DoD's $44.4M contract for aircraft equipment maintenance awarded to MTC Technologies Inc. shows potential value concerns

Contract Overview

Contract Amount: $44,429,224 ($44.4M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2005-09-16

End Date: 2009-05-19

Contract Duration: 1,341 days

Daily Burn Rate: $33.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200511!000165!5700!FA8223!OO-ALC/PKT/YWK !F0960301D0209 !A!N! !Y!QP38 ! !20050916!20060930!122525991!122525991!110341133!N!MTC TECHNOLOGIES INC !4032 LINDEN AVE !DAYTON !OH!45432!21000!113!39!DAYTON !MONTGOMERY !OHIO !+000004202297!N!N!000000000000!J069!MAINT & REPAIR OF EQ/TRAINING AIDS & DEVICES !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !611519!E! !5!B!S! ! ! !20200930!B! ! !A! !A!U!J!2!001!B! !C!Y!Z! ! !N!B!N!N! ! !A! !A!A!000!A!B!N! ! ! !Y! ! !0001! !

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $44.4 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: 200511!000165!5700!FA8223!OO-ALC/PKT/YWK !F0960301D0209 !A!N! !Y!QP38 ! !20050916!20060930!122525991!122525991!110341133!N!MTC TECHNOLOGIES INC !4032 LINDEN AVE !DAYTON !OH!45432!21000!113!39!DAYTON !MONT… Key points: 1. The contract's value appears high relative to its duration and scope, warranting further investigation into cost-effectiveness. 2. Competition dynamics are unclear, as the contract type is listed as 'FULL AND OPEN COMPETITION' but only one awardee is identified. 3. Risk indicators are moderate, with a long performance period and a significant dollar amount, suggesting potential for cost overruns or performance issues. 4. Performance context is limited, focusing on maintenance and repair of training aids and devices, which is a critical but specific function. 5. Sector positioning is within the Defense industrial base, specifically supporting aircraft equipment, a high-priority area for national security. 6. The contract's duration of over 3 years suggests a need for sustained support, but also increases the risk of price escalation.

Value Assessment

Rating: questionable

The total award amount of $44.4 million over approximately 3.7 years (1341 days) averages to roughly $12 million per year. Without specific details on the scope of 'MAINT & REPAIR OF EQ/TRAINING AIDS & DEVICES', it is difficult to benchmark against similar contracts. However, the per-year cost seems substantial for maintenance and repair, especially considering the contract is for training aids and devices rather than primary aircraft systems. Further analysis of the specific equipment maintained and the labor hours/rates would be necessary to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract is listed as 'FULL AND OPEN COMPETITION', indicating that all responsible sources were permitted to submit offers. However, the provided data only shows one awardee, MTC TECHNOLOGIES INC. It is unclear from this data alone how many bids were received or if other qualified bidders chose not to submit. A full and open competition is generally expected to yield competitive pricing, but the absence of information on the number of bidders makes it difficult to assess the effectiveness of this competition in driving down costs.

Taxpayer Impact: While a full and open competition is intended to benefit taxpayers by fostering a competitive environment that can lead to lower prices, the lack of transparency regarding the number of bids received prevents a definitive conclusion on whether taxpayers received the best possible value in this instance.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel who rely on functional training aids and devices for effective military preparation. Services delivered include the maintenance and repair of aircraft equipment, specifically training aids and devices, ensuring their operational readiness. The geographic impact is likely concentrated around the bases or facilities where MTC Technologies Inc. operates to provide these maintenance services, potentially within Ohio based on the contractor's address. Workforce implications include the creation or sustainment of jobs for technicians and support staff involved in the maintenance and repair of specialized equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns given the significant contract value and duration.
Lack of clarity on the number of bidders in a 'full and open' competition raises questions about price discovery.
The specific nature of 'training aids and devices' might limit the pool of qualified contractors, potentially impacting competition.
The contract's duration could lead to price increases over time if not managed effectively.

Positive Signals

Awarded under a 'full and open competition' framework, suggesting an effort to maximize contractor availability.
The contract specifies 'FIRM FIXED PRICE', which shifts cost risk to the contractor and provides budget certainty.
The contractor, MTC TECHNOLOGIES INC., is identified, allowing for track record assessment.
The contract is for maintenance and repair, a necessary function for operational readiness of training equipment.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically supporting the maintenance and repair of aircraft-related equipment. The market for defense maintenance, repair, and overhaul (MRO) services is substantial, driven by the need to maintain aging fleets and complex training systems. Comparable spending benchmarks would typically involve analyzing the costs associated with similar MRO contracts for training devices and aircraft components across different branches of the military. The industry is characterized by specialized technical expertise and stringent quality requirements.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications mandated by a small business set-aside. The primary contractor, MTC TECHNOLOGIES INC., is likely a mid-to-large-sized business. The absence of a small business set-aside means that opportunities for small businesses to participate in this contract would depend on the prime contractor's voluntary subcontracting efforts or if they are part of a larger supply chain that includes small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. DCMA is responsible for ensuring contractor compliance with contract terms, quality standards, and delivery schedules. Accountability measures are embedded in the 'FIRM FIXED PRICE' contract type, which incentivizes the contractor to manage costs effectively. Transparency is generally facilitated through contract databases like FPDS, although detailed performance reports may not always be publicly accessible. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair Services
Defense Training and Simulation Equipment
Aerospace Parts and Components
Government Contracting Support Services
Military Readiness Programs

Risk Flags

Potential for high cost relative to scope/duration.
Unclear number of bidders despite 'full and open' competition.
Long contract duration increases risk of price escalation.
Contractor performance history requires verification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.4 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. 200511!000165!5700!FA8223!OO-ALC/PKT/YWK !F0960301D0209 !A!N! !Y!QP38 ! !20050916!20060930!122525991!122525991!110341133!N!MTC TECHNOLOGIES INC !4032 LINDEN AVE !DAYTON !OH!45432!21000!113!39!DAYTON !MONTGOMERY !OHIO !+000004202297!N!N!000000000000!J069!MAINT & REPAIR OF EQ/TRAINING AIDS & DEVICES !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !611519!E! !5!B!S! ! ! !202

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $44.4 million.

What is the period of performance?

Start: 2005-09-16. End: 2009-05-19.

What is the specific nature of the 'TRAINING AIDS & DEVICES' being maintained under this contract, and what is their criticality to DoD operations?

The contract specifies 'MAINT & REPAIR OF EQ/TRAINING AIDS & DEVICES' under the PSC code 611519 (Training Aids). This category typically includes simulators, mock-ups, diagnostic equipment, and other specialized devices used to train military personnel on aircraft operation, maintenance, and combat systems. Their criticality lies in ensuring that personnel receive realistic and effective training without risking actual equipment or personnel. Malfunctioning training aids can lead to reduced training effectiveness, delays in personnel readiness, and potentially impact operational preparedness. The specific types of devices covered under this $44.4 million contract would range from flight simulators to virtual reality training environments and diagnostic test equipment for aircraft systems.

How does the average annual cost of $12 million for this contract compare to industry benchmarks for similar maintenance and repair services for defense training equipment?

Benchmarking the average annual cost of $12 million for this contract requires detailed knowledge of the specific training aids and devices covered, their complexity, and the scope of maintenance required (e.g., scheduled vs. unscheduled, parts replacement, software updates). Generally, the defense MRO market is expensive due to specialized labor, stringent quality controls, and the high cost of replacement parts. However, without a precise breakdown of services and equipment, a direct comparison is challenging. If these training aids are highly complex, such as full-flight simulators for advanced aircraft, then $12 million annually might be within a reasonable range. If they are simpler devices, this figure could indicate potential overpricing or a very extensive scope of work. Further investigation into the contractor's proposed labor rates and parts markup would be necessary.

Given the 'FULL AND OPEN COMPETITION' designation, why does the data only show one awardee (MTC TECHNOLOGIES INC.)?

The designation 'FULL AND OPEN COMPETITION' signifies that the solicitation was made available to all eligible sources, and any responsible contractor could submit an offer. However, it does not guarantee that multiple bids will be received or that multiple awards will be made. Several factors could explain why only one awardee is listed: 1) Only one contractor possessed the highly specialized capabilities required for this specific type of maintenance. 2) The solicitation terms or requirements may have inadvertently discouraged other potential bidders. 3) Other bidders may have submitted proposals that were deemed non-responsive or technically unacceptable. 4) The government may have negotiated with multiple parties but ultimately found only one offer to be the best value. Without access to the solicitation details and bid tabulation, the exact reason remains speculative.

What are the potential risks associated with a 'FIRM FIXED PRICE' contract of this magnitude and duration for maintenance services?

A 'FIRM FIXED PRICE' (FFP) contract shifts the primary cost risk to the contractor, which is generally favorable for the government as it provides budget certainty. However, for a contract of $44.4 million over 3.7 years, risks remain. If the contractor underestimated the labor, parts, or logistical costs involved in maintaining the training aids, they could incur losses, potentially leading to quality compromises to protect their profit margin. Conversely, if the initial price was set too high due to inadequate competition or flawed cost estimation by the government, taxpayers could overpay. Another risk is contractor default or poor performance, which, under FFP, can be more complex to manage than under cost-reimbursement contracts, potentially leading to delays and the need for contract termination and re-competition.

What is the track record of MTC TECHNOLOGIES INC. in performing similar maintenance and repair contracts for the Department of Defense?

Information regarding MTC TECHNOLOGIES INC.'s specific track record for similar DoD maintenance and repair contracts is not directly available in the provided data snippet. To assess their performance history, one would need to consult comprehensive federal procurement databases (like FPDS or SAM.gov) to review past contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or contract modifications. A positive track record with successful past performance on comparable contracts would increase confidence in their ability to execute this current $44.4 million award effectively. Conversely, a history of performance issues or contract disputes would raise concerns about the reliability of MTC TECHNOLOGIES INC. for this significant undertaking.

How does the duration of this contract (1341 days) impact the assessment of its value and potential for price escalation?

A contract duration of 1341 days (approximately 3.7 years) for maintenance and repair services necessitates careful consideration of value and price escalation. On one hand, a longer duration can provide stability and predictability for both the government and the contractor, potentially leading to efficiencies and economies of scale. It allows the contractor to invest in specialized personnel and equipment. On the other hand, extended periods increase the risk of price escalation, especially if the contract includes provisions for economic price adjustments or if market prices for labor and parts increase significantly over time. For a Firm Fixed Price contract, the initial price should ideally account for anticipated cost changes. However, unforeseen market volatility or changes in the scope of work could still impact the overall value realization for the government over the contract's life.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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