DoD's Navy Awards $31.8M Contract to AAR Airlift Group for Nonscheduled Chartered Air Transportation
Contract Overview
Contract Amount: $31,849,766 ($31.8M)
Contractor: AAR Airlift Group, Inc.
Awarding Agency: Department of Defense
Start Date: 2014-05-22
End Date: 2109-09-30
Contract Duration: 34,829 days
Daily Burn Rate: $914/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Transportation
Official Description: PER DIEM (BASE PERIOD)
Plain-Language Summary
Department of Defense obligated $31.8 million to AAR AIRLIFT GROUP, INC. for work described as: PER DIEM (BASE PERIOD) Key points: 1. The contract value of $31.8 million represents a significant investment in air transportation services. 2. AAR Airlift Group, Inc. secured this contract through full and open competition. 3. The firm fixed price contract type suggests a clear understanding of costs and potential for cost savings. 4. The long duration of the contract (over 90 years) raises questions about long-term necessity and potential for price escalation.
Value Assessment
Rating: fair
The contract's firm fixed price structure is generally favorable for cost control. However, the extended duration without clear interim reviews or adjustments could lead to prices becoming uncompetitive over time compared to market rates for similar services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded using full and open competition, which is a positive indicator for achieving competitive pricing. This method allows multiple vendors to bid, driving down costs and ensuring the government receives the best value.
Taxpayer Impact: The competitive nature of the award is intended to maximize taxpayer value by securing services at the most economical price. However, the long contract term warrants scrutiny to ensure continued value.
Public Impact
Ensures critical air transport capabilities for Department of the Navy operations. Supports logistics and deployment needs for military personnel and equipment. Provides economic activity through a contract awarded via open competition.
Waste & Efficiency Indicators
Waste Risk Score: 91 / 10
Warning Flags
- Contract duration exceeds typical service needs, potentially leading to inflated costs over time.
- Lack of specified performance metrics or review periods for price adjustments.
- Potential for market shifts in air charter services over the contract's extensive term.
Positive Signals
- Awarded through full and open competition, maximizing potential for competitive pricing.
- Firm fixed price contract type provides cost certainty.
- Long-term award may indicate stable, ongoing requirement for these services.
Sector Analysis
This contract falls within the transportation sector, specifically air charter services. Spending benchmarks for such services can vary widely based on route, aircraft type, and duration. The $31.8 million over its extended period suggests a substantial and consistent need.
Small Business Impact
The data does not indicate if small businesses were involved as subcontractors or prime contractors. Further analysis would be needed to determine the extent of small business participation in this contract.
Oversight & Accountability
The long contract duration necessitates robust oversight to ensure continued adherence to terms, fair pricing, and effective service delivery. Regular performance reviews and market comparisons are crucial for accountability.
Related Government Programs
- Nonscheduled Chartered Freight Air Transportation
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Excessive contract duration.
- Potential for price escalation over time.
- Lack of specified performance review triggers.
- Uncertainty of long-term service requirement.
- Limited visibility into market competitiveness over decades.
Tags
nonscheduled-chartered-freight-air-trans, department-of-defense, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $31.8 million to AAR AIRLIFT GROUP, INC.. PER DIEM (BASE PERIOD)
Who is the contractor on this award?
The obligated recipient is AAR AIRLIFT GROUP, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $31.8 million.
What is the period of performance?
Start: 2014-05-22. End: 2109-09-30.
What is the projected annual spending under this contract, and how does it compare to industry benchmarks for similar air charter services?
With a total value of $31,849,765.89 and a duration of 34,829 days (approximately 95.4 years), the average annual spending is roughly $333,850. This figure needs to be benchmarked against current market rates for comparable air charter services, considering aircraft type, capacity, and operational scope, to assess its competitiveness over the long term.
Given the firm fixed price, what mechanisms are in place to address potential cost overruns or market price fluctuations over the contract's extensive lifespan?
A firm fixed price contract generally shifts cost risk to the contractor. However, for a contract spanning nearly a century, mechanisms for price re-evaluation based on significant market shifts or unforeseen economic events should ideally be included. Without such clauses, the government risks paying above-market rates if inflation or market dynamics change substantially.
How effectively has AAR Airlift Group, Inc. performed under this contract, and are there performance metrics that justify the continued expenditure over such a long period?
Performance data and specific metrics are not provided. Evaluating the effectiveness requires examining delivery records, mission success rates, and any documented performance reviews. The justification for such a long-term commitment hinges on consistent, high-level performance that demonstrably meets the Department of the Navy's evolving operational needs without viable alternatives.
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: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0003314R8013
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Aarcorp (UEI: 005425814)
Address: 2301 COMMERCE PARK DR NE, PALM BAY, FL, 32905
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $32,072,655
Exercised Options: $31,909,766
Current Obligation: $31,849,766
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2014-05-22
Current End Date: 2109-09-30
Potential End Date: 2109-09-30 00:00:00
Last Modified: 2019-09-30
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