DoD's $46.2M Aircraft Manufacturing Contract with Vertex Aerospace Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $46,244,399 ($46.2M)
Contractor: Vertex Aerospace LLC
Awarding Agency: Department of Defense
Start Date: 2007-12-01
End Date: 2010-04-30
Contract Duration: 881 days
Daily Burn Rate: $52.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: TIME AND MATERIALS
Sector: Defense
Official Description: DEPOT LEVEL MAINTENANCE
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92135
Plain-Language Summary
Department of Defense obligated $46.2 million to VERTEX AEROSPACE LLC for work described as: DEPOT LEVEL MAINTENANCE Key points: 1. The contract awarded to Vertex Aerospace LLC for Depot Level Maintenance represents a significant investment in aircraft manufacturing. 2. Full and open competition was utilized, suggesting an effort to secure competitive pricing, though the final price is a key area for review. 3. Potential risks include the Time and Materials pricing structure, which can lead to cost overruns if not managed effectively. 4. The sector is Aircraft Manufacturing, a critical area for national defense, with spending benchmarks needing careful consideration.
Value Assessment
Rating: fair
The contract's value of $46.2 million for depot level maintenance requires careful assessment against industry benchmarks for similar aircraft manufacturing services. The Time and Materials pricing structure, without a clear ceiling, raises concerns about potential cost escalation and overall value for money.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is a positive indicator for price discovery. However, the Time and Materials (T&M) pricing type can limit the effectiveness of competition in controlling final costs, as the contractor is reimbursed for actual labor and material costs plus a fee.
Taxpayer Impact: The use of T&M pricing, while allowing for flexibility, poses a risk to taxpayers if not rigorously monitored for efficiency and necessity of expenditures.
Public Impact
Taxpayers may be exposed to higher costs due to the Time and Materials pricing structure, which lacks a fixed ceiling. The effectiveness of the competition is somewhat diminished by the T&M pricing, potentially leading to less cost certainty. The duration of the contract (881 days) and its value suggest a substantial commitment of resources that warrants ongoing oversight.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Time and Materials pricing structure
- Lack of clear cost ceiling
- Potential for cost overruns
Positive Signals
- Awarded under full and open competition
- Critical defense sector support
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, specifically focusing on depot-level maintenance. Spending in this area is crucial for maintaining military readiness, but it is also susceptible to cost overruns if not managed with strict oversight, especially with T&M contracts.
Small Business Impact
The provided data does not indicate whether small businesses were involved as subcontractors or prime contractors. Further analysis would be needed to determine the extent of small business participation in this contract.
Oversight & Accountability
The Time and Materials pricing structure necessitates robust oversight from the Department of Defense to ensure that all costs incurred are reasonable, allocable, and necessary. Regular audits and performance reviews are critical for accountability.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Time and Materials pricing structure
- Lack of cost ceiling
- Potential for cost overruns
- Limited visibility into subcontractor costs (if applicable)
Tags
aircraft-manufacturing, department-of-defense, ca, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $46.2 million to VERTEX AEROSPACE LLC. DEPOT LEVEL 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 (Department of the Navy).
What is the total obligated amount?
The obligated amount is $46.2 million.
What is the period of performance?
Start: 2007-12-01. End: 2010-04-30.
What was the estimated cost ceiling or target price for this Time and Materials contract, and how was it determined?
The provided data does not specify an estimated cost ceiling or target price for this Time and Materials contract. T&M contracts typically reimburse the contractor for direct labor hours at specified hourly rates, plus direct material costs, and a fixed fee or profit. Without a ceiling, the government's financial exposure is theoretically unlimited, making rigorous monitoring of labor hours and material costs paramount.
How effectively did the 'full and open competition' process mitigate cost risks associated with the Time and Materials pricing structure?
While 'full and open competition' is designed to foster price discovery, its effectiveness in mitigating cost risks for Time and Materials (T&M) contracts is inherently limited. Competition primarily drives down the initial bid price or hourly rates. However, T&M contracts reimburse actual costs, meaning efficiencies or inefficiencies during performance can significantly impact the final price, potentially negating initial competitive advantages.
What specific metrics or performance indicators were used to assess the value and effectiveness of Vertex Aerospace's depot-level maintenance services?
The provided data does not detail the specific metrics or performance indicators used to assess the value and effectiveness of Vertex Aerospace's services. For T&M contracts, effectiveness is often measured through on-time delivery, quality of work (e.g., defect rates), and adherence to technical specifications. Value is harder to quantify with T&M and relies heavily on the government's ability to manage and audit costs effectively.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
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: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)
Address: 555 INDUSTRIAL DR S, MADISON, MS, 03
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $46,279,716
Exercised Options: $46,279,716
Current Obligation: $46,244,399
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N6893606D0024
IDV Type: IDC
Timeline
Start Date: 2007-12-01
Current End Date: 2010-04-30
Potential End Date: 2010-04-30 00:00:00
Last Modified: 2010-07-22
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