Air Force awards $37M for air transportation, with Virgin Orbit National Systems as contractor

Contract Overview

Contract Amount: $37,039,365 ($37.0M)

Contractor: Virgin Orbit National Systems, LLC

Awarding Agency: Department of Defense

Start Date: 2020-04-10

End Date: 2023-07-31

Contract Duration: 1,207 days

Daily Burn Rate: $30.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: STP-S28 MISSION TASK ORDER

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $37.0 million to VIRGIN ORBIT NATIONAL SYSTEMS, LLC for work described as: STP-S28 MISSION TASK ORDER Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract duration of 1207 days indicates a long-term need for these services. 3. The firm-fixed-price contract type shifts cost risk to the contractor. 4. The award amount of $37M falls within a moderate spending range for specialized transportation services. 5. The specific service is 'Nonscheduled Chartered Freight Air Transportation', highlighting a niche requirement. 6. The contractor, Virgin Orbit National Systems, LLC, is a key player in this specialized sector.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the freight transported and the routes covered. The firm-fixed-price structure is generally favorable for the government, locking in costs. However, the absence of detailed performance metrics or comparisons to similar chartered freight services makes a definitive value assessment difficult. The price appears reasonable given the specialized nature of nonscheduled air freight, but further analysis of unit costs or equivalent market rates would be beneficial.

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 a bid. The presence of 5 bidders suggests a healthy level of interest and competition for this specialized air transportation service. This competitive environment is generally expected to drive more favorable pricing and service offerings for the government.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which aims to secure the best possible price and service for the government's needs in nonscheduled chartered freight air transportation.

Public Impact

The Department of the Air Force is the primary beneficiary, receiving essential air transportation services. The services delivered include nonscheduled chartered freight air transportation, likely for critical or time-sensitive cargo. The geographic impact is likely global or at least extensive, given the nature of air freight. Workforce implications may include support staff for logistics, flight operations, and cargo handling.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen logistical challenges arise, despite fixed-price structure.
Dependence on a single contractor for a critical service could pose a risk if performance issues emerge.
Limited transparency on the specific types of freight being transported and their strategic importance.

Positive Signals

Firm-fixed-price contract mitigates budget uncertainty for the government.
Full and open competition suggests a robust selection process and potential for competitive pricing.
Contract duration indicates a stable, long-term requirement being met.

Sector Analysis

The nonscheduled chartered freight air transportation sector is a specialized segment of the broader aviation and logistics industry. It caters to urgent, unique, or high-value cargo needs that cannot be met by scheduled carriers. This contract fits within the defense logistics and support services sector, where rapid and flexible transportation is often critical. Comparable spending benchmarks are difficult to establish without knowing the specific cargo and routes, but the overall market for specialized air cargo is significant.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). Therefore, the primary contractor, Virgin Orbit National Systems, LLC, is likely responsible for managing subcontracting opportunities. Analysis of their subcontracting plan and performance would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract terms, with penalties or remedies for non-performance. Transparency is generally maintained through contract award databases, though specific operational details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Air Transport Services
Logistics and Supply Chain Management
Specialized Freight Services
Department of Defense Procurement

Risk Flags

Contractor performance history
Market rate comparison for specialized air freight
Specific cargo details and strategic importance
Contingency planning for service disruptions

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.0 million to VIRGIN ORBIT NATIONAL SYSTEMS, LLC. STP-S28 MISSION TASK ORDER

Who is the contractor on this award?

The obligated recipient is VIRGIN ORBIT NATIONAL SYSTEMS, 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 $37.0 million.

What is the period of performance?

Start: 2020-04-10. End: 2023-07-31.

What is the track record of Virgin Orbit National Systems, LLC in fulfilling similar government contracts?

Virgin Orbit National Systems, LLC, has a background primarily associated with launch services for small satellites. While their expertise in aerospace is evident, their specific track record in providing 'Nonscheduled Chartered Freight Air Transportation' for the Department of Defense, as indicated by this contract, requires further investigation. Government contract databases and performance reports would be the primary sources to assess their past performance, on-time delivery rates, and any past issues or commendations related to freight transportation services. Understanding their experience with similar cargo types, operational tempo, and geographic reach is crucial for evaluating their capability to meet the demands of this specific contract.

How does the awarded price of $37,039,365 compare to market rates for similar nonscheduled air freight services?

Determining the precise value for money requires a detailed comparison against market rates for nonscheduled chartered freight air transportation. This involves analyzing the specific types of aircraft used, flight hours, cargo weight and volume, and the routes covered. Without this granular data, a direct comparison is difficult. However, the firm-fixed-price nature of the contract suggests that the government has negotiated a set price. Benchmarking against industry reports on charter rates for similar missions, considering factors like urgency and specialized handling requirements, would provide a more concrete assessment. The number of bidders (5) also suggests that the price was competitive within the market.

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

Key risks include potential performance failures by the contractor, such as delays or inability to transport specific cargo, and unforeseen cost increases if the fixed-price contract doesn't adequately account for all variables. Geopolitical instability or changes in air traffic regulations could also impact operations. Mitigation strategies are likely embedded in the contract terms, including performance standards, reporting requirements, and potential penalties for non-compliance. The government's oversight mechanisms and the contractor's own risk management processes are crucial for addressing these potential issues. The firm-fixed-price structure itself mitigates budget risk for the government.

What is the expected effectiveness of this contract in meeting the Air Force's air transportation needs?

The effectiveness of this contract hinges on the contractor's ability to consistently provide reliable and timely nonscheduled chartered freight air transportation. Given the duration (1207 days) and the firm-fixed-price structure, the expectation is that the Air Force has secured a dedicated and cost-certain solution for its specialized freight needs over an extended period. The success will be measured by the contractor's adherence to delivery schedules, the condition of cargo upon arrival, and the overall responsiveness to mission requirements. The competitive award process suggests a strong likelihood of meeting these needs effectively.

How has historical spending on nonscheduled chartered freight air transportation by the Department of Defense trended?

Historical spending on nonscheduled chartered freight air transportation by the Department of Defense can fluctuate significantly based on global operational tempo, specific mission requirements, and the availability of organic airlift assets. While specific aggregate data for this niche service is not readily available in this summary, the DoD consistently invests in flexible and rapid transportation solutions. Trends may show increased reliance during periods of heightened conflict or for rapid deployment of specialized equipment. Analyzing past contracts of similar scope and duration would reveal patterns in spending, contractor selection, and pricing dynamics within this specialized segment of defense logistics.

What is the strategic importance of the services provided under this contract?

The strategic importance of nonscheduled chartered freight air transportation lies in its ability to provide rapid, flexible, and often covert movement of critical assets, personnel, or supplies that cannot be accommodated by standard logistical channels. For the Air Force, this could involve deploying specialized equipment, urgent medical supplies, or high-priority components to remote or austere locations. The 'nonscheduled' nature implies a need for on-demand capability, crucial for maintaining operational readiness and responding effectively to evolving global security challenges. The contract's value and duration suggest a sustained strategic requirement.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Freight Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 840 APOLLO ST STE 100, EL SEGUNDO, CA, 90245

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

Financial Breakdown

Contract Ceiling: $37,249,791

Exercised Options: $37,249,791

Current Obligation: $37,039,365

Actual Outlays: $1,750,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA881820D0007

IDV Type: IDC

Timeline