DoD's $15.4M aircraft engine maintenance contract with PAE Applied Technologies shows fair value despite limited competition
Contract Overview
Contract Amount: $15,385,393 ($15.4M)
Contractor: PAE Applied Technologies LLC
Awarding Agency: Department of Defense
Start Date: 2009-07-01
End Date: 2010-12-29
Contract Duration: 546 days
Daily Burn Rate: $28.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 7
Pricing Type: TIME AND MATERIALS
Sector: Defense
Official Description: TIME AND MATERIAL LABOR - AIRCRAFT ENGINE MAINTENANCE, MODIFICATION, REPAIR, PREPARATION TESTING, AND ACCEPTANCE TESTING.
Place of Performance
Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73145
State: Oklahoma Government Spending
Plain-Language Summary
Department of Defense obligated $15.4 million to PAE APPLIED TECHNOLOGIES LLC for work described as: TIME AND MATERIAL LABOR - AIRCRAFT ENGINE MAINTENANCE, MODIFICATION, REPAIR, PREPARATION TESTING, AND ACCEPTANCE TESTING. Key points: 1. Contract value of $15.4M for aircraft engine maintenance over 1.7 years suggests a moderate investment in fleet readiness. 2. The 'Full and Open Competition' was utilized, but the low number of bids (7) warrants scrutiny for potential price impacts. 3. Performance and schedule metrics are marked 'OK', indicating satisfactory execution during the contract period. 4. The contract falls within the 'Aircraft Manufacturing' sector, aligning with core defense industrial base activities. 5. No specific small business set-aside was noted, suggesting opportunities may have been missed for smaller enterprises. 6. The 'Time and Materials' pricing structure can pose risks if not closely managed to control labor costs.
Value Assessment
Rating: fair
The contract's total value of $15.4 million for aircraft engine maintenance over approximately 1.7 years appears reasonable for the services rendered. Benchmarking against similar contracts is challenging without more specific service details, but the duration and scope suggest a moderate investment. The 'Time and Materials' pricing model, while common, requires diligent oversight to ensure costs remain aligned with the value delivered and do not escalate beyond expectations. The 'OK' status for performance and schedule indicates the contractor met basic requirements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under 'Full and Open Competition,' theoretically allowing any responsible source to submit an offer. However, only 7 bids were received, which is a relatively low number for a full and open competition, potentially indicating barriers to entry or limited market interest. This level of competition might not have driven the most aggressive pricing, as the contractor faced fewer direct alternatives.
Taxpayer Impact: While competition was open, the limited number of bidders suggests taxpayers may not have benefited from the most cost-effective pricing achievable in a more robustly contested market.
Public Impact
The primary beneficiaries are the Department of Defense and specifically the Department of the Air Force, ensuring the operational readiness of aircraft engines. Services delivered include maintenance, modification, repair, and testing of aircraft engines, crucial for flight safety and mission capability. The geographic impact is likely concentrated around the Air Force bases where PAE Applied Technologies operates, supporting local maintenance activities. Workforce implications include employment for skilled technicians and support staff involved in aircraft engine services.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Risk of cost overruns due to the 'Time and Materials' pricing structure, which can incentivize longer labor hours if not managed.
- Limited competition (7 bidders) may have resulted in less favorable pricing for the government compared to a more competitive scenario.
- The contract duration of 546 days (approx. 1.7 years) is relatively short, potentially leading to frequent re-competition and associated administrative costs.
Positive Signals
- Awarded under 'Full and Open Competition,' adhering to principles of broad market access.
- Performance and schedule metrics were rated 'OK', indicating satisfactory execution of contract requirements.
- The contract supports critical defense functions related to aircraft engine readiness and maintenance.
Sector Analysis
This contract operates within the broader aerospace and defense sector, specifically focusing on aircraft component maintenance and repair. The market for such services is substantial, driven by the continuous need to maintain complex military aviation assets. PAE Applied Technologies, as a significant defense contractor, is well-positioned in this niche. Comparable spending benchmarks would typically involve analyzing other MRO (Maintenance, Repair, and Overhaul) contracts for similar military aircraft engines, considering factors like engine type, complexity, and required service levels.
Small Business Impact
The data indicates this contract was not specifically set aside for small businesses (sb: false). While PAE Applied Technologies is a large business, the lack of a small business set-aside means that subcontracting opportunities for small businesses were not mandated by the contract's structure. The extent of small business participation would depend on PAE's internal subcontracting strategy and any broader small business goals set by the Air Force for this type of work.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are embedded in the performance and schedule metrics ('OK' rating). Transparency is generally provided through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Aircraft Engine Repair and Overhaul Services
- Defense Logistics and Maintenance Contracts
- Air Force Aviation Support Services
- Time and Materials Service Contracts
- Aerospace Manufacturing Support
Risk Flags
- Limited Competition
- Time and Materials Pricing
- Potential for Cost Overruns
- Moderate Performance Rating
Tags
defense, department-of-defense, department-of-the-air-force, aircraft-engine-maintenance, time-and-materials, full-and-open-competition, pae-applied-technologies, aircraft-manufacturing, oklahoma, moderate-competition
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $15.4 million to PAE APPLIED TECHNOLOGIES LLC. TIME AND MATERIAL LABOR - AIRCRAFT ENGINE MAINTENANCE, MODIFICATION, REPAIR, PREPARATION TESTING, AND ACCEPTANCE TESTING.
Who is the contractor on this award?
The obligated recipient is PAE APPLIED TECHNOLOGIES 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 $15.4 million.
What is the period of performance?
Start: 2009-07-01. End: 2010-12-29.
What is the track record of PAE Applied Technologies with the Department of Defense for similar services?
PAE Applied Technologies, now part of Amentum, has a long history of providing a wide range of services to the Department of Defense, including logistics, maintenance, and technical support. Their experience spans various platforms and systems, including aviation. For aircraft engine maintenance specifically, their track record would involve assessing past performance on similar contracts, looking at metrics like on-time delivery, quality of work, and adherence to budget. Historical data suggests PAE has been a significant player in defense contracting, often winning large, complex contracts. A detailed review would involve examining specific past performance evaluations and any contract disputes or awards related to engine maintenance.
How does the pricing structure (Time and Materials) compare to fixed-price contracts for aircraft engine maintenance?
Time and Materials (T&M) contracts, like the one awarded to PAE Applied Technologies, offer flexibility but can lead to higher costs if not managed effectively. The government pays for the actual labor hours and material costs incurred by the contractor, plus a fixed fee or overhead. This contrasts with fixed-price contracts, where the contractor agrees to perform the work for a predetermined sum, shifting more risk to the contractor for cost overruns. For aircraft engine maintenance, T&M can be advantageous when the scope of work is uncertain or difficult to define upfront (e.g., unexpected repairs). However, it requires robust government oversight to monitor labor hours and material usage to prevent cost escalation. Fixed-price contracts are generally preferred when the scope is well-defined, as they offer better cost certainty for the government.
What are the potential risks associated with a 'Time and Materials' contract for aircraft engine maintenance?
The primary risk with a 'Time and Materials' (T&M) contract for aircraft engine maintenance is the potential for cost overruns. Since the contractor is reimbursed for labor hours and materials, there's an inherent incentive to extend labor time or use more expensive parts if not properly monitored. This necessitates strong government oversight, including detailed tracking of hours, verification of materials, and comparison against established labor rates and market prices. Another risk is the difficulty in accurately forecasting the total contract cost, making budget planning more challenging. Without clear ceilings or robust management, T&M contracts can become significantly more expensive than initially anticipated, impacting overall program value for the taxpayer.
How does the number of bidders (7) in a 'Full and Open Competition' impact price discovery and value for money?
Receiving only 7 bids in a 'Full and Open Competition' suggests that while the process was theoretically open to all, the actual market participation was limited. In a highly competitive scenario with numerous bidders, the pressure to offer competitive pricing is intense, leading to better price discovery and potentially lower costs for the government. With only 7 bidders, the level of competition is moderate. This means that while there was some choice, the government might not have achieved the absolute lowest possible price. The specific nature of aircraft engine maintenance, which requires specialized skills and facilities, could contribute to a smaller pool of qualified bidders, thus influencing the number of offers received and the resulting price.
What does the 'OK' rating for performance and schedule imply about the contractor's execution?
An 'OK' rating for performance and schedule indicates that PAE Applied Technologies met the basic requirements and expectations outlined in the contract. It suggests that the work was completed satisfactorily, within the agreed-upon timelines, and to the required standards. However, 'OK' is generally considered a standard or acceptable rating, not an exceptional one. It implies that there were no major deficiencies or significant deviations from the contract terms, but also that the contractor did not necessarily exceed expectations or demonstrate outstanding performance. For a critical function like aircraft engine maintenance, 'OK' performance ensures operational continuity but may not reflect optimal efficiency or innovation.
What is the typical duration for aircraft engine maintenance contracts, and how does this contract's duration compare?
Aircraft engine maintenance contracts can vary significantly in duration depending on the scope of work, the type of engine, and the contracting strategy. Some contracts might be for specific repair actions with shorter durations, while others could be longer-term Performance-Based Logistics (PBL) contracts or indefinite-delivery/indefinite-quantity (IDIQ) vehicles that span several years. This particular contract, with a duration of 546 days (approximately 1.7 years), is relatively short for a comprehensive maintenance program. Shorter durations can sometimes lead to more frequent recompetes, increasing administrative burden and potentially disrupting contractor performance continuity. Longer-term contracts often allow for greater investment in process improvements and can foster stronger partnerships, potentially leading to better long-term value.
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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 7
Pricing Type: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Parent Company: Computer Sciences Corporation (UEI: 009581091)
Address: 6500 WEST FREEWAY STE 600, FORT WORTH, TX, 90
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $15,385,393
Exercised Options: $15,385,393
Current Obligation: $15,385,393
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA810809D0002
IDV Type: IDC
Timeline
Start Date: 2009-07-01
Current End Date: 2010-12-29
Potential End Date: 2010-12-29 00:00:00
Last Modified: 2014-01-02
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