DoD's $4.2B Air Transportation Support Contract with M1 Support Services Faces Scrutiny Over Pricing and Competition

Contract Overview

Contract Amount: $4,222,239,340 ($4.2B)

Contractor: M1 Support Services, L.P.

Awarding Agency: Department of Defense

Start Date: 2017-10-01

End Date: 2027-01-17

Contract Duration: 3,395 days

Daily Burn Rate: $1.2M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: IGF::OT::IGF

Place of Performance

Location: FORT NOVOSEL, DALE County, ALABAMA, 36362

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $4.22 billion to M1 SUPPORT SERVICES, L.P. for work described as: IGF::OT::IGF Key points: 1. The contract's significant value of $4.22 billion warrants close examination of its cost-effectiveness. 2. M1 Support Services, L.P. is the sole awardee, raising questions about the extent of competition. 3. The fixed-price incentive contract type introduces potential risks and rewards for both parties. 4. This spending falls within the broader 'Other Support Activities for Air Transportation' sector.

Value Assessment

Rating: questionable

The contract's total value is substantial. Without detailed cost breakdowns and benchmarks for similar air transportation support services, it's difficult to definitively assess its pricing fairness. The fixed-price incentive structure suggests an attempt to control costs, but the overall value raises concerns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While the contract was awarded under full and open competition, the fact that M1 Support Services, L.P. is the sole awardee suggests potential issues with the bidding process or the availability of qualified competitors. This could impact price discovery and potentially lead to higher costs.

Taxpayer Impact: The substantial value of this contract means that any inefficiencies or overpricing could have a significant impact on taxpayer funds allocated to defense.

Public Impact

Taxpayers are funding extensive air transportation support services, crucial for military operations. The long duration of the contract (over 9 years) means sustained financial commitment. Potential for cost overruns or inefficiencies could divert funds from other critical defense needs. The contract's performance directly impacts the efficiency and readiness of air transport operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole awardee despite full and open competition
High contract value requires rigorous cost oversight
Fixed-price incentive contract complexity

Positive Signals

Contract supports critical air transportation functions
Long-term contract provides stability for services

Sector Analysis

This contract falls under the 'Other Support Activities for Air Transportation' category, which is vital for the Department of Defense's logistical capabilities. Spending in this sector can vary widely based on operational tempo and equipment needs, but large, long-term contracts like this represent significant investments.

Small Business Impact

There is no explicit indication of small business participation in this contract award. Further analysis would be needed to determine if subcontracting opportunities were provided to small businesses.

Oversight & Accountability

The significant value and long duration of this contract necessitate robust oversight from the Department of Defense's Inspector General and relevant contracting officials to ensure performance, cost control, and adherence to terms.

Related Government Programs

Other Support Activities for Air Transportation
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Potential lack of robust competition despite 'full and open' designation
High contract value necessitates stringent cost oversight
Complexity of Fixed Price Incentive contract type
Long contract duration increases long-term financial exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $4.22 billion to M1 SUPPORT SERVICES, L.P.. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is M1 SUPPORT SERVICES, L.P..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $4.22 billion.

What is the period of performance?

Start: 2017-10-01. End: 2027-01-17.

What specific performance metrics are in place to ensure the value derived from this $4.22 billion contract aligns with the services provided?

The contract is a Fixed Price Incentive (FPI) type, which typically includes target costs, target profits, and price ceilings, along with incentive clauses tied to performance. Detailed performance metrics should be outlined in the contract's statement of work, focusing on operational efficiency, response times, and quality of support for air transportation. Regular performance reviews and audits are crucial to ensure the government receives the expected value.

Given the sole awardee status, what steps were taken during the 'full and open competition' to ensure maximum price competition and prevent potential collusion or lack of innovation?

During a full and open competition, agencies are expected to solicit offers from all responsible sources. The sole awardee status, despite this, suggests that either only one offer was received, or only one was deemed acceptable. Agencies should document the market research conducted, the solicitation's clarity, and the evaluation criteria used. If only one bid was received, it warrants investigation into why more competitors did not participate, potentially indicating issues with the solicitation or market dynamics.

How does the fixed-price incentive structure of this contract effectively balance cost control for the government against incentivizing M1 Support Services to perform efficiently and effectively?

The FPI structure aims to share cost savings or overruns between the government and the contractor. It establishes a target cost and target profit, with a negotiated price ceiling. If the contractor performs under the target cost, both share in the savings; if costs exceed the target, both share the overrun up to the ceiling. This incentivizes efficiency by allowing the contractor to increase profit if they control costs, while the ceiling protects the government from unlimited overspending.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W9124G17R0002

Offers Received: 4

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 300 N ELM ST STE 101, DENTON, TX, 76201

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Service Disabled Veteran Owned Business, Special Designations, U.S.-Owned Business, Veteran Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $5,522,349,151

Exercised Options: $4,894,609,058

Current Obligation: $4,222,239,340

Actual Outlays: $760,876,589

Subaward Activity

Number of Subawards: 478

Total Subaward Amount: $125,669,910

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline