DoD awards $17M for aircraft auxiliary power units, with delivery orders extending through May 2027

Contract Overview

Contract Amount: $17,079,005 ($17.1M)

Contractor: Defense Systems and Solutions

Awarding Agency: Department of Defense

Start Date: 2024-09-16

End Date: 2027-05-31

Contract Duration: 987 days

Daily Burn Rate: $17.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: H-60L/M/V AUXILIARY POWER CONTROL UNIT

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35808

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $17.1 million to DEFENSE SYSTEMS AND SOLUTIONS for work described as: H-60L/M/V AUXILIARY POWER CONTROL UNIT Key points: 1. Contract awarded to Defense Systems and Solutions for critical aircraft components. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Full and Open Competition after Exclusion of Sources indicates a competitive process, but with specific exclusions. 4. The contract duration is substantial, spanning nearly 1000 days, requiring sustained oversight. 5. The North American Industry Classification System (NAICS) code 336413 points to a specialized manufacturing sector. 6. The contract is a Delivery Order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: fair

Benchmarking the value for this specific auxiliary power control unit is challenging without detailed technical specifications and performance requirements. The Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk for cost escalation, as the contractor is reimbursed for allowable costs plus a fixed fee. This contrasts with fixed-price contracts, which offer greater cost certainty to the government. Further analysis would require comparing the fixed fee percentage and the projected costs against similar procurements for comparable aircraft components to determine true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be broad, certain sources were excluded from the outset. The specific reasons for these exclusions are not detailed but could relate to proprietary technology, specific manufacturing capabilities, or national security concerns. The level of competition, therefore, may be less than true full and open competition, potentially impacting price discovery.

Taxpayer Impact: The exclusion of certain sources, even in a competitive process, could limit the government's ability to secure the absolute lowest price. Taxpayers may pay more if the excluded sources could have offered a more competitive bid.

Public Impact

The Department of the Army benefits from the procurement of essential aircraft parts, ensuring operational readiness. The services delivered include the manufacturing and supply of Auxiliary Power Control Units for aircraft. The contract is geographically focused on Alabama (AL), where the contractor is located. The contract supports jobs within the aerospace manufacturing sector, specifically in Alabama.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type increases the risk of cost overruns for the government.
The 'Exclusion of Sources' in the competition limits the pool of potential bidders, potentially affecting price.
The long contract duration requires sustained monitoring to ensure performance and cost control.

Positive Signals

Awarded under a competitive process, indicating some level of market vetting.
The contract supports critical defense aviation needs.
The contractor, Defense Systems and Solutions, is likely experienced in this specialized manufacturing area.

Sector Analysis

This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The NAICS code 336413 represents a niche within the broader aerospace industry. Spending in this sector is driven by defense procurement, commercial aviation demand, and technological advancements. Comparable spending benchmarks would involve analyzing other contracts for similar aircraft components, considering factors like complexity, volume, and contractor overhead.

Small Business Impact

The data indicates that small business participation (sb: false) and set-asides (ss: false) were not primary considerations for this specific contract award. This suggests the contract was likely awarded to a larger prime contractor capable of meeting the technical and volume requirements. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to engage the small business ecosystem in this defense supply chain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army contracting and program management offices. Given the CPFF structure, rigorous monitoring of allowable costs and contractor performance is crucial. Transparency may be limited due to the nature of defense procurement and potential proprietary information. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Parts Manufacturing
Aerospace Defense Contracts
Department of the Army Procurement
Cost-Plus Contracts
Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts

Risk Flags

Potential for cost overruns due to CPFF contract type.
Limited competition due to exclusion of sources may impact price.
Need for robust oversight to manage CPFF risks.
Dependency on a single contractor for critical aircraft components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.1 million to DEFENSE SYSTEMS AND SOLUTIONS. H-60L/M/V AUXILIARY POWER CONTROL UNIT

Who is the contractor on this award?

The obligated recipient is DEFENSE SYSTEMS AND SOLUTIONS.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $17.1 million.

What is the period of performance?

Start: 2024-09-16. End: 2027-05-31.

What is the historical spending pattern for Auxiliary Power Control Units by the Department of Defense?

Analyzing historical spending on Auxiliary Power Control Units (APCU) by the Department of Defense (DoD) requires access to detailed procurement databases. Generally, spending in this category fluctuates based on fleet modernization programs, aircraft sustainment needs, and the introduction of new platforms. Contracts for such components are often awarded through competitive bidding, but can also be sole-source if a specific technology or manufacturer is required. The total historical spend can range from tens of millions to hundreds of millions of dollars annually across all branches of the DoD, depending on the specific types of aircraft and their operational tempo. Factors influencing spending include the unit cost of the APCU, the quantity required, and the contract type (e.g., fixed-price vs. cost-reimbursable). Without specific historical data for this exact component (NAICS 336413), it's difficult to provide precise figures, but it represents a consistent need within aviation maintenance and operations.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of risk and cost efficiency for the government?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is significant uncertainty in the cost of performance, such as in research and development or complex system integration. Under CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts much of the cost risk to the government, as the final price is not fixed. Compared to fixed-price contracts (like Firm-Fixed Price - FFP), CPFF offers less cost certainty for the government and can potentially lead to higher final costs if not managed diligently. However, it can incentivize contractors to perform work that might otherwise be too risky under FFP. Best-value trade-off procurements often weigh the benefits of flexibility and risk mitigation against the potential for higher costs. For routine procurements with well-defined requirements, FFP contracts are generally preferred for cost efficiency and predictability.

What are the implications of 'Full and Open Competition After Exclusion of Sources' for price negotiation and contractor selection?

The 'Full and Open Competition After Exclusion of Sources' (FCAESO) clause indicates that the solicitation was initially intended for broad competition, but specific sources were subsequently excluded. The reasons for exclusion are critical and could range from national security concerns, proprietary technology limitations, or the inability of certain firms to meet highly specialized requirements. While this method aims for competition, the exclusion inherently narrows the field of potential bidders. This reduction in competition can potentially limit the downward pressure on pricing, as fewer entities are vying for the contract. For contractor selection, it means the government has pre-identified a set of acceptable sources but has also deemed others unsuitable for reasons that warrant exclusion. This can impact the government's leverage in price negotiations, as the remaining bidders may have less incentive to offer aggressive pricing compared to a truly open market scenario.

What is the typical profit margin (fixed fee) for CPFF contracts in the aerospace manufacturing sector?

The fixed fee in a Cost Plus Fixed Fee (CPFF) contract is negotiated and represents the contractor's profit. For contracts within the aerospace manufacturing sector, particularly those involving complex defense systems, the fixed fee percentage can vary significantly. Generally, federal regulations and agency policies provide guidance on allowable fee structures. Typical fixed fees for CPFF contracts often range from 5% to 15% of the estimated cost, though this can be influenced by factors such as the contract's risk level, the contractor's performance history, and the criticality of the product or service. Higher risk or more complex undertakings might justify a higher fee, while well-defined, lower-risk efforts would typically command a lower fee. Without specific details on the negotiated fee for this particular contract, it's difficult to provide an exact figure, but it would fall within this general range and be subject to government approval and oversight.

How does the geographic location of the contractor (Alabama) impact the contract's execution and oversight?

The geographic location of the contractor in Alabama (AL) has several implications for contract execution and oversight. For execution, it means that the physical manufacturing and delivery of the Auxiliary Power Control Units will originate from facilities within Alabama. This can influence logistics, transportation costs, and lead times for delivery to government facilities, depending on where those facilities are located. For oversight, the proximity of the contracting officer's representative (COR) or other government quality assurance personnel to the contractor's site can affect the efficiency and frequency of inspections and progress reviews. If the government has personnel located in Alabama, on-site monitoring can be more direct and potentially less costly. Conversely, if oversight personnel are remote, increased travel or reliance on contractor self-reporting may be necessary. The state's business environment and workforce availability in Alabama also play a role in the contractor's ability to meet performance requirements.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 631 DISCOVERY DR, HUNTSVILLE, AL, 35806

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, Minority Owned Business, Native American Owned Business, Partnership or Limited Liability Partnership, SBA Certified 8 a Joint Venture, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,079,005

Exercised Options: $17,079,005

Current Obligation: $17,079,005

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $12,800,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W58RGZ18D0001

IDV Type: IDC

Timeline