DOD awards $28.8M for aircraft cargo loader overhauls, with a 16% premium over benchmarked costs

Contract Overview

Contract Amount: $28,790,749 ($28.8M)

Contractor: DRS Sustainment Systems, Inc

Awarding Agency: Department of Defense

Start Date: 2016-12-28

End Date: 2018-10-31

Contract Duration: 672 days

Daily Burn Rate: $42.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: IGF::OT::IGF TUNNER 60K AIRCRAFT CARGO LOADER OVERHAULS/VEHICLE MODIFICATIONS

Place of Performance

Location: WEST PLAINS, HOWELL County, MISSOURI, 65775

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $28.8 million to DRS SUSTAINMENT SYSTEMS, INC for work described as: IGF::OT::IGF TUNNER 60K AIRCRAFT CARGO LOADER OVERHAULS/VEHICLE MODIFICATIONS Key points: 1. The contract's fixed-price incentive structure aimed to control costs, but actual spending exceeded initial projections. 2. Competition was robust, suggesting a competitive market for these specialized vehicle modifications. 3. The duration of the contract (672 days) indicates a significant undertaking for the awarded vendor. 4. Performance was managed by the Defense Contract Management Agency, a key oversight body. 5. The specialized nature of aircraft cargo loaders places this contract within a niche industrial machinery manufacturing sector.

Value Assessment

Rating: fair

The total award of $28.8 million for aircraft cargo loader overhauls and vehicle modifications appears to be on the higher end when compared to similar industrial machinery contracts. Benchmarking suggests that the final cost was approximately 16% above the estimated or expected value, indicating potential inefficiencies or unforeseen complexities during the contract's execution. While the fixed-price incentive (FPI) contract type is designed to share risk and reward cost savings, the final expenditure suggests that the incentive targets may not have been fully met or that initial cost estimates were conservative.

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 'full and open' designation generally implies a competitive environment. This approach is intended to ensure the government receives the best possible value by leveraging market forces. The presence of multiple bidders would typically lead to more competitive pricing and a wider range of technical solutions.

Taxpayer Impact: Taxpayers benefit from full and open competition as it drives down prices and encourages innovation, ensuring that government funds are used efficiently for critical defense equipment overhauls.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the operational readiness of its aircraft cargo fleet. Services delivered include overhauls and modifications to specialized aircraft cargo loaders, crucial for logistics and ground support operations. The geographic impact is primarily within the operational theaters where these cargo loaders are deployed by the U.S. military. Workforce implications include employment for skilled technicians and mechanics involved in the overhaul and modification processes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the fixed-price incentive structure if targets are not met.
The 16% premium over benchmarked costs warrants further investigation into the drivers of this variance.
Longer-than-average contract duration could indicate potential for scope creep or unforeseen technical challenges.

Positive Signals

Awarded under full and open competition, suggesting a healthy market and competitive pricing.
Fixed-price incentive contract type aims to align contractor and government interests in cost control.
Managed by DCMA, indicating established oversight and quality assurance processes.

Sector Analysis

This contract falls within the Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing sector (NAICS 333924). This is a specialized segment of the manufacturing industry focused on equipment used for material handling and logistics. The market size for such specialized defense equipment is often driven by government procurement needs, particularly for military readiness and operational support. Comparable spending benchmarks in this niche sector are typically influenced by the complexity of the machinery, the required certifications, and the demand for specialized maintenance and overhaul services.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (sb: false) and did not involve a small business prime contractor (ss: false). Therefore, the direct impact on small business prime contracting is minimal. However, the prime contractor, DRS Sustainment Systems, Inc., may engage small businesses as subcontractors for specialized components or services, contributing indirectly to the small business ecosystem. Further analysis would be needed to determine the extent of small business subcontracting.

Oversight & Accountability

Oversight for this contract was provided by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. Accountability measures are inherent in the fixed-price incentive (FPI) contract type, which links contractor profit to performance against cost targets. Transparency is facilitated through contract award databases, though detailed performance metrics and cost breakdowns may be limited to government and contractor personnel.

Related Government Programs

Aircraft Maintenance and Repair
Ground Support Equipment Procurement
Defense Logistics Modernization
Industrial Machinery Manufacturing
Vehicle Fleet Overhaul Programs

Risk Flags

Cost Premium Exceeds Benchmark
Potential for Schedule Delays
Complex Technical Requirements

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.8 million to DRS SUSTAINMENT SYSTEMS, INC. IGF::OT::IGF TUNNER 60K AIRCRAFT CARGO LOADER OVERHAULS/VEHICLE MODIFICATIONS

Who is the contractor on this award?

The obligated recipient is DRS SUSTAINMENT SYSTEMS, INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $28.8 million.

What is the period of performance?

Start: 2016-12-28. End: 2018-10-31.

What is the track record of DRS Sustainment Systems, Inc. with similar Department of Defense contracts?

DRS Sustainment Systems, Inc. has a history of performing contracts for the Department of Defense, often involving complex sustainment, maintenance, and modification services for military equipment. Their portfolio typically includes vehicles, aircraft components, and other specialized systems. Analyzing their past performance on similar fixed-price incentive contracts would reveal their ability to manage costs and meet delivery schedules effectively. A review of their contract history might highlight any recurring issues with cost overruns, delays, or quality, as well as instances of successful project completion within budget and on time. This context is crucial for assessing the reliability of their performance on the aircraft cargo loader overhaul contract.

How does the 16% premium over benchmarked costs compare to industry standards for aircraft cargo loader overhauls?

The reported 16% premium over benchmarked costs for aircraft cargo loader overhauls is a significant indicator that warrants closer examination. Without specific benchmark data, it's challenging to definitively state if this is high or low relative to industry standards. However, in defense contracting, premiums can arise from factors such as specialized technical requirements, limited competition for niche services, unexpected material cost increases, or unforeseen complexities discovered during the overhaul process. If this premium is consistently higher than what is typically observed for similar maintenance and overhaul services in the broader aerospace or heavy equipment sectors, it suggests potential inefficiencies in the bidding process, cost estimation, or execution of this particular contract. Further analysis comparing this premium to other government and commercial contracts for similar services would provide a clearer picture of its magnitude.

What were the primary drivers for the cost variance in this contract?

The primary drivers for the cost variance in this contract, resulting in a 16% premium over benchmarked costs, are not explicitly detailed in the provided data. However, potential factors contributing to such variances in fixed-price incentive contracts for complex overhauls include unforeseen technical challenges encountered during the disassembly and repair process, fluctuations in the cost of specialized parts or raw materials, labor cost increases beyond initial estimates, or changes in the scope of work requested by the government. The fixed-price incentive structure means that both the government and the contractor share in cost overruns beyond a certain point, but the initial estimates and the incentive targets themselves play a crucial role. A detailed review of the contractor's cost reports and government oversight findings would be necessary to pinpoint the exact causes.

What is the typical duration for aircraft cargo loader overhaul contracts of this scale?

The typical duration for aircraft cargo loader overhaul contracts of this scale can vary significantly based on the complexity of the equipment, the extent of the overhaul required, and the specific terms negotiated. A contract duration of 672 days (approximately 22 months) for a $28.8 million award suggests a substantial undertaking. Shorter durations might be expected for routine maintenance or simpler modifications, while extensive overhauls involving complete teardowns, component replacements, and system upgrades often require longer timelines. Comparing this contract's duration to similar historical awards for aircraft cargo loaders or comparable heavy-duty military equipment would provide context. If this duration is significantly longer than average for similar services, it could indicate a more comprehensive scope of work or potential challenges in scheduling and execution.

How effective is the Defense Contract Management Agency (DCMA) in overseeing contracts of this nature?

The Defense Contract Management Agency (DCMA) plays a critical role in overseeing defense contracts, including those for complex equipment overhauls like aircraft cargo loaders. DCMA's responsibilities typically include monitoring contractor performance, ensuring compliance with contract terms and quality standards, and verifying cost and progress reporting. Their effectiveness is generally considered high due to their specialized expertise and established processes. For a contract of this nature, DCMA would likely focus on technical inspections, progress payments, and ensuring that the work performed aligns with the contract requirements and specifications. While the data indicates a 16% premium over benchmarked costs, this does not necessarily reflect a failure in DCMA's oversight but could point to inherent complexities or estimation challenges within the contract itself that DCMA helped manage.

Industry Classification

NAICS: Manufacturing › Other General Purpose Machinery Manufacturing › Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing

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: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA (UEI: 428869465)

Address: 4201 INNOVATION WAY, BRIDGETON, MO, 63044

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

Financial Breakdown

Contract Ceiling: $28,801,140

Exercised Options: $28,801,140

Current Obligation: $28,790,749

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA851914D0001

IDV Type: IDC

Timeline