Forest Service awards $18.7M for helicopter services, raising questions on value and competition

Contract Overview

Contract Amount: $18,710,433 ($18.7M)

Contractor: Construction Helicopters, Inc.

Awarding Agency: Department of Agriculture

Start Date: 2010-05-20

End Date: 2014-04-30

Contract Duration: 1,441 days

Daily Burn Rate: $13.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 23

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: NATIONAL INITIAL ATTACK HELICOPTER SERVICES

Place of Performance

Location: BELLINGHAM, WHATCOM County, WASHINGTON, 98226

State: Washington Government Spending

Plain-Language Summary

Department of Agriculture obligated $18.7 million to CONSTRUCTION HELICOPTERS, INC. for work described as: NATIONAL INITIAL ATTACK HELICOPTER SERVICES Key points: 1. Contract value appears high relative to duration, suggesting potential for cost efficiencies. 2. Limited competition dynamics may have impacted price discovery and overall value for money. 3. Risk indicators include the contract type (fixed price with economic price adjustment) which can expose the government to cost escalations. 4. Performance context is limited, but the service category suggests critical operational support. 5. Sector positioning is within aviation support services for federal land management agencies.

Value Assessment

Rating: fair

The contract's total value of $18.7 million over approximately 4 years (1441 days) averages to roughly $4.9 million per year. Benchmarking against similar nonscheduled chartered freight air transportation contracts is difficult without more specific service details. However, the fixed-price with economic price adjustment structure introduces risk of cost overruns, potentially impacting the overall value proposition if market prices for fuel or other inputs rise significantly. The relatively high number of offers (23) is a positive sign, but the final price needs closer scrutiny against market rates for comparable helicopter services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources may have been excluded. With 23 offers received, the competition level appears robust on the surface. However, the 'exclusion of sources' clause warrants further investigation to understand if it artificially limited the pool of potential bidders and thus impacted price discovery. A truly open competition typically yields the most competitive pricing.

Taxpayer Impact: The exclusion of certain sources, even with a high number of offers, could mean taxpayers did not benefit from the lowest possible price achievable through unrestricted market participation.

Public Impact

The primary beneficiaries are the Department of Agriculture's Forest Service, which receives critical aviation support for its operations. Services delivered include nonscheduled chartered freight air transportation, likely essential for remote area access, firefighting support, or resource management. Geographic impact is centered in Washington state, where the contract was awarded and services are likely performed. Workforce implications may include support for pilots, mechanics, and ground crews associated with helicopter operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost escalation due to 'economic price adjustment' clause.
Unclear impact of 'exclusion of sources' on true competition and pricing.
Limited detail on specific performance metrics and outcomes.

Positive Signals

Significant number of offers (23) suggests broad interest in the contract.
Awarded to a single contractor, implying a clear selection process.
Contract duration provides a period of stable service provision.

Sector Analysis

The aviation support services sector is critical for various government functions, including land management, emergency response, and logistics. The market for specialized air transport, particularly for government contracts, is often influenced by regulatory requirements, safety standards, and the need for specific aircraft capabilities. This contract fits within the broader category of government aviation procurement, where factors like operational readiness, cost-effectiveness, and contractor reliability are paramount. Comparable spending benchmarks would depend on the specific type of helicopter and mission profile.

Small Business Impact

The provided data does not indicate any small business set-aside provisions (ss: false, sb: false). Therefore, this contract was not specifically targeted towards small businesses. There is no information on subcontracting plans, so the direct impact on the small business ecosystem is unclear. Without specific set-aside goals or reporting, it's difficult to assess the extent to which small businesses may have participated either as prime contractors or subcontractors.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) within the Forest Service, responsible for monitoring performance and ensuring compliance with contract terms. Accountability measures are embedded in the contract's performance requirements and payment terms. Transparency is generally facilitated through federal procurement databases like FPDS, where contract awards are recorded. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Department of Agriculture Aviation Management
Forest Service Firefighting Support Contracts
Federal Aviation Administration (FAA) Regulations
General Services Administration (GSA) Aviation Services

Risk Flags

Potential for cost overruns due to economic price adjustment.
Limited clarity on the impact of 'exclusion of sources' on competition.
Lack of specific performance metrics in the provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $18.7 million to CONSTRUCTION HELICOPTERS, INC.. NATIONAL INITIAL ATTACK HELICOPTER SERVICES

Who is the contractor on this award?

The obligated recipient is CONSTRUCTION HELICOPTERS, INC..

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Forest Service).

What is the total obligated amount?

The obligated amount is $18.7 million.

What is the period of performance?

Start: 2010-05-20. End: 2014-04-30.

What is the specific nature of the 'nonscheduled chartered freight air transportation' services provided under this contract, and how do they align with the Forest Service's mission?

The service category 'Nonscheduled Chartered Freight Air Transportation' (NAICS code 481212) typically refers to the chartering of aircraft for transporting goods or cargo on a non-regularly scheduled basis. For the Forest Service, this could encompass a wide range of critical operations, including the delivery of supplies and equipment to remote fire camps, transport of personnel to inaccessible areas, aerial application of retardants or water during wildfires, or movement of natural resource management equipment. The specific alignment with the Forest Service's mission is high, as efficient and timely logistical support via air transport is often crucial for managing vast federal lands, responding to emergencies like wildfires, and conducting conservation efforts in challenging terrains.

How does the 'fixed price with economic price adjustment' (FP-EPA) contract type potentially impact the final cost to taxpayers compared to a firm-fixed-price contract?

A Fixed Price with Economic Price Adjustment (FP-EPA) contract allows for adjustments to the contract price based on fluctuations in specified economic factors, most commonly fuel costs or labor rates. This contrasts with a Firm Fixed Price (FFP) contract, where the price remains constant regardless of market changes. While FP-EPA can provide contractors with a degree of protection against unforeseen cost increases, potentially ensuring service availability, it shifts some of the price risk to the government. If the specified economic indicators rise significantly during the contract period, the total cost to taxpayers could exceed what would have been paid under an FFP contract, especially if the initial price was not conservatively estimated. Conversely, if costs decrease, the price may be adjusted downward, though this is less common in practice.

What does the 'exclusion of sources' in the competition type 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' imply for the bidding process and potential price outcomes?

The competition type 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' indicates that while the solicitation was intended to be open to all responsible sources, specific categories or types of sources were intentionally excluded from bidding. This exclusion could be based on various factors, such as specific technical capabilities, past performance requirements, or national security considerations. While the intent is still to achieve broad competition among the remaining eligible sources, the exclusion inherently limits the total number of potential bidders. This reduction in the competitive pool could potentially lead to less aggressive pricing than if the competition were entirely unrestricted, as the pressure to underbid a wider range of competitors is lessened. Understanding the rationale behind the exclusion is key to assessing its impact on price discovery.

Given the contract duration of 1441 days (approx. 4 years), how does the total award amount of $18.7 million compare to annual spending on similar helicopter services by the Forest Service or other ag

The total award of $18.7 million over approximately four years equates to an average annual value of roughly $4.675 million. To assess this accurately, it requires comparison with historical spending data for similar nonscheduled chartered freight air transportation services, specifically helicopter-based operations, within the Forest Service and other agencies like the Department of the Interior or FEMA. Without access to detailed historical spending benchmarks for comparable services (e.g., specific helicopter models, mission types like firefighting vs. transport, operational hours), it's challenging to definitively state whether this amount represents high, low, or average spending. However, the figure suggests a significant investment in aviation support, warranting scrutiny against market rates and service needs.

What are the potential risks associated with awarding a contract of this magnitude to a single entity, even with multiple offers received?

Awarding a contract of this magnitude ($18.7 million) to a single entity, even after receiving 23 offers, carries inherent risks. Firstly, it concentrates operational reliance on one contractor, increasing vulnerability if that contractor experiences financial difficulties, operational failures, or goes out of business. Secondly, while 23 offers indicate initial interest, the long-term performance and potential for complacency from a sole provider can be a concern. There's a risk that the contractor may become less incentivized to innovate or maintain peak efficiency over the contract's duration. Furthermore, if the contract is critical and the contractor underperforms, finding and transitioning to a replacement can be a lengthy and costly process, potentially disrupting essential Forest Service operations.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Freight Air Transportation

Product/Service Code: NATURAL RESOURCES MANAGEMENT › NATURAL RESOURCE CONSERVERVAT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: AG-024B-S-09-9004

Offers Received: 23

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 3679 BOWEN RD, HOWELL, MI, 07

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $18,710,433

Exercised Options: $18,710,433

Current Obligation: $18,710,433

Contract Characteristics

Cost or Pricing Data: NO

Timeline