DoD's $127M aircraft contractor logistics maintenance contract awarded to Vertex Aerospace LLC

Contract Overview

Contract Amount: $127,082,705 ($127.1M)

Contractor: Vertex Aerospace LLC

Awarding Agency: Department of Defense

Start Date: 2012-10-01

End Date: 2014-03-31

Contract Duration: 546 days

Daily Burn Rate: $232.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST NO FEE

Sector: Defense

Official Description: AIRCRAFT CONTRACTOR LOGISTICS MAINTENANCE

Place of Performance

Location: MADISON, MADISON County, MISSISSIPPI, 39110

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $127.1 million to VERTEX AEROSPACE LLC for work described as: AIRCRAFT CONTRACTOR LOGISTICS MAINTENANCE Key points: 1. Contract provides essential logistics support for aircraft, ensuring operational readiness. 2. Awarded under full and open competition, suggesting a competitive bidding process. 3. The contract duration of 546 days indicates a medium-term operational requirement. 4. The contract type 'COST NO FEE' implies the government bears the cost of performance, with the contractor receiving no fee. 5. The North American Industry Classification System (NAICS) code 488190 points to support activities for air transportation. 6. The contract was awarded as a Delivery Order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar vehicle.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without knowing the scope of services and the specific aircraft supported. The 'COST NO FEE' contract type is unusual for logistics maintenance and typically used in specific government-furnished equipment scenarios or when the contractor is not expected to incur significant costs beyond basic administration. This structure warrants further investigation into the cost drivers and the contractor's role. Without comparable contract data for similar logistics maintenance services, a precise value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that all responsible sources were permitted to submit bids. This suggests a robust bidding environment, which typically leads to better price discovery and potentially more favorable terms for the government. The number of bidders is not specified, but the open competition framework is a positive sign for market responsiveness.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve the quality of services offered.

Public Impact

The primary beneficiaries are the Department of Defense (DoD) and its aviation units, receiving critical logistics support for their aircraft. Services delivered likely include maintenance, repair, parts management, and technical support for aircraft fleets. The geographic impact is likely concentrated around the operational bases or maintenance facilities where the supported aircraft are located. Workforce implications may include employment for skilled aviation mechanics, technicians, and logistics personnel employed by Vertex Aerospace LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'COST NO FEE' contract type raises questions about cost control and contractor incentive for efficiency, as the contractor is reimbursed for costs without an additional profit margin.
Lack of specific performance metrics or award fee structure makes it difficult to assess contractor performance beyond basic delivery.
The relatively short duration (546 days) might indicate a need for ongoing re-competition or that this is a task order under a larger, longer-term vehicle, requiring further investigation into the overall program structure.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that should yield fair market pricing.
The contract addresses a critical need for aircraft logistics maintenance, directly supporting military readiness.
Vertex Aerospace LLC's role as a contractor indicates a reliance on specialized industry expertise for essential support functions.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on support services. The market for aircraft maintenance, repair, and overhaul (MRO) is substantial, with significant government spending allocated to ensuring the operational readiness of military aviation assets. Comparable spending benchmarks would involve analyzing other DoD contracts for similar logistics support across different aircraft platforms and service providers.

Small Business Impact

The contract details indicate that small business participation was not a specific set-aside criterion ('sb': false). There is no explicit mention of subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless Vertex Aerospace LLC voluntarily engages small businesses in its supply chain or subcontracting efforts.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, particularly regarding delivery and adherence to specifications. Transparency is facilitated through contract databases like FPDS, though detailed performance reports are often internal to the DoD.

Related Government Programs

DoD Aircraft Maintenance Contracts
Aerospace Logistics Support Services
Defense Contractor Support Services
Air Transportation Support Activities

Risk Flags

Cost Control Risk due to 'COST NO FEE' structure
Potential for Scope Creep without clear performance metrics
Dependence on contractor for critical maintenance functions

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $127.1 million to VERTEX AEROSPACE LLC. AIRCRAFT CONTRACTOR LOGISTICS MAINTENANCE

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 $127.1 million.

What is the period of performance?

Start: 2012-10-01. End: 2014-03-31.

What is the specific nature of the 'COST NO FEE' contract type in the context of aircraft logistics maintenance, and what are the implications for cost control and contractor performance?

The 'COST NO FEE' (CNF) contract type is relatively uncommon for standard logistics maintenance. Typically, it's used when the contractor's primary role is to provide services using government-furnished equipment or facilities, and their direct costs are minimal, or when the contractor is essentially acting as an agent for the government. In this context, Vertex Aerospace LLC would be reimbursed for its direct and indirect costs incurred in performing the logistics maintenance, but would not receive any fee or profit. This structure shifts the financial risk almost entirely to the government. For cost control, it means the government must have robust oversight to ensure costs are reasonable and necessary, as the contractor has no inherent profit motive to reduce costs. Performance assessment would rely heavily on meeting delivery schedules and technical specifications rather than cost efficiency, which could be a challenge if not managed carefully.

How does the value of this $127 million contract compare to other DoD aircraft logistics maintenance contracts?

Direct comparison of this $127 million contract's value is difficult without detailed scope and duration context for other contracts. However, the total contract value suggests a significant, though not exceptionally large, commitment for logistics support over its period of performance (546 days). The DoD procures a vast array of logistics and maintenance services, with individual contract values ranging from thousands to billions of dollars depending on the aircraft platform, fleet size, and complexity of support required. This contract appears to be a mid-tier award for specific logistics functions. To provide a true benchmark, one would need to compare it against contracts for similar aircraft types, service levels (e.g., depot-level maintenance vs. line maintenance), and geographic scope.

What are the potential risks associated with awarding a logistics maintenance contract under 'COST NO FEE' terms?

The primary risk with a 'COST NO FEE' contract is the potential for cost escalation and lack of contractor incentive for efficiency. Since the contractor is reimbursed for all allowable costs and receives no profit, they may have less motivation to control expenses compared to a fixed-price or cost-plus-incentive-fee contract. This places a greater burden on the government's oversight mechanisms to scrutinize costs, ensure they are reasonable and allocable, and prevent potential overruns. Another risk is that the contractor might prioritize tasks that are easier to perform or less scrutinized, rather than those most critical for long-term readiness, if performance metrics are not clearly defined and enforced. Furthermore, the absence of a fee could potentially limit the pool of highly motivated contractors willing to undertake such work.

What is Vertex Aerospace LLC's track record in providing aircraft logistics maintenance services to the DoD?

Vertex Aerospace LLC has a history of performing various aviation-related services for the U.S. military. While specific details on their performance for this particular contract are not publicly detailed here, the company has been involved in aircraft modification, maintenance, and support roles for different branches of the DoD. Their ability to secure a $127 million contract awarded through full and open competition suggests they possess the necessary certifications, capabilities, and past performance record to be considered a viable and competitive bidder in this space. A deeper dive into their contract history, past performance evaluations (if available), and any reported issues would provide a more comprehensive understanding of their track record.

How does this contract fit into the broader landscape of DoD aviation readiness and sustainment strategies?

This contract represents a component of the DoD's broader strategy to ensure the operational readiness and sustainment of its aviation assets. By outsourcing logistics maintenance to specialized contractors like Vertex Aerospace LLC, the DoD can leverage industry expertise, potentially achieve cost efficiencies, and focus its organic resources on core competencies. Such contracts are crucial for maintaining complex aircraft fleets, ensuring they are mission-capable, and extending their service life. The specific nature of the support (logistics maintenance) indicates a focus on the upkeep and operational availability of aircraft, which is a fundamental aspect of military aviation sustainment.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vertex Aerospace Services Corp. (UEI: 081292432)

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

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $127,082,705

Exercised Options: $127,082,705

Current Obligation: $127,082,705

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001908D0014

IDV Type: IDC

Timeline