DoD's $18.9M conveyor kit contract awarded to AAR Supply Chain, Inc. lacked competition

Contract Overview

Contract Amount: $18,903,450 ($18.9M)

Contractor: AAR Supply Chain, Inc

Awarding Agency: Department of Defense

Start Date: 2007-10-12

End Date: 2011-02-04

Contract Duration: 1,211 days

Daily Burn Rate: $15.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CONVEYOR KIT, CARGO

Place of Performance

Location: WOOD DALE, DUPAGE County, ILLINOIS, 60191

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $18.9 million to AAR SUPPLY CHAIN, INC for work described as: CONVEYOR KIT, CARGO Key points: 1. The contract's value of $18.9 million for conveyor kits and cargo handling equipment was awarded without competitive bidding. 2. AAR Supply Chain, Inc. secured this contract, which ran from October 2007 to February 2011. 3. The firm fixed-price contract type suggests a defined scope and cost structure. 4. The contract was managed by the Defense Logistics Agency (DLA) under the 'NOT COMPETED' category. 5. The North American Industry Classification System (NAICS) code 333922 indicates the manufacturing of conveyor and conveying equipment. 6. The contract's duration of 1211 days (approximately 3.3 years) provided a significant period for delivery and service. 7. The contract was awarded in Illinois, with the ultimate destination code 'IL' suggesting it was destined for Illinois.

Value Assessment

Rating: questionable

Benchmarking the value of this specific conveyor kit contract is challenging due to the lack of competitive data. Without multiple bids, it's difficult to ascertain if the $18.9 million price represented fair market value. The firm fixed-price structure implies cost certainty for the government, but the absence of competition raises concerns about potential overpayment. Further analysis would require comparing the specific components and quantities to similar procurements, which are not readily available in this dataset.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly categorized as 'NOT COMPETED,' indicating a sole-source award. There is no information provided on the number of bidders or the solicitation process. This lack of competition means that the Defense Logistics Agency did not explore multiple vendor options, potentially limiting price discovery and innovation. The rationale for a sole-source award is not detailed, which is a significant gap in understanding the procurement's justification.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from the price reductions typically achieved through competitive bidding. This limits the government's ability to secure the best possible value for public funds.

Public Impact

The Department of Defense benefits from the acquisition of essential conveyor and cargo handling equipment for its logistical operations. The contract supports the Defense Logistics Agency's mission to provide supply chain management and support to the military services. The geographic impact is primarily within the defense sector, ensuring operational readiness and efficiency. Workforce implications are likely within the manufacturing and supply chain sectors related to conveyor equipment production and distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and suboptimal value for taxpayer dollars.
Absence of a competitive process limits transparency and the ability to verify fair market pricing.
The specific justification for a sole-source award is not provided, hindering a full assessment of necessity.
Limited data on performance metrics or contractor track record within this specific award context.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government once awarded.
Awarded to AAR Supply Chain, Inc., a known entity in the supply chain sector.
The contract supported critical defense logistics operations.

Sector Analysis

The manufacturing of conveyor and conveying equipment falls under the broader industrial machinery sector. This sector is crucial for logistics, warehousing, and manufacturing operations across various industries, including defense. The market size for such equipment is substantial, driven by automation trends and the need for efficient material handling. This contract represents a specific procurement within the defense logistics sub-sector, highlighting the government's reliance on specialized equipment manufacturers to maintain operational capabilities.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. The award was made to AAR Supply Chain, Inc., and the 'sb' field is false, suggesting it is not a small business. Without specific subcontracting plans or set-aside requirements, the direct impact on the small business ecosystem from this particular award is likely minimal, though the prime contractor's own supply chain may involve small businesses.

Oversight & Accountability

Oversight for this contract would have been managed by the Defense Logistics Agency (DLA). As a sole-source award, the primary oversight focus would likely be on ensuring delivery according to the firm fixed-price terms and specifications. Transparency is limited due to the lack of a competitive bidding process. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Defense Logistics Agency Procurement
Cargo Handling Equipment
Supply Chain Management Services
Industrial Machinery Manufacturing
Federal Sole-Source Contracts

Risk Flags

Sole-source award without clear justification
Potential lack of competitive pricing
Limited transparency in procurement process

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.9 million to AAR SUPPLY CHAIN, INC. CONVEYOR KIT, CARGO

Who is the contractor on this award?

The obligated recipient is AAR SUPPLY CHAIN, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $18.9 million.

What is the period of performance?

Start: 2007-10-12. End: 2011-02-04.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. However, the specific justification for this determination is not included in the dataset. Typically, sole-source awards are justified when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. Without further documentation from the Defense Logistics Agency, the precise rationale remains unknown. This lack of transparency is a concern, as it prevents an independent assessment of whether competition was genuinely not feasible or if it was bypassed for other reasons, potentially impacting the value obtained for taxpayer funds.

How does the $18.9 million contract value compare to similar procurements for conveyor kits?

Direct comparison of the $18.9 million contract value for conveyor kits is difficult without access to a broader dataset of similar procurements, especially those awarded competitively. The 'NOT COMPETED' status means there were no alternative bids to establish a market price benchmark for this specific award. To assess value for money, one would need to analyze the specific technical specifications, quantities, and duration of this contract and compare them against other DLA or DoD contracts for comparable equipment. Factors like inflation, technological advancements, and differing contract terms (e.g., maintenance, installation) would also need to be considered for a meaningful comparison, which is not possible with the current data.

What are the potential risks associated with awarding a contract of this magnitude without competition?

Awarding a contract of $18.9 million without competition presents several risks. Primarily, there is a heightened risk of overpaying for the goods or services, as the government does not benefit from the price reductions typically driven by competitive bidding. This lack of competition can also lead to reduced innovation, as contractors may have less incentive to offer superior solutions or cost-saving measures. Furthermore, it raises concerns about transparency and accountability, making it harder to ensure that the chosen contractor is the most capable and that the terms are truly in the government's best interest. The absence of a competitive process can also set a precedent for future sole-source awards.

What was the performance history of AAR Supply Chain, Inc. under this specific contract?

The provided data includes the award date (2007-10-12) and end date (2011-02-04) for the contract with AAR Supply Chain, Inc., indicating a duration of 1211 days. However, it does not contain specific performance metrics, delivery success rates, quality assessments, or any details regarding contractor performance during the contract period. To evaluate AAR Supply Chain, Inc.'s performance, one would need to access contract performance reports, payment histories, and any documented issues or commendations related to this specific $18.9 million award. Without such information, assessing their track record on this particular contract is not possible.

How does this contract fit into the broader spending patterns of the Defense Logistics Agency for conveyor equipment?

This $18.9 million contract represents a significant, albeit non-competed, expenditure by the Defense Logistics Agency (DLA) for conveyor kits and cargo handling equipment. Analyzing its place within broader spending patterns would require examining historical DLA procurement data for similar items over several fiscal years. Understanding whether this was a one-time large purchase, part of a sustained need, or an anomaly due to the sole-source award is crucial. If the DLA frequently procures similar equipment, especially through competitive means, this contract's non-competed nature and value become more noteworthy. Without comparative data on overall DLA spending for logistics equipment, it's difficult to contextualize this single award effectively.

Industry Classification

NAICS: Manufacturing › Other General Purpose Machinery Manufacturing › Conveyor and Conveying Equipment Manufacturing

Product/Service Code: MATERIALS HANDLING EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ07R0615

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Aarcorp (UEI: 005425814)

Address: 1100 N WOOD DALE RD, WOOD DALE, IL, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $28,926,000

Exercised Options: $18,903,450

Current Obligation: $18,903,450

Contract Characteristics

Cost or Pricing Data: NO

Timeline