DoD awards $52.4M for KC-46 initial spare parts, with Velo Aviation LLC securing the contract

Contract Overview

Contract Amount: $52,448,525 ($52.4M)

Contractor: Velo Aviation LLC

Awarding Agency: Department of Defense

Start Date: 2025-04-25

End Date: 2027-07-27

Contract Duration: 823 days

Daily Burn Rate: $63.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 11

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KC-46 INITIAL SPARE PARTS FOR TINKER AFB 424TH (UNRESTRICTED). DELIVERY ORDER WILL BE PLACED OFF OF THE KC-46 INITIAL SPARES (KIS) MULTIPLE AWARD PROGRAM.

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $52.4 million to VELO AVIATION LLC for work described as: KC-46 INITIAL SPARE PARTS FOR TINKER AFB 424TH (UNRESTRICTED). DELIVERY ORDER WILL BE PLACED OFF OF THE KC-46 INITIAL SPARES (KIS) MULTIPLE AWARD PROGRAM. Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract is for initial spare parts, crucial for the operational readiness of the KC-46 aircraft. 3. Delivery order placed off of a multiple award program, indicating a pre-established framework for procurement. 4. The firm-fixed-price contract type shifts risk to the contractor for cost overruns. 5. The contract duration of approximately 2.7 years suggests a focused need for these specific spare parts. 6. The award value of $52.4 million is significant for a specific set of initial spare parts.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific part details and market prices. The award value of $52.4 million for initial spare parts for a major aircraft program like the KC-46 appears substantial. However, without comparable contract data for similar initial spare parts procurements or detailed cost breakdowns, a definitive value-for-money assessment is difficult. The firm-fixed-price structure is generally favorable for the government, but the actual cost-effectiveness will depend on the pricing of individual components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit bids. The data shows 11 bids were received, suggesting a healthy level of competition for this requirement. A competitive process like this generally leads to better price discovery and potentially lower costs for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: The robust competition for these KC-46 spare parts is beneficial for taxpayers, as it likely drove down prices and ensured the government received competitive offers for essential components.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the KC-46 Pegasus tanker aircraft, ensuring their operational readiness. The contract delivers critical initial spare parts necessary for the maintenance and sustainment of the KC-46 fleet. The geographic impact is primarily at Tinker Air Force Base, where the parts will likely be managed and distributed. Workforce implications may include roles in logistics, maintenance, and supply chain management related to the KC-46 program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation on individual parts if not tightly managed within the firm-fixed-price structure.
Dependence on a single contractor for a critical set of initial spare parts could pose supply chain risks.
The 'initial' nature of the spares suggests a need for ongoing, potentially separate, procurement efforts for long-term sustainment.

Positive Signals

Awarded through full and open competition with multiple bidders, indicating a competitive market.
Firm-fixed-price contract type provides cost certainty for the government.
Procurement is being conducted under an existing multiple-award program, suggesting established processes and oversight.

Sector Analysis

The aerospace and defense sector is characterized by complex supply chains and high-value procurements. The KC-46 program represents a significant investment in modernizing air refueling capabilities. This contract for initial spare parts fits within the broader ecosystem of aircraft manufacturing and sustainment, where specialized parts are crucial for maintaining fleet readiness. Comparable spending benchmarks for initial spare parts can vary widely based on aircraft type and program maturity, but multi-million dollar awards are common for major defense platforms.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). Velo Aviation LLC, the awardee, is not explicitly identified as a small business in the provided data. Therefore, the direct impact on small business set-asides appears minimal. However, the prime contractor may engage small businesses as subcontractors for specialized components or services, contributing indirectly to the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force, potentially through contracting officers and program management offices responsible for the KC-46 program. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified parts at the agreed-upon price. Transparency is facilitated by the contract award being made under full and open competition, with details available through federal procurement databases.

Related Government Programs

KC-46 Pegasus Program
Air Mobility Command Aircraft Procurement
Defense Logistics Agency (DLA) Spare Parts Management
Air Force Sustainment Center Operations

Risk Flags

Potential for supply chain disruption
Dependence on specific part availability
Quality assurance of delivered components
Long-term sustainment strategy integration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.4 million to VELO AVIATION LLC. KC-46 INITIAL SPARE PARTS FOR TINKER AFB 424TH (UNRESTRICTED). DELIVERY ORDER WILL BE PLACED OFF OF THE KC-46 INITIAL SPARES (KIS) MULTIPLE AWARD PROGRAM.

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 $52.4 million.

What is the period of performance?

Start: 2025-04-25. End: 2027-07-27.

What is the track record of Velo Aviation LLC in fulfilling government contracts, particularly for aircraft parts?

Information regarding Velo Aviation LLC's specific track record with government contracts, especially for aircraft parts, is not detailed in the provided data snippet. A comprehensive assessment would require reviewing historical contract awards, performance reviews (e.g., Contractor Performance Assessment Reporting System - CPARS), and any past issues or successes. Without this historical context, it's difficult to gauge their reliability and experience in delivering similar components. Further research into their contract history with the Department of Defense and other federal agencies would be necessary to evaluate their performance.

How does the $52.4 million award compare to typical spending on initial spare parts for new aircraft programs?

The $52.4 million award for initial spare parts for the KC-46 is substantial but falls within the expected range for major defense acquisition programs. Initial spare parts are critical for the early operational phase of any new aircraft, covering immediate maintenance needs before long-term sustainment strategies are fully established. For comparison, other programs like the F-35 or B-21 might see initial spare parts procurements in the tens to hundreds of millions of dollars, depending on the complexity and quantity of parts required. The 'initial' designation suggests this is a one-time or limited-duration procurement to bridge the gap until a more comprehensive sustainment plan is in place.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks include potential supply chain disruptions for specific parts, quality control issues, and price volatility if not managed effectively within the firm-fixed-price structure. Mitigation strategies are embedded in the contract's structure and oversight. The firm-fixed-price nature shifts cost overrun risk to the contractor. The use of a multiple-award program framework suggests pre-vetted capabilities and potentially established quality standards. Furthermore, the full and open competition likely selected a capable vendor. Ongoing government oversight, inspection of delivered parts, and performance monitoring are crucial for mitigating these risks throughout the contract period.

How effective is the current procurement strategy for KC-46 spare parts in ensuring long-term fleet readiness?

This contract addresses the 'initial' spare parts need, which is crucial for the early operational phase of the KC-46 fleet. Its effectiveness in ensuring long-term readiness depends on how well it integrates with the broader sustainment strategy. The fact that it's a delivery order off a multiple-award program suggests a structured approach. However, long-term readiness will rely on subsequent contracts for sustainment spares, maintenance, and repair services. The current strategy's effectiveness for the long haul will be determined by the overall lifecycle management plan for the KC-46, including forecasting future part needs and ensuring a robust supply chain beyond this initial procurement.

What are the historical spending patterns for KC-46 spare parts, and how does this award fit in?

As the KC-46 program is still relatively early in its operational lifecycle, historical spending patterns for spare parts may be limited compared to more mature platforms. This $52.4 million award represents a significant portion of the 'initial' spare parts procurement, likely covering a critical set of components needed as the fleet expands and operational tempo increases. Future spending will likely involve sustainment spares, depot-level maintenance, and potentially upgrades. Understanding the full historical context would require analyzing all previous KC-46 spare parts contracts, including those for development and initial fielding, to see how this award aligns with projected needs and overall program costs.

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: 11

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: $52,448,525

Exercised Options: $52,448,525

Current Obligation: $52,448,525

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