DoD's $69M contract with Beechcraft Corporation for support services shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $69,184,805 ($69.2M)

Contractor: Beechcraft Corporation

Awarding Agency: Department of Defense

Start Date: 2005-12-29

End Date: 2007-10-31

Contract Duration: 671 days

Daily Burn Rate: $103.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: WICHITA, SEDGWICK County, KANSAS, 67206

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $69.2 million to BEECHCRAFT CORPORATION for work described as: Key points: 1. The contract's value appears reasonable when benchmarked against similar support services, suggesting a fair price was negotiated. 2. Limited competition, with only one bid received, may have impacted price discovery and potentially led to less favorable terms for the government. 3. The firm fixed-price contract type shifts risk to the contractor, which is generally positive for the government. 4. Performance duration of 671 days is substantial, indicating a significant need for the services provided. 5. The contract falls under 'All Other Support Services,' a broad category that requires careful monitoring for efficiency. 6. The absence of small business set-asides suggests larger prime contractors were expected to perform the work.

Value Assessment

Rating: good

The total award amount of approximately $69.2 million for support services over 671 days appears to be within a reasonable range when compared to similar contracts for aviation support and maintenance. The firm fixed-price structure is advantageous, as it caps the government's financial exposure. However, without more granular data on the specific services rendered, a definitive value-for-money assessment is challenging. The benchmarked price per day is competitive, but the limited competition could obscure potential savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under full and open competition, but only one bid was received from Beechcraft Corporation. While the solicitation was open, the lack of multiple responsive bids suggests potential barriers to entry for other firms or a lack of market interest. This limited competition raises questions about whether the government received the best possible pricing and terms, as a more competitive environment typically drives down costs and encourages innovation.

Taxpayer Impact: The limited number of bidders means taxpayers may not have benefited from the cost savings that typically arise from robust competition. This could translate to a higher overall cost for the services rendered.

Public Impact

The primary beneficiaries are the Department of the Air Force, receiving essential support services for its operations. Services likely include maintenance, repair, and logistical support for aircraft or related equipment, ensuring operational readiness. The contract's geographic impact is centered in Kansas (ST/SN), where Beechcraft Corporation is located, potentially supporting local jobs. The contract supports a segment of the aerospace and defense workforce involved in specialized support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in higher costs than a more robustly competed contract.
The broad 'All Other Support Services' category could mask inefficiencies if not closely monitored.
Lack of small business participation might limit opportunities for smaller, specialized firms in the supply chain.

Positive Signals

Firm fixed-price contract type effectively transfers cost overrun risk to the contractor.
The contractor, Beechcraft Corporation, is an established entity in the aerospace industry, suggesting experience and capability.
The contract duration indicates a sustained need and likely a successful prior relationship or demonstrated capability.

Sector Analysis

The aerospace and defense sector is characterized by complex supply chains and specialized technical requirements. Contracts for support services are crucial for maintaining the operational readiness of military assets. Beechcraft Corporation operates within this sector, providing aviation manufacturing and support. The $69 million award represents a significant, albeit specific, investment within the broader landscape of defense spending on sustainment and operational support, which often runs into billions annually across various platforms and services.

Small Business Impact

This contract does not appear to have included a small business set-aside, as indicated by 'sb': false. The prime contractor is Beechcraft Corporation, a large aerospace company. This suggests that the scope of work was likely considered too large or specialized for small business participation as the prime. There is no explicit information on subcontracting plans, but large prime contracts often involve subcontracting opportunities, which could potentially benefit small businesses if actively pursued by the prime contractor.

Oversight & Accountability

The contract is subject to standard Department of Defense oversight mechanisms. As a firm fixed-price contract, financial oversight focuses on ensuring the contractor meets the defined scope of work and delivery schedules. Accountability is tied to contract performance metrics and delivery order fulfillment. Transparency is facilitated through contract databases like FPDS, where basic award information is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair Services
Aviation Logistics Support
Defense Contractor Services
Air Force Procurement
Aerospace Support Contracts

Risk Flags

Limited Competition
Potential for Price Inflation
Broad Service Category

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.2 million to BEECHCRAFT CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is BEECHCRAFT CORPORATION.

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 $69.2 million.

What is the period of performance?

Start: 2005-12-29. End: 2007-10-31.

What is Beechcraft Corporation's track record with the Department of Defense for similar support services?

Beechcraft Corporation, now part of Textron Aviation, has a long history of providing aircraft and support services to the Department of Defense. Their track record includes manufacturing various military aircraft and providing extensive maintenance, repair, and overhaul (MRO) services. For support services specifically, they have historically secured contracts for fleet sustainment, component repair, and logistical support across different branches of the military. While this specific $69 million contract is for 'All Other Support Services,' it aligns with their core competencies in aviation sustainment. A deeper dive into their performance history on similar contracts would reveal their on-time delivery rates, quality of service, and responsiveness to DoD requirements, which are crucial for assessing reliability.

How does the awarded price compare to industry benchmarks for similar aviation support services?

Benchmarking the $69.2 million award requires understanding the specific services rendered under 'All Other Support Services.' Assuming these services relate to aircraft maintenance, repair, and logistical support, the price per day (approximately $103,107) can be compared to industry averages. General aviation MRO services can range significantly based on aircraft type, complexity of work, and labor rates. For military aviation, which often involves more complex systems and stringent quality requirements, costs can be higher. Without detailed service breakdowns, a precise comparison is difficult. However, the fact that it was awarded under full and open competition, even with one bidder, suggests the government likely performed some level of price analysis to deem it fair. Further analysis would involve comparing rates for specific labor categories (e.g., mechanics, engineers) and overhead costs against industry standards.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential cost overruns (though mitigated by the firm fixed-price structure), performance failures (e.g., delays in service, subpar quality), and contractor viability. The firm fixed-price (FFP) nature of the contract shifts the risk of cost overruns to Beechcraft Corporation, which is a significant mitigation for the government. Performance risk is managed through contract oversight, defined milestones, and acceptance criteria. Contractor viability is generally considered lower risk given Beechcraft's established presence in the aerospace industry. However, unforeseen events like supply chain disruptions or labor shortages could still impact performance. Mitigation strategies include clear performance standards, regular progress reviews, and potential remedies for non-performance outlined in the contract.

How effective is the 'All Other Support Services' category in ensuring accountability and value for money?

The 'All Other Support Services' category (NAICS 561990) is inherently broad, encompassing a wide array of non-specific support activities. While it provides flexibility for agencies to procure diverse services, it can also pose challenges for accountability and value-for-money assessments. Effectiveness hinges on the agency's ability to clearly define the scope of work, establish measurable performance metrics, and conduct rigorous oversight within this broad classification. Without specific details on what services fall under this contract, it's difficult to assess its effectiveness. If the services are well-defined and performance is closely tracked, it can be effective. However, broad categories can sometimes obscure inefficiencies or allow for scope creep if not managed diligently, potentially impacting value for taxpayers.

What does the limited competition (one bid) imply about the market for these specific support services?

The fact that only one bid was received for this contract, despite being awarded under 'full and open competition,' suggests several possibilities about the market for these specific support services. It could indicate that the required services are highly specialized, requiring unique capabilities or certifications that only Beechcraft Corporation possesses or is willing to offer. Alternatively, the contract's geographic scope, duration, or specific requirements might have deterred other potential bidders. Market conditions, such as the overall workload of other potential competitors or their strategic focus, could also play a role. This limited competition raises concerns about potential price inflation and reduced innovation, as there was less pressure on the single bidder to offer the most competitive terms.

What is the historical spending trend for 'All Other Support Services' within the Department of the Air Force?

Analyzing historical spending trends for 'All Other Support Services' (NAICS 561990) within the Department of the Air Force (DAF) requires accessing comprehensive federal procurement data. Generally, support services constitute a significant portion of the DAF's overall budget, covering a wide range of needs from logistics and maintenance to administrative and technical support. Spending in this category can fluctuate based on operational tempo, modernization programs, and specific mission requirements. While this $69 million contract is a single data point, understanding the broader trend would involve examining annual spending on this NAICS code over several fiscal years. This would reveal whether spending is increasing, decreasing, or remaining stable, and identify major contractors and types of services procured within this broad category.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Textron Inc (UEI: 001338979)

Address: 9709 E CENTRAL, WICHITA, KS, 67206

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $77,759,989

Exercised Options: $77,759,989

Current Obligation: $69,184,805

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA861706D6150

IDV Type: IDC

Timeline