Naval Air Systems Command awards $30M contract for aircraft structural component repair, exceeding initial estimates

Contract Overview

Contract Amount: $30,029,515 ($30.0M)

Contractor: Vertex Aerospace LLC

Awarding Agency: Department of Defense

Start Date: 2005-10-01

End Date: 2006-09-30

Contract Duration: 364 days

Daily Burn Rate: $82.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200612!467225!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001905D0023 !A!N! !Y!WA01 ! !20051001!20060930!008898843!008898843!008898843!N!L-3 COMMUNICATIONS HOLDING, IN!600 3RD AVE FL 35 !NEW YORK !NY!10016!77500!113!12!WHITING FIELD NAS !SANTA ROSA !FLORIDA !+000002950543!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !NOT DISCERNABLE !488190!E! !5!A!S! ! !D!20060930!B! ! !A! !A!N!J!2!002!B! !C!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y!1700!N00019!0001! !

Place of Performance

Location: MADISON, MADISON County, MISSISSIPPI, 39110, UNITED STATES OF AMERICA

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $30.0 million to VERTEX AEROSPACE LLC for work described as: 200612!467225!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001905D0023 !A!N! !Y!WA01 ! !20051001!20060930!008898843!008898843!008898843!N!L-3 COMMUNICATIONS HOLDING, IN!600 3RD AVE FL 35 !NEW YORK !NY!10016!77500!113!12!WHITING FIELD NAS !SANT… Key points: 1. Contract value significantly surpassed initial estimates, suggesting potential for cost overruns or scope expansion. 2. The contract was awarded under full and open competition, indicating a competitive bidding process. 3. A single award was made, which could limit price discovery compared to multi-bidder scenarios. 4. The contract duration of one year suggests a focus on immediate or short-term support needs. 5. The primary service involves maintenance and repair of aircraft structural components, a critical but potentially high-cost area. 6. The contractor, Vertex Aerospace LLC, has a track record that warrants further examination for performance and value. 7. The contract's value and nature place it within the broader defense aerospace maintenance and repair sector.

Value Assessment

Rating: questionable

The awarded value of $30,029,515.46 for a one-year contract for aircraft structural component repair appears high when compared to the initial estimate of $170,000. This substantial difference raises concerns about the accuracy of the initial budgeting or potential scope creep. Without more detailed cost breakdowns or benchmarks for similar repair services, it is difficult to definitively assess value for money. However, the significant deviation warrants scrutiny to understand the drivers behind the increased cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. However, only two bids were received, which is a relatively low number for a contract of this magnitude. While competition was present, the limited number of bidders might have restricted the full potential for price discovery and negotiation, potentially leading to a less competitive outcome than ideal.

Taxpayer Impact: The full and open competition, despite only two bidders, theoretically provides a baseline for fair pricing. However, taxpayers may not have received the absolute lowest price achievable if more bidders had participated or if the competition had been structured differently.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense requiring aircraft structural maintenance. The contract delivers essential maintenance and repair services for aircraft structural components, ensuring fleet readiness and safety. The geographic impact is centered around Whiting Field NAS in Florida, where the services are likely performed or managed. Workforce implications include direct employment for skilled technicians and support staff at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant discrepancy between awarded value and initial estimate requires explanation.
Low number of bids received despite full and open competition.
Potential for cost overruns or scope creep needs monitoring.
Contract awarded to a single vendor, limiting further competitive pressure.
Lack of detailed cost breakdown makes value assessment challenging.

Positive Signals

Contract awarded through full and open competition, adhering to procurement regulations.
Focus on critical aircraft structural component repair ensures operational readiness.
The contract specifies a firm fixed-price type, providing cost certainty once awarded.

Sector Analysis

The defense aerospace sector is characterized by high technological complexity, stringent quality requirements, and significant government spending. Contracts for maintenance, repair, and overhaul (MRO) are a substantial part of this sector, supporting the operational readiness of military fleets. Spending in this area is often driven by the age of aircraft, operational tempo, and specific mission requirements. Benchmarks for similar MRO contracts can vary widely based on aircraft type, component complexity, and service level agreements.

Small Business Impact

There is no indication that this contract included a small business set-aside. The prime contractor, Vertex Aerospace LLC, is a significant entity, suggesting that subcontracting opportunities may exist for smaller businesses within the aerospace supply chain. However, the extent of these opportunities and whether they are actively pursued by the prime contractor is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's established procurement and contract management processes, likely managed by the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm fixed-price contract type, which places cost risk on the contractor. Transparency is facilitated by the contract award data being publicly available, though detailed performance metrics and cost breakdowns may be less accessible.

Related Government Programs

Aircraft Maintenance and Repair Services
Naval Aviation Support Contracts
Defense Logistics and Sustainment
Aerospace Component Manufacturing and Repair

Risk Flags

Significant variance between estimated and awarded cost.
Low number of bids received for a full and open competition.
Potential for cost escalation due to initial estimation inaccuracies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.0 million to VERTEX AEROSPACE LLC. 200612!467225!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001905D0023 !A!N! !Y!WA01 ! !20051001!20060930!008898843!008898843!008898843!N!L-3 COMMUNICATIONS HOLDING, IN!600 3RD AVE FL 35 !NEW YORK !NY!10016!77500!113!12!WHITING FIELD NAS !SANTA ROSA !FLORIDA !+000002950543!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !NOT DISCERNABLE !488190!E! !5!A!S! ! !D!200

Who is the contractor on this award?

The obligated recipient is VERTEX AEROSPACE LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $30.0 million.

What is the period of performance?

Start: 2005-10-01. End: 2006-09-30.

What is the historical spending pattern for aircraft structural component repair at Naval Air Systems Command?

Analyzing historical spending patterns for aircraft structural component repair at Naval Air Systems Command (NAVAIR) is crucial for understanding trends and identifying potential anomalies. While this specific contract awarded in 2005 for approximately $30 million is a data point, a comprehensive review would involve examining NAVAIR's spending over several fiscal years. This would include looking at the total obligated amounts for similar contracts, the number of awards, the types of services procured (e.g., depot-level maintenance, component repair, structural modification), and the average contract values. Comparing the $30 million award to historical averages can reveal if this contract represents a typical expenditure or a significant deviation. Factors such as fleet size, aircraft modernization programs, and operational tempo influence these spending patterns. A trend of increasing spending in this category might indicate aging fleets requiring more maintenance, while a decrease could suggest fleet recapitalization or efficiency improvements. Without access to NAVAIR's detailed historical contract databases, a precise analysis is limited, but understanding these patterns is key to evaluating the current contract's context and justification.

How does the awarded value of $30,029,515.46 compare to industry benchmarks for similar aircraft structural repair services?

Comparing the awarded value of $30,029,515.46 to industry benchmarks for similar aircraft structural repair services is essential for assessing value for money. However, obtaining precise benchmarks is challenging due to the proprietary nature of pricing in the aerospace industry and the variability in service scope. Key factors influencing cost include the specific aircraft platforms, the complexity of the structural components, the extent of damage or required repairs, labor rates, material costs, and overhead. For a one-year contract, this value suggests a significant scope of work or a high-demand service. Industry reports or databases that track MRO (Maintenance, Repair, and Overhaul) costs for defense aircraft could provide comparative data. For instance, if similar contracts for repairing structural components on comparable naval aircraft typically range from $10 million to $20 million, then this $30 million award would appear high. Conversely, if the scope includes extensive repairs on multiple aircraft types or highly specialized components, the cost might be justified. Further analysis would require detailed technical specifications of the work performed under this contract and access to industry cost-estimating data.

What is Vertex Aerospace LLC's track record with government contracts, particularly in aircraft maintenance and repair?

Vertex Aerospace LLC's track record with government contracts, especially in aircraft maintenance and repair, is a critical factor in evaluating this award. A review of their contract history would reveal their performance on previous agreements, including on-time delivery, quality of work, and adherence to budget. Databases like the Federal Procurement Data System (FPDS) can provide insights into the number and value of contracts awarded to Vertex Aerospace, the agencies they have served, and any reported performance issues or contract disputes. Positive indicators would include a history of successful contract completions, positive past performance reviews, and a low rate of contract terminations or penalties. Conversely, a history of significant performance problems, cost overruns on previous contracts, or unresolved disputes could raise concerns about their capability to deliver on this current $30 million award. Understanding their experience with similar types of aircraft structural repairs is also important. A strong, consistent track record suggests a lower risk for the government, while a less proven history might warrant closer monitoring.

What are the potential risks associated with a single-award contract for critical aircraft structural repairs?

A single-award contract for critical aircraft structural repairs carries several potential risks for the government. Firstly, it limits competitive pressure, potentially leading to higher prices than if multiple vendors were vying for the work. The government may have less leverage in negotiations and future contract renewals. Secondly, there is a risk of vendor lock-in; if the contractor fails to perform adequately or goes out of business, finding and transitioning to a new provider for such specialized services can be time-consuming and costly, potentially impacting aircraft readiness. Thirdly, without the ongoing comparison of multiple vendors, there's a reduced incentive for the incumbent to innovate or maintain the highest levels of efficiency and quality. Finally, if the awarded price was based on optimistic projections, the government might face significant cost increases if unforeseen issues arise during contract performance. Mitigating these risks often involves robust performance monitoring, clear contract terms, and contingency planning.

How does the initial estimate of $170,000 compare to the final awarded value of over $30 million, and what could explain this discrepancy?

The discrepancy between the initial estimate of $170,000 and the final awarded value of over $30 million for this contract is exceptionally large and warrants significant investigation. Such a vast difference suggests a fundamental misunderstanding or misstatement in the initial estimation process. Possible explanations include: 1) A clerical error where the estimate was entered incorrectly (e.g., missing zeros). 2) The initial estimate was based on a vastly different, much smaller scope of work that was later expanded significantly. 3) The estimate was for a preliminary planning purpose and did not reflect the true anticipated cost of the required services. 4) The estimate was intentionally low to meet budget planning thresholds, with the expectation of a subsequent modification or higher award. 5) The market conditions or technical requirements changed dramatically between the estimation and award phases. Regardless of the cause, this magnitude of difference indicates a failure in the initial planning or budgeting phase and raises questions about the reliability of the government's cost estimation processes for this procurement. It suggests that the $30 million award may be more reflective of the actual need, but the initial $170,000 figure is highly misleading.

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

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)

Address: 555 INDUSTRIAL DR S, MADISON, MS, 39110

Business Categories: Category Business, Not Designated a Small Business

Parent Contract

Parent Award PIID: N0001905D0023

IDV Type: IDC

Timeline