DoD's $12.25M contract for F-16 spares awarded to Modern Technologies Corp. shows potential value concerns

Contract Overview

Contract Amount: $14,009,926 ($14.0M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2002-09-19

End Date: 2013-05-30

Contract Duration: 3,906 days

Daily Burn Rate: $3.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200211!000319!5700!GE37 !OO-ALC/LGFD !F0960301D0209 !A!N! !N!QP08 !20020919!20030531!122525991!122525991!110341133!N!MODERN TECHNOLOGIES CORP !4032 LINDEN AVE !DAYTON !OH!45432!21000!113!39!DAYTON !MONTGOMERY !OHIO !+000000075000!N!N!000000000000!1680!MSL AIRCRAFT ACCESSORIES AND COMPONENTS !A1A!AIRFRAMES AND SPARES !3AFH!F-16 FALCON !336411!E! !5!B!M! !A! !99990909!B! ! !A! !A!U!J!2!004!B! !A!N!Z! ! !N!B!N!N! ! !A! !A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $14.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: 200211!000319!5700!GE37 !OO-ALC/LGFD !F0960301D0209 !A!N! !N!QP08 !20020919!20030531!122525991!122525991!110341133!N!MODERN TECHNOLOGIES CORP !4032 LINDEN AVE !DAYTON !OH!45432!21000!113!39!DAYTON !MONTG… Key points: 1. The contract's value appears high relative to the duration and quantity of items, suggesting potential overpricing. 2. Limited competition information available, but the award was made under full and open competition. 3. The contract's duration of over 10 years raises questions about long-term price stability and market responsiveness. 4. Performance context is limited, but the award suggests the contractor met initial requirements for aircraft components. 5. This contract falls within the Defense sector, specifically supporting aircraft manufacturing and maintenance. 6. The absence of small business set-aside indicates a focus on larger prime contractors for this requirement.

Value Assessment

Rating: questionable

The total contract value of $12.25 million for 39 months of performance, with 4 delivery orders, appears high. Benchmarking against similar contracts for F-16 spare parts is difficult without more detailed itemization. However, the average annual spend of approximately $3.14 million for aircraft components of this nature warrants scrutiny. The firm-fixed-price structure suggests the contractor assumed risk, but the overall cost may not reflect optimal value for taxpayer dollars given the extended period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the number of actual bidders is not specified in the provided data. A competitive process is generally positive for price discovery, but the ultimate number of participants and the specific terms offered would determine the extent of this benefit.

Taxpayer Impact: Full and open competition is intended to drive down prices through market forces, potentially leading to better value for taxpayers. However, without knowing the number of bids received, it's difficult to definitively assess the competitive pressure applied.

Public Impact

The primary beneficiaries are entities within the Department of Defense, specifically the Air Force, requiring F-16 aircraft components. The services delivered include the provision of aircraft accessories and components, crucial for maintaining the operational readiness of the F-16 fleet. The geographic impact is likely concentrated around Air Force bases and maintenance depots that operate and service F-16 aircraft. Workforce implications include support for personnel involved in aircraft maintenance, logistics, and supply chain management related to these components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the long contract duration and lack of detailed pricing breakdown.
Risk of obsolescence for certain aircraft components over the extended performance period.
Dependence on a single contractor for critical spare parts could lead to supply chain vulnerabilities.

Positive Signals

Awarded under full and open competition, suggesting a structured procurement process.
Firm-fixed-price contract type shifts cost risk to the contractor.
Contract supports the operational readiness of a key military asset (F-16).

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft components and spares. The market for military aircraft parts is often characterized by specialized suppliers and long-term sustainment contracts. The total addressable market for such components is substantial, driven by the ongoing operational needs of global air forces. Comparable spending benchmarks would typically involve analyzing the unit costs of similar parts across different military aircraft programs and defense contractors.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss=false, sb=false). This suggests the requirement was likely fulfilled by a large prime contractor or that the nature of the components did not lend itself to small business participation. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity for broader economic impact.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's contracting and financial management regulations. Accountability measures are typically embedded in the contract terms, including performance standards and delivery schedules. Transparency is facilitated through contract databases like FPDS, though detailed justifications for award and pricing are not always publicly available. Inspector General offices within the DoD would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

F-16 Fighting Falcon Sustainment Programs
Air Force Aircraft Parts and Components Procurement
Defense Logistics Agency (DLA) Aviation Supply Chain
Military Aircraft Maintenance and Repair Contracts

Risk Flags

Potential for overpricing due to long contract duration.
Limited transparency on the number of bidders.
Lack of detailed cost breakdown for components.
Risk of component obsolescence over the contract term.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. 200211!000319!5700!GE37 !OO-ALC/LGFD !F0960301D0209 !A!N! !N!QP08 !20020919!20030531!122525991!122525991!110341133!N!MODERN TECHNOLOGIES CORP !4032 LINDEN AVE !DAYTON !OH!45432!21000!113!39!DAYTON !MONTGOMERY !OHIO !+000000075000!N!N!000000000000!1680!MSL AIRCRAFT ACCESSORIES AND COMPONENTS !A1A!AIRFRAMES AND SPARES !3AFH!F-16 FALCON !336411!E! !5!B!M! !A! !99990909!B

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC..

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 $14.0 million.

What is the period of performance?

Start: 2002-09-19. End: 2013-05-30.

What is the track record of Modern Technologies Corp. in fulfilling defense contracts, particularly for aircraft components?

Modern Technologies Corporation (MTC) has a history of receiving federal contracts, primarily within the defense sector. While specific details on their performance for this particular F-16 component contract are limited in the provided data, their past awards suggest experience in supplying goods and services to government agencies. A deeper dive into their contract performance history, including any past performance evaluations, on-time delivery rates, and quality metrics for similar procurements, would be necessary to fully assess their track record. Examining any past disputes, contract modifications, or terminations could also provide valuable insights into their reliability as a contractor for critical defense supplies.

How does the awarded price compare to market rates for similar F-16 aircraft components?

Directly comparing the awarded price of $12.25 million to current market rates for similar F-16 aircraft components is challenging without a detailed breakdown of the specific parts procured under this contract. The provided data aggregates the total value over a significant period (39 months). To perform a robust comparison, one would need to identify the individual part numbers, quantities, and their respective market prices from other suppliers or through historical procurement data. Factors such as bulk purchasing discounts, specific technical requirements, and the urgency of need can influence market prices. However, the overall value suggests a substantial investment in sustainment, and benchmarking against industry price lists or competitor quotes for equivalent parts would be essential for a value-for-money assessment.

What are the primary risks associated with a long-duration contract for aircraft spare parts?

Long-duration contracts for aircraft spare parts, like this 39-month award, present several risks. Firstly, there's the risk of price escalation; while this is a firm-fixed-price contract, market conditions can change significantly over several years, potentially making the contracted price less competitive over time. Secondly, technological obsolescence is a concern; aircraft components can become outdated as newer technologies emerge or aircraft configurations change. Thirdly, the long duration might disincentivize the contractor from seeking more cost-effective production methods if they are locked into a specific price. Lastly, there's a risk of supply chain disruptions or contractor viability issues over an extended period, potentially impacting the availability of critical parts.

How effective is the firm-fixed-price contract type in ensuring value for money in this context?

The firm-fixed-price (FFP) contract type is generally favored for its ability to control costs, as it shifts the risk of cost overruns to the contractor. In the context of aircraft spare parts, FFP can be effective if the scope of work and pricing are well-defined and based on realistic cost estimates. It provides budget certainty for the government. However, the effectiveness hinges on the accuracy of the initial pricing and the contractor's ability to manage their costs efficiently throughout the contract period. If the initial price is set too high due to inadequate market research or competitive pressure, the government may end up overpaying despite the FFP structure. Conversely, if the contractor underestimates costs, they might cut corners on quality, which is a risk that needs to be managed through oversight.

What are the historical spending patterns for F-16 aircraft components within the Department of Defense?

Historical spending patterns for F-16 aircraft components within the Department of Defense typically show consistent, significant investment in sustainment and readiness. The F-16 has been a workhorse for the Air Force and allied nations for decades, necessitating ongoing procurement of spare parts, maintenance services, and upgrades. Spending often fluctuates based on operational tempo, fleet age, and modernization initiatives. Contracts for such components are frequently awarded through competitive processes, though sole-source or limited competition awards can occur for highly specialized or long-lead-time items. Analyzing past FPDS data reveals billions spent annually across various contracts supporting the F-16 fleet, with spending concentrated among major aerospace and defense contractors.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft 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: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 520 GAITHER RD, ROCKVILLE, MD, 20850

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F0960301D0209

IDV Type: IDC

Timeline