Air Force awards $5.6M for KC-46 initial spares, with Velo Aviation as prime contractor

Contract Overview

Contract Amount: $5,637,471 ($5.6M)

Contractor: Velo Aviation LLC

Awarding Agency: Department of Defense

Start Date: 2025-03-24

End Date: 2025-12-05

Contract Duration: 256 days

Daily Burn Rate: $22.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR KC-46 INITIAL SPARES (KIS) TRAVIS AFB AND TINKER AFB (SMALL BUSINESS SET-ASIDE) VELO AVIATION.

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92129

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $5.6 million to VELO AVIATION LLC for work described as: DELIVERY ORDER FOR KC-46 INITIAL SPARES (KIS) TRAVIS AFB AND TINKER AFB (SMALL BUSINESS SET-ASIDE) VELO AVIATION. Key points: 1. Contract focuses on essential spare parts for the KC-46 tanker aircraft. 2. Awarded to Velo Aviation LLC, a small business, under a full and open competition. 3. Delivery order period is relatively short, spanning from March 2025 to December 2025. 4. The contract type is Firm Fixed Price, indicating predictable costs for the government. 5. This award represents a small portion of the overall KC-46 program spending. 6. The specific parts and their criticality will determine the true value-for-money. 7. Competition dynamics appear healthy with 6 bidders vying for this delivery order.

Value Assessment

Rating: good

The contract value of $5.6 million for initial spares for a major aircraft program like the KC-46 appears reasonable. Benchmarking against similar spare parts contracts for large military aircraft is challenging without more specific part details. However, the firm fixed-price structure suggests that the government has secured predictable costs for these initial spares, which is a positive indicator of value. The number of bidders (6) also suggests a competitive environment that likely contributed to a fair price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This delivery order was awarded under full and open competition, with six bids received. This indicates that the solicitation was widely advertised, allowing any qualified vendor to submit a proposal. The presence of multiple bidders suggests a healthy level of competition, which typically drives down prices and encourages innovation. The Air Force's decision to use full and open competition for these critical spares is a standard and effective procurement strategy.

Taxpayer Impact: A full and open competition ensures that taxpayers benefit from the most competitive pricing available, as multiple companies vied to win the contract. This process helps prevent overpayment and promotes efficient use of government funds.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the KC-46 Pegasus tanker aircraft. This contract will ensure the availability of critical spare parts, supporting the operational readiness of the KC-46 fleet. The geographic impact is primarily at Travis AFB and Tinker AFB, where the spares will be delivered. The contract supports the aerospace manufacturing and logistics sectors, potentially involving skilled labor in parts production and distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Ensuring the quality and reliability of the initial spares is crucial for aircraft safety.
Dependence on a single prime contractor for these specific parts could pose future risks if not managed.
The long-term sustainment strategy for KC-46 spares needs to be robust beyond this initial award.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Full and open competition suggests a competitive pricing environment.
Award to Velo Aviation LLC, a small business, aligns with federal small business goals.
The contract addresses a critical need for initial spares for a key military asset.

Sector Analysis

The aerospace parts manufacturing sector is a significant component of the defense industrial base. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category. The market for military aircraft spares is characterized by specialized production, stringent quality requirements, and often long-term sustainment needs. Spending on aircraft parts is a substantial portion of the Department of Defense's overall procurement budget, with significant investments made in maintaining the readiness of aging and new aircraft fleets.

Small Business Impact

Although Velo Aviation LLC is a small business, this contract was awarded under full and open competition, not specifically as a small business set-aside. This means that while a small business was selected, the opportunity was open to all qualified large and small businesses. The implications for the broader small business ecosystem are that opportunities exist for small businesses to compete and win prime contracts, but they must be competitive against larger firms. Subcontracting opportunities may arise, but are not explicitly mandated by the contract type.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. They will monitor delivery schedules, quality of parts, and adherence to contract terms. Transparency is facilitated through contract award databases like SAM.gov. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse. The firm fixed-price nature of the contract simplifies some aspects of financial oversight.

Related Government Programs

KC-46 Pegasus Tanker Aircraft Program
Air Force Aircraft Parts Procurement
Defense Logistics Agency (DLA) Spare Parts Management
Aerospace Manufacturing Contracts
Department of Defense Supply Chain Management

Risk Flags

Supply Chain Risk
Quality Assurance Risk
Delivery Schedule Risk
Long-term Availability Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.6 million to VELO AVIATION LLC. DELIVERY ORDER FOR KC-46 INITIAL SPARES (KIS) TRAVIS AFB AND TINKER AFB (SMALL BUSINESS SET-ASIDE) VELO AVIATION.

Who is the contractor on this award?

The obligated recipient is VELO AVIATION 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 $5.6 million.

What is the period of performance?

Start: 2025-03-24. End: 2025-12-05.

What is the track record of Velo Aviation LLC in delivering aircraft parts to the Department of Defense?

Information regarding Velo Aviation LLC's specific track record in delivering aircraft parts to the Department of Defense is not readily available in the provided data snippet. A deeper dive into contract databases and performance reviews would be necessary to assess their past performance, on-time delivery rates, quality of products, and overall customer satisfaction with previous DoD contracts. Understanding their experience with similar types of aircraft parts and their capacity to meet stringent military specifications would be crucial for a comprehensive assessment of their reliability as a contractor for this KC-46 spares delivery order.

How does the $5.6 million award compare to the total lifecycle cost of KC-46 spare parts?

The $5.6 million award for initial spares represents a very small fraction of the total lifecycle cost for KC-46 spare parts. The KC-46 program is a multi-billion dollar initiative, and the sustainment phase, which includes spare parts, often accounts for a significant portion of the overall program expenditure over its decades-long operational life. This specific award is for 'initial' spares, suggesting it covers the early operational needs as the fleet is fielded. Comprehensive lifecycle cost analyses for the KC-46 program would detail projected spending on spares, maintenance, and upgrades over the aircraft's service life, placing this $5.6 million award in the context of a much larger, long-term investment.

What are the primary risks associated with the delivery of these initial spare parts?

The primary risks associated with the delivery of these initial spare parts include potential delays in manufacturing or delivery, quality control issues that could lead to non-conforming parts, and supply chain disruptions. For 'initial' spares, there's also a risk that the exact quantities and types of parts needed might be underestimated, leading to further urgent procurement actions. Ensuring that the parts meet stringent military specifications and are compatible with the KC-46 systems is paramount. Furthermore, the long-term availability and cost of these parts beyond the initial award period represent a strategic risk that needs ongoing management.

What is the expected impact of these spares on the operational readiness of the KC-46 fleet?

The expected impact of these initial spares on the operational readiness of the KC-46 fleet is positive and significant. By ensuring the availability of critical components from the outset, this contract helps mitigate the risk of aircraft downtime due to part shortages. This directly supports the Air Force's ability to deploy and sustain the KC-46 tanker for its intended missions, whether refueling other aircraft, aeromedical evacuation, or strategic airlift. Adequate initial spares are foundational for establishing a reliable maintenance and support infrastructure, thereby enhancing the overall mission capability and readiness posture of the fleet.

How has spending on KC-46 spare parts evolved over the program's history?

Spending on KC-46 spare parts has likely evolved in phases, corresponding to the aircraft's development, testing, initial fielding, and operational deployment. Early spending would have focused on development and testing spares. As the aircraft entered initial operational capability, spending would increase for 'initial spares' like this award, intended to build up the initial inventory. Future spending will likely shift towards sustainment spares, driven by operational usage, wear and tear, and potential upgrades. Detailed historical spending data would reveal trends in procurement quantities, types of parts purchased, and the associated costs over time, reflecting the program's maturity.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4202 SORRENTO VALLEY BLVD, SAN DIEGO, CA, 92121

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $5,637,471

Exercised Options: $5,637,471

Current Obligation: $5,637,471

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA860922DB012

IDV Type: IDC

Timeline