Department of Defense awards $32.1M contract for third-party logistics to S & K Aerospace, LLC

Contract Overview

Contract Amount: $32,094,700 ($32.1M)

Contractor: S & K Aerospace, LLC

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2011-11-30

Contract Duration: 790 days

Daily Burn Rate: $40.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: THIRD PARTY LOGISTICS MANAGEMENT SERVICES FOR ROYAL SAUDI AIR FORCE.

Place of Performance

Location: SAINT IGNATIUS, LAKE County, MONTANA, 59865

State: Montana Government Spending

Plain-Language Summary

Department of Defense obligated $32.1 million to S & K AEROSPACE, LLC for work described as: THIRD PARTY LOGISTICS MANAGEMENT SERVICES FOR ROYAL SAUDI AIR FORCE. Key points: 1. Contract awarded on a cost-plus-incentive-fee basis, suggesting potential for cost overruns if not managed carefully. 2. The contract was not competed, raising questions about potential price advantages missed. 3. S & K Aerospace, LLC, is the sole awardee, limiting market visibility into competitive pricing. 4. The contract duration of 790 days (approx. 2 years) indicates a medium-term need for these services. 5. The primary service category is administrative services, which can be prone to scope creep. 6. The contract's value is moderate within the context of large defense logistics contracts.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the lack of competitive bids and the cost-plus fee structure. The contract's total value of $32.1 million over approximately two years suggests a significant investment in logistics support. Without comparable contract data or a competitive bidding process, it's difficult to definitively assess if this represents excellent value for money. The 'cost no fee' (CNF) pricing type, while seemingly straightforward, can still lead to higher overall costs if the contractor's base costs are inflated.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not publicly advertised or competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, security clearances, or when urgency dictates a rapid award. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the government did not benefit from multiple offers driving down prices.

Public Impact

The Royal Saudi Air Force benefits from third-party logistics management services, enhancing their operational efficiency. Services provided likely include supply chain management, inventory control, and transportation coordination. The geographic impact is primarily focused on supporting the Royal Saudi Air Force's operations, with potential implications for regional stability. Workforce implications are likely internal to S & K Aerospace, LLC, and potentially within the Department of Defense for oversight.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential savings.
Cost-plus fee structure can incentivize higher spending if not tightly managed.
Lack of transparency in pricing due to non-competitive nature.
Potential for scope creep in administrative services contracts.
Contract duration may not align with evolving logistical needs.

Positive Signals

S & K Aerospace, LLC, likely possesses specialized expertise required for this niche service.
The contract aims to provide essential support to a key international partner.
The Department of Defense has established a relationship with the contractor for these services.
The contract structure allows for flexibility in costs, which can be beneficial for unforeseen logistical challenges.

Sector Analysis

This contract falls within the broader defense logistics and support services sector. This sector is characterized by complex supply chains, specialized equipment, and the need for reliable operational support, often involving international partners. The market size for defense logistics is substantial, with numerous companies offering a range of services from warehousing to full third-party logistics (3PL). This specific contract, focusing on administrative services for a foreign military, represents a niche within the larger defense services market, often involving direct foreign military sales or security cooperation agreements.

Small Business Impact

This contract was awarded to S & K Aerospace, LLC, and there is no indication of a small business set-aside. The contract details do not specify any subcontracting requirements for small businesses. Therefore, this award does not appear to directly benefit the small business ecosystem through set-asides or mandated subcontracting goals. The focus is on a large prime contractor fulfilling a specific defense need.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force, specifically the contracting and program management offices responsible for the Royal Saudi Air Force's support. Accountability measures would be defined within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Foreign Military Sales Program
Defense Logistics Agency Contracts
Air Force Materiel Command Support Contracts
International Security Assistance Programs

Risk Flags

Sole-source award raises concerns about competition and potential value.
Cost-plus fee structure requires diligent government cost oversight.
Broad 'administrative services' category increases risk of scope creep.
Lack of public data on contractor's specific performance in this niche.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.1 million to S & K AEROSPACE, LLC. THIRD PARTY LOGISTICS MANAGEMENT SERVICES FOR ROYAL SAUDI AIR FORCE.

Who is the contractor on this award?

The obligated recipient is S & K AEROSPACE, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $32.1 million.

What is the period of performance?

Start: 2009-10-01. End: 2011-11-30.

What is the track record of S & K Aerospace, LLC in delivering similar third-party logistics services, particularly for international military clients?

Information regarding S & K Aerospace, LLC's specific track record for delivering third-party logistics management services, especially to international military clients like the Royal Saudi Air Force, is not readily available in the provided data. As a sole-source award, the justification for selecting this contractor would typically include an assessment of their capabilities and past performance. However, without access to that detailed justification or broader contract databases, a comprehensive analysis of their performance history in this specific niche is not possible. Further investigation into government performance databases or contractor profiles would be necessary to fully assess their experience and reliability in fulfilling such complex logistical requirements.

How does the pricing structure (Cost No Fee) compare to other logistics contracts awarded by the Department of Defense, and what are the potential implications for cost control?

The 'Cost No Fee' (CNF) pricing structure means the contractor is reimbursed for all allowable costs but receives no fee or profit. This structure is less common for complex service contracts compared to cost-plus-incentive-fee (CPIF) or fixed-price contracts. While it removes the profit motive, it can sometimes lead to less incentive for the contractor to control costs aggressively, as their primary focus might be on ensuring all incurred costs are allowable. For the government, effective oversight and rigorous auditing of costs are paramount to prevent inflated expenses. Compared to CPIF contracts, CNF might offer less direct incentive for performance optimization but simplifies the fee calculation. The primary implication for cost control rests heavily on the government's ability to scrutinize and validate all claimed costs.

What are the specific administrative services included under this contract, and what is the risk of scope creep?

The contract specifies 'Office Administrative Services' (NAICS code 561110) as the primary service. This broad category can encompass a wide range of support functions, such as general office management, record-keeping, scheduling, communication support, and potentially basic human resources or financial administration. The risk of scope creep is inherent in administrative service contracts because the boundaries of 'support' can be fluid and subject to interpretation. Without clearly defined deliverables, performance metrics, and strict change control processes, there's a tendency for requirements to expand beyond the original intent. This can lead to increased costs and extended timelines if not managed proactively by the contracting officer.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent contractor overcharging?

When a contract is awarded sole-source, ensuring fair pricing relies heavily on robust government oversight and negotiation. Mechanisms typically include detailed cost analysis by the government's pricing and auditing teams to validate the contractor's proposed costs against market data, historical costs, and industry standards. The 'Cost No Fee' structure itself aims to limit contractor profit, but the government must still ensure that the underlying costs are reasonable and allowable. Contract clauses related to cost allowability, cost accounting standards, and rights to audit contractor records are crucial. Furthermore, the contracting officer must maintain vigilance in monitoring performance and expenditures throughout the contract lifecycle to identify any potential anomalies or inefficiencies.

What is the historical spending pattern for third-party logistics management services for the Royal Saudi Air Force by the Department of Defense?

The provided data only details this specific $32.1 million contract awarded in 2009. It does not offer insight into historical spending patterns for similar services provided to the Royal Saudi Air Force by the Department of Defense. To understand historical trends, one would need to analyze contract awards over multiple fiscal years, looking for previous contracts with the same or similar scope, for the same or related entities (like the Royal Saudi Air Force), and potentially with the same contractor or competitors. Without this broader dataset, it's impossible to determine if this $32.1 million award represents an increase, decrease, or consistent level of spending for these services over time.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Office Administrative Services › Office Administrative Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 63066 OLD HIGHWAY 93, SAINT IGNATIUS, MT, 01

Business Categories: 8(a) Program Participant, Category Business, Labor Surplus Area Firm, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,094,700

Exercised Options: $32,094,700

Current Obligation: $32,094,700

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA850510D0001

IDV Type: IDC

Timeline