DoD Awards $788M for Aircraft Structural Component Repair, Facing Potential Cost Overruns
Contract Overview
Contract Amount: $251,404,587 ($251.4M)
Contractor: Vertex Aerospace LLC
Awarding Agency: Department of Defense
Start Date: 2006-09-18
End Date: 2011-08-20
Contract Duration: 1,797 days
Daily Burn Rate: $139.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: TIME AND MATERIALS
Sector: Defense
Official Description: 200612!001546!5700!FA8108!OC-ALC/LAD CFT !F3460197D0425 !A!N! !N!0305 ! !20060918!20070921!788547347!091441089!008898843!N!L-3 COMMUNICATIONS VERTEX AER!8001 MID AMERICA BLVD STE !OKLAHOMA CITY !OK!73135!00000! !AF! ! !AFGHANISTA!+000026904000!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1A!AIRFRAMES AND SPARES !000 !NOT DISCERNABLE !336413!E! !5!B!M! !A! !99990909!B! ! !A! !A!U!Y!2!004!B! !Z!Y!Z! ! !N!M!N! ! ! ! ! !A!A!000!A!B!N! ! ! ! !2100! !0001! !
Place of Performance
Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135
State: Oklahoma Government Spending
Plain-Language Summary
Department of Defense obligated $251.4 million to VERTEX AEROSPACE LLC for work described as: 200612!001546!5700!FA8108!OC-ALC/LAD CFT !F3460197D0425 !A!N! !N!0305 ! !20060918!20070921!788547347!091441089!008898843!N!L-3 COMMUNICATIONS VERTEX AER!8001 MID AMERICA BLVD STE !OKLAHOMA CITY !OK!73135!00000! !AF! ! … Key points: 1. Significant contract value for aircraft structural component maintenance. 2. Competition was full and open, but pricing mechanisms warrant scrutiny. 3. Risk of cost overruns exists due to time and materials contract type. 4. Defense sector spending on aircraft parts and repair is substantial.
Value Assessment
Rating: questionable
The contract's total value is substantial. However, the use of Time and Materials pricing, coupled with a significant number of modifications and a high number of contract actions, raises concerns about cost control and potential overruns compared to fixed-price contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the Time and Materials pricing structure may limit the effectiveness of competition in controlling final costs.
Taxpayer Impact: The substantial value of this contract means that any inefficiencies or cost overruns directly impact taxpayer funds allocated to defense.
Public Impact
Ensures continued operational readiness of critical aircraft assets. Supports jobs within the aerospace maintenance and repair industry. Potential for increased costs to taxpayers if not managed effectively. Impacts the supply chain for essential military aircraft components.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Time and Materials pricing
- High number of modifications
- Potential for cost overruns
Positive Signals
- Full and open competition
- Supports critical defense infrastructure
Sector Analysis
This contract falls within the Defense sector, specifically for the maintenance and repair of aircraft structural components. Spending in this area is crucial for maintaining military readiness and can be benchmarked against similar MRO (Maintenance, Repair, and Overhaul) contracts for military aircraft.
Small Business Impact
While the primary contractor is Vertex Aerospace LLC, it's important to analyze if and how small businesses are utilized as subcontractors for specialized services or parts within this large contract.
Oversight & Accountability
The contract's duration and number of modifications suggest a need for robust oversight to ensure adherence to scope, prevent scope creep, and manage costs effectively. Audits and performance reviews are critical.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Potential for cost overruns due to T&M pricing
- High number of contract modifications
- Dependency on specific suppliers for parts
- Risk of component obsolescence
- Quality control of repaired/manufactured parts
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, ok, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $251.4 million to VERTEX AEROSPACE LLC. 200612!001546!5700!FA8108!OC-ALC/LAD CFT !F3460197D0425 !A!N! !N!0305 ! !20060918!20070921!788547347!091441089!008898843!N!L-3 COMMUNICATIONS VERTEX AER!8001 MID AMERICA BLVD STE !OKLAHOMA CITY !OK!73135!00000! !AF! ! !AFGHANISTA!+000026904000!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1A!AIRFRAMES AND SPARES !000 !NOT DISCERNABLE !336413!E! !5!B!M! !A! !999
Who is the contractor on this award?
The obligated recipient is VERTEX AEROSPACE LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $251.4 million.
What is the period of performance?
Start: 2006-09-18. End: 2011-08-20.
What is the average cost per modification, and how does it compare to the initial contract value?
Analyzing the average cost per modification requires detailed data on each modification's value. Without this granular data, a precise comparison is difficult. However, a high number of modifications on a Time and Materials contract often indicates potential scope creep or evolving requirements, which can lead to increased overall costs beyond initial projections.
What specific risks are associated with the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category in this contract?
Risks in this category can include supply chain disruptions for specialized parts, obsolescence of older components, quality control issues with manufactured or repaired parts, and fluctuating market prices for raw materials. Ensuring robust quality assurance and supplier vetting is crucial to mitigate these risks.
How effectively does the Time and Materials pricing model ensure value for money in aircraft structural component repair?
Time and Materials pricing can be less effective for ensuring value for money compared to fixed-price contracts, as it incentivizes longer labor hours and higher material costs. While it offers flexibility for undefined scopes, it necessitates stringent oversight, detailed cost tracking, and competitive bidding on subcontracts to control expenditures and prevent overcharging.
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: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 4
Pricing Type: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)
Address: 8001 MID AMERICA BLVD STE 500, OKLAHOMA CITY, OK, 90
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: F3460197D0425
IDV Type: IDC
Timeline
Start Date: 2006-09-18
Current End Date: 2011-08-20
Potential End Date: 2011-08-20 00:00:00
Last Modified: 2011-03-21
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