DoD's $253M contract for aircraft parts manufacturing saw significant overspending, with a final cost 9822% above initial estimates

Contract Overview

Contract Amount: $25,312,023 ($25.3M)

Contractor: URS Federal Services Inc.

Awarding Agency: Department of Defense

Start Date: 1999-09-09

End Date: 2006-09-29

Contract Duration: 2,577 days

Daily Burn Rate: $9.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: 199912!5700!0381!GD15 !OC-ALC/LIDIC !F3460197D0423 !A!*!0137 !19990909!19990930!020205527!073871048!175406842!N!2AAC5!LEAR SIEGLER SERVICES, INC. !3100 S I 35 !OKLAHOMA CITY !OK!73129!55000!017!40!OKLAHOMA CITY !CANADIAN !OKLAHOMA !0001!+000000254179!N!N!000000000000!J023!MAINT & REPAIR OF EQ/VEHICLES-TRAILERS-CYCLES !A1A!AIRFRAMES AND SPARES !3000!NOT DISCERNABLE OR CLASSIFIED !3728!5!B!S!C!B!A!*!A !U!Y!2!007!B!* !C!Y!Z!* !* !N!C!*!C!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: LAREDO, WEBB County, TEXAS, 78041

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $25.3 million to URS FEDERAL SERVICES INC. for work described as: 199912!5700!0381!GD15 !OC-ALC/LIDIC !F3460197D0423 !A!*!0137 !19990909!19990930!020205527!073871048!175406842!N!2AAC5!LEAR SIEGLER SERVICES, INC. !3100 S I 35 !OKLAHOMA CITY !OK!73129!55000!017!40!OKLAHOMA CITY !CANADI… Key points: 1. The contract's final cost was dramatically higher than the initial estimate, indicating potential issues with cost control or scope creep. 2. Competition was robust, with 7 bidders vying for the contract, suggesting a healthy market for these services. 3. The significant cost overrun presents a clear risk indicator for future contract performance and budget predictability. 4. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a critical component of the defense industrial base. 5. The contract was awarded as a Time and Materials type, which can sometimes lead to cost overruns if not closely managed. 6. The contractor, URS Federal Services Inc., has a track record that warrants further investigation given the substantial cost increase.

Value Assessment

Rating: concerning

The final cost of $253,120,231.50 is a staggering 9822% above the initial estimate of $2,541,790. This level of cost overrun is highly unusual and suggests a severe disconnect between initial planning and final execution. Benchmarking against similar contracts for aircraft parts manufacturing is difficult due to the extreme deviation from the initial estimate. The value for money is questionable given the massive cost increase.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with 7 bidders participating. This indicates a competitive marketplace for the required services. However, the significant cost overrun raises questions about whether the competitive process adequately controlled costs throughout the contract's lifecycle, or if unforeseen circumstances significantly impacted all bidders' cost projections.

Taxpayer Impact: Taxpayers bore the brunt of the substantial cost overrun, paying significantly more than initially anticipated for the goods and services procured.

Public Impact

The primary beneficiaries are likely entities within the Department of Defense requiring aircraft parts and related manufacturing services. The contract supported the production and delivery of 'Other Aircraft Parts and Auxiliary Equipment'. The geographic impact is centered around the contractor's operations in Oklahoma City, Oklahoma, and potentially other locations where parts are manufactured or utilized. The contract likely had implications for the aerospace manufacturing workforce, supporting jobs in design, production, and quality control.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Extreme cost overrun (9822%) indicates poor initial cost estimation or significant unforeseen issues.
The large deviation from the initial estimate raises concerns about the contractor's ability to manage costs effectively.
The Time and Materials contract type, while flexible, can contribute to cost escalation if not rigorously monitored.
Lack of specific details on the 'MAINT & REPAIR OF EQ/VEHICLES-TRAILERS-CYCLES' component makes it hard to assess value.
The contract duration of over 7 years (2577 days) allowed ample time for costs to escalate.

Positive Signals

Awarded under full and open competition, suggesting a competitive market.
Multiple bidders (7) participated, indicating industry interest and capability.
The contract supported a critical defense need for aircraft parts.
The contractor, URS Federal Services Inc., is a known entity in federal contracting.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on 'Other Aircraft Parts and Auxiliary Equipment Manufacturing'. This sector is characterized by high technological demands, stringent quality requirements, and significant government spending. The market size for such components is substantial, driven by military readiness and modernization programs. Comparable spending benchmarks are difficult to establish due to the extreme cost overrun on this specific contract.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting plans for small businesses in the provided data. This suggests that the primary award went to a larger entity, and the impact on the small business ecosystem is likely indirect, potentially through supply chain opportunities.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) and the Defense Contract Management Agency (DCMA). Accountability measures would include performance reviews, audits, and adherence to contract terms. Transparency is assessed through contract databases like FPDS, which provide basic award information. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics
Aerospace Equipment Maintenance
Federal Procurement
Time and Materials Contracts
Department of Defense Contracts

Risk Flags

Extreme Cost Overrun
Potential Poor Initial Estimation
High Risk Contract Type (T&M)
Lack of Transparency on Cost Drivers

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.3 million to URS FEDERAL SERVICES INC.. 199912!5700!0381!GD15 !OC-ALC/LIDIC !F3460197D0423 !A!*!0137 !19990909!19990930!020205527!073871048!175406842!N!2AAC5!LEAR SIEGLER SERVICES, INC. !3100 S I 35 !OKLAHOMA CITY !OK!73129!55000!017!40!OKLAHOMA CITY !CANADIAN !OKLAHOMA !0001!+000000254179!N!N!000000000000!J023!MAINT & REPAIR OF EQ/VEHICLES-TRAILERS-CYCLES !A1A!AIRFRAMES AND SPARES !3000!NOT DISCERNABLE OR CLASSIFIED !3728!5!B!S!C!B!A!*!A !U!Y!2!0

Who is the contractor on this award?

The obligated recipient is URS FEDERAL SERVICES INC..

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 $25.3 million.

What is the period of performance?

Start: 1999-09-09. End: 2006-09-29.

What specific factors contributed to the 9822% cost overrun on this contract?

The provided data does not specify the exact factors leading to the 9822% cost overrun. However, common reasons for such extreme deviations include significant scope creep, unforeseen technical challenges, underestimation of labor or material costs during the bidding phase, changes in government requirements, or extended contract performance periods. The 'MAINT & REPAIR OF EQ/VEHICLES-TRAILERS-CYCLES' and 'AIRFRAMES AND SPARES' components suggest a broad range of potential issues. A detailed review of contract modifications, change orders, and performance reports would be necessary to pinpoint the precise causes.

How does the final cost of $253 million compare to typical spending for similar aircraft parts contracts?

The final cost of $253 million is exceptionally high, especially when considering the initial estimate was only around $2.5 million. Without specific details on the exact type and quantity of aircraft parts, direct comparison is challenging. However, a cost overrun of this magnitude (9822%) is far outside the norm for typical federal contracts. Most well-managed contracts aim for costs within a reasonable variance of the initial estimate. This contract's final expenditure suggests either a vastly underestimated initial scope or significant unforeseen complexities and cost drivers that were not adequately accounted for during the bidding or execution phases.

What is the track record of URS Federal Services Inc. regarding cost management on federal contracts?

The provided data highlights a significant cost overrun on this specific contract awarded to URS Federal Services Inc. (identified as LEAR SIEGLER SERVICES, INC. in the data, which may indicate a predecessor or subsidiary). While this single instance is concerning, a comprehensive assessment of the contractor's track record would require analyzing their entire contract history. This would involve reviewing other awards for cost performance, adherence to schedules, and overall client satisfaction. A deeper dive into historical contract data and performance reviews would be needed to determine if this is an isolated incident or a pattern of behavior.

Were there any contract modifications or change orders that explain the substantial increase in cost?

The provided summary data does not explicitly detail contract modifications or change orders. However, a cost increase of this magnitude (9822%) strongly suggests that significant modifications, scope changes, or unforeseen issues likely occurred during the contract's performance period (1999-2006). Federal contracts often include provisions for modifications to address evolving requirements or unexpected challenges. To understand the cost overrun, a thorough examination of all contract amendments, supplemental agreements, and associated justifications would be essential.

What are the implications of a Time and Materials (T&M) contract type for cost control in this context?

The contract was awarded as a Time and Materials (T&M) type. T&M contracts are often used when the extent or duration of the work cannot be determined in advance. While they offer flexibility, they also carry a higher risk of cost overruns if not managed diligently. In this case, the T&M structure may have contributed to the significant cost increase, as the government pays for the actual labor hours and material costs incurred by the contractor. Effective oversight, detailed reporting, and clear task definitions are crucial to control costs under T&M contracts, and the extreme overrun suggests these controls may have been insufficient or overwhelmed by other factors.

How did the initial estimate of $2.5 million for this contract come to be, and why was it so inaccurate?

The provided data does not explain the methodology behind the initial estimate of $2,541,790. However, such a vast inaccuracy (leading to a final cost of over $253 million) suggests a fundamental flaw in the initial estimation process. This could stem from incomplete requirements definition, a lack of understanding of the technical complexities involved, overly optimistic assumptions about labor or material costs, or a failure to account for potential risks and contingencies. It is also possible that the initial estimate was based on a much smaller scope of work than what was ultimately delivered or required.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: AECOM Global II, LLC (UEI: 043271568)

Address: 175 ADMIRAL COCHRANE DR, ANNAPOLIS, MD, 03

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3460197D0423

IDV Type: IDC

Timeline