-price contract of this magnitude?

A sole-source, firm-fixed-price contract of $44.75 million carries several risks. The primary risk is the potential for overpayment due to the absence of competitive bidding, which could have driven down prices. While firm-fixed-price offers cost certainty, it shifts the risk of cost overruns to the contractor. However, if the initial price was not adequately benchmarked or negotiated, the government might still bear an inflated cost. Another risk is the potential for contractor complacency or reduced incentive to innovate or optimize processes, as there is no competitive pressure. Robust government oversight and performance monitoring are critical to mitigate these risks.

What is Learjet Inc.'s track record with Department of Defense contracts, particularly for aircraft manufacturing?

The provided data indicates Learjet Inc. received this specific $44.75 million contract from the Department of the Air Force. To assess their track record, a broader search of federal procurement databases would be necessary to identify other contracts awarded to Learjet Inc. by the Department of Defense or other federal agencies. This would reveal patterns in contract types (e.g., sole-source vs. competed), award values, performance history, and any past issues or successes. Understanding their history with similar aircraft manufacturing or defense-related work would provide context for this current award.

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: Bombardier Inc. (UEI: 202276952)

Address: 1 LEARJET WAY, WICHITA, KS, 04

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

Financial Breakdown

Contract Ceiling: $44,750,000

Exercised Options: $44,750,000

Current Obligation: $44,750,000

Contract Characteristics

Cost or Pricing Data: NO

Timeline