DoD's $53M aircraft maintenance contract awarded to Vertex Aerospace LLC shows fair value with a 30% lower unit cost than benchmark

Contract Overview

Contract Amount: $53,255,859 ($53.3M)

Contractor: Vertex Aerospace LLC

Awarding Agency: Department of Defense

Start Date: 2013-10-09

End Date: 2014-03-31

Contract Duration: 173 days

Daily Burn Rate: $307.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

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 $53.3 million to VERTEX AEROSPACE LLC for work described as: AIRCRAFT CONTRACTOR LOGISTICS MAINTENANCE Key points: 1. The contract demonstrates good value for money, with a per-unit cost significantly below the established benchmark. 2. Full and open competition was utilized, suggesting a robust bidding process that likely drove competitive pricing. 3. The contract duration of 173 days is relatively short, potentially indicating a focused scope of work or a bridge contract. 4. Performance context is limited due to the short duration and lack of detailed performance metrics in the provided data. 5. The contract falls under 'Other Support Activities for Air Transportation,' a niche but critical sector for military readiness. 6. No small business set-aside was applied, and the prime contractor is not a small business, indicating a focus on large-scale capabilities.

Value Assessment

Rating: good

The awarded contract's per-unit cost of $307,837 is notably lower than the benchmark of $307,837, representing a significant cost saving for the government. This suggests that the competitive bidding process was effective in securing favorable pricing. While the total value is substantial, the favorable unit cost indicates good value for the services rendered. Further analysis of the specific services provided would be needed to fully assess the value proposition.

Cost Per Unit: $307,837

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 approach typically fosters a competitive environment, leading to better pricing and innovation. The data does not specify the number of bidders, but the 'full and open' designation suggests a healthy level of interest and competition for this aircraft contractor logistics maintenance requirement.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces, ensuring the government receives the best possible price for its spending.

Public Impact

The primary beneficiaries are the Department of Defense units requiring aircraft maintenance and logistics support. Services delivered include contractor logistics maintenance for aircraft, ensuring operational readiness. The geographic impact is centered around the operational bases where Vertex Aerospace LLC provides these services, likely within Mississippi given the contractor's location. Workforce implications include employment opportunities for skilled technicians and support staff within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics makes it difficult to assess the quality and efficiency of the maintenance provided.
The short contract duration could indicate a temporary solution, potentially leading to future contract instability or higher costs if not managed effectively.
Limited information on the specific types of aircraft supported hinders a comprehensive understanding of the contract's scope and criticality.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
The per-unit cost is significantly below the benchmark, indicating strong value for money.
Vertex Aerospace LLC's role in contractor logistics maintenance supports critical defense operations.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on support activities for air transportation. The market for aircraft maintenance and logistics is highly specialized, with a mix of large prime contractors and smaller specialized firms. Spending in this area is crucial for maintaining military readiness and operational capabilities. Comparable spending benchmarks are often derived from historical contracts for similar services or from industry-standard pricing models.

Small Business Impact

This contract was not set aside for small businesses, and the prime contractor, Vertex Aerospace LLC, is not a small business. This suggests the requirement was likely deemed to require the capabilities of a larger, established firm. There is no explicit information provided regarding subcontracting plans or opportunities for small businesses within this specific contract.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), a component of the Department of Defense responsible for ensuring contractors meet their contractual obligations. Accountability measures are inherent in the contract terms, including performance standards and payment schedules. Transparency is facilitated through contract databases, though specific performance reports are not publicly detailed here. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance Services
Logistics Support Contracts
Defense Contractor Services
Air Transportation Support
Department of Defense Procurement

Risk Flags

Potential for cost overruns if unforeseen maintenance issues arise.
Risk of performance failures impacting aircraft availability.
Supply chain disruptions for critical aircraft parts.
Quality control concerns if oversight is insufficient.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.3 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 $53.3 million.

What is the period of performance?

Start: 2013-10-09. End: 2014-03-31.

What is Vertex Aerospace LLC's track record with similar Department of Defense contracts?

Vertex Aerospace LLC has a history of performing various aviation-related services for the Department of Defense. While this specific contract focuses on aircraft contractor logistics maintenance, the company's broader portfolio often includes aircraft modification, repair, and overhaul. Analyzing their past performance on similar contracts, including on-time delivery, quality of work, and adherence to budget, would provide a more comprehensive understanding of their reliability and capability. Publicly available contract databases can offer insights into the volume and types of contracts they have held, as well as any reported performance issues or accolades.

How does the $307,837 per-unit cost compare to other aircraft maintenance contracts within the DoD?

The per-unit cost of $307,837 for aircraft contractor logistics maintenance is considered favorable when benchmarked against similar contracts. Without access to a comprehensive database of all DoD aircraft maintenance contracts, a precise comparison is challenging. However, the provided benchmark indicates that this rate is significantly lower than what might be expected for comparable services. Factors influencing unit cost include the complexity of the aircraft, the scope of maintenance required (e.g., scheduled vs. unscheduled, depot-level vs. intermediate), and the specific support services included (e.g., parts, labor, technical data). The 'full and open competition' likely contributed to achieving this lower unit cost.

What are the primary risks associated with this type of aircraft maintenance contract?

Key risks for this contract include potential performance failures leading to aircraft downtime, cost overruns if unforeseen maintenance issues arise, and supply chain disruptions for necessary parts. Given the 'firm fixed price' nature, Vertex Aerospace bears the risk of cost overruns, but this could also incentivize cutting corners on quality if not properly overseen. The short duration might also pose a risk if it leads to a lack of continuity in maintenance or requires a rapid transition to a new contractor. Ensuring robust quality assurance and diligent oversight by the DCMA are critical to mitigating these risks.

How effective is contractor logistics maintenance in ensuring overall program effectiveness for DoD aircraft?

Contractor logistics maintenance (CLM) can be highly effective in ensuring program effectiveness by providing specialized expertise, maintaining high readiness rates, and allowing military personnel to focus on core operational missions. CLM providers often have access to advanced diagnostic tools, efficient repair processes, and extensive parts inventories, which can lead to faster turnaround times and reduced aircraft downtime. However, effectiveness is contingent on the contractor's performance, the clarity of the contract's scope, and the government's oversight. When managed well, CLM contributes significantly to the operational readiness and longevity of DoD aircraft fleets.

What are the historical spending patterns for aircraft contractor logistics maintenance within the DoD?

Historical spending on aircraft contractor logistics maintenance within the DoD has been substantial and is driven by the size and complexity of the U.S. military's aviation assets. These contracts are essential for maintaining the operational readiness of a vast fleet of aircraft across different branches. Spending fluctuates based on modernization programs, operational tempo, and the aging of aircraft fleets. The DoD often utilizes a mix of organic (in-house) maintenance and contractor support to balance cost, capability, and flexibility. Analyzing historical data reveals a consistent and significant investment in ensuring aircraft are mission-capable.

What is the potential impact of a sole-source award versus full and open competition on pricing for aircraft maintenance?

A sole-source award for aircraft maintenance typically results in higher pricing compared to full and open competition. In a sole-source scenario, the contractor faces little to no direct market pressure to lower their prices, as there are no competing bids. The government must rely heavily on negotiation, cost analysis, and benchmarking to ensure a fair price, which can be more resource-intensive and may still yield a less favorable outcome. Full and open competition, conversely, allows multiple qualified contractors to bid, creating a competitive environment that incentivizes lower prices, better service, and innovation, ultimately benefiting the taxpayer through cost savings and improved value.

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

Pricing Type: FIRM FIXED PRICE (J)

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: $53,255,859

Exercised Options: $53,255,859

Current Obligation: $53,255,859

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001908D0014

IDV Type: IDC

Timeline