DoD's $184M contract for aviation and missile logistics support services awarded to AAI Corp

Contract Overview

Contract Amount: $184,004,028 ($184.0M)

Contractor: Textron Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2003-05-01

End Date: 2012-01-12

Contract Duration: 3,178 days

Daily Burn Rate: $57.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 200308!003068!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0103C0042 !A!N! !Y! !20030501!20040430!003090198!003090198!001527852!N!AAI CORP !YORK RD & INDUSTRY LA !HUNT VALLEY !MD!21030!41100!005!24!HUNT VALLEY !BALTIMORE !MARYLAND !+000004850000!N!N!000000000000!R706!LOGISTICS SUPPORT SERVICES !A1A!AIRFRAMES AND SPARES !1GHL!AIRBORNE RECON LOW (ARL) !541330!E! !1! ! ! ! ! !99990909!B! ! !A! !D!N!V!1!001!N!1G!C!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: COCKEYSVILLE, BALTIMORE County, MARYLAND, 21030, UNITED STATES OF AMERICA

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $184.0 million to TEXTRON SYSTEMS CORPORATION for work described as: 200308!003068!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0103C0042 !A!N! !Y! !20030501!20040430!003090198!003090198!001527852!N!AAI CORP !YORK RD & INDUSTRY LA !HUNT VALLEY !MD!21030!41100!005!24!HUNT VALLEY !BALTI… Key points: 1. Contract awarded on a sole-source basis, raising questions about potential overpayment and lack of competitive pressure. 2. Significant contract duration of over 8 years suggests a long-term need for these specialized services. 3. The 'Cost Plus Incentive Fee' pricing structure could incentivize cost overruns if not closely monitored. 4. Awarded to AAI Corp, a Textron Systems Corporation subsidiary, indicating a focus on established defense contractors. 5. The contract's scope includes logistics support for airborne reconnaissance systems, a critical but niche defense capability. 6. Geographic concentration in Maryland may indicate a specific operational or maintenance hub for these assets.

Value Assessment

Rating: questionable

The total award amount of $184 million over an 8-year period for logistics support services is substantial. Without comparable contract data for similar services or specific performance metrics, it is difficult to definitively assess value for money. The 'Cost Plus Incentive Fee' (CPIF) contract type, while allowing for flexibility, can lead to higher costs if not managed rigorously, especially in the absence of competitive bidding which would typically drive down prices. The lack of competition is a primary concern regarding the overall value realized by the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one bidder, AAI Corp., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally result in less price discovery and potentially higher costs for the government compared to full and open competition.

Taxpayer Impact: The lack of competition means taxpayers may not have received the best possible price for these essential logistics support services. Without competing offers, there's no market pressure to ensure cost-effectiveness.

Public Impact

The primary beneficiaries are the U.S. Army units utilizing the Airborne Reconnaissance Low (ARL) systems, ensuring their operational readiness. Services delivered include crucial logistics support, likely encompassing maintenance, repair, and supply chain management for airframes and spares. The geographic impact is concentrated in Maryland, suggesting a key operational or maintenance facility for these assets. Workforce implications include the employment of specialized personnel in logistics, aviation maintenance, and potentially engineering roles within AAI Corp.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost Plus Incentive Fee structure requires stringent oversight to prevent cost overruns.
Long contract duration (over 8 years) increases exposure to potential performance issues or scope creep.
Lack of transparency in the sole-source justification process.
Potential for vendor lock-in due to specialized nature of services and long-term relationship.

Positive Signals

Award to an established contractor (AAI Corp.) suggests a level of proven capability in defense logistics.
Focus on critical assets like Airborne Reconnaissance Low (ARL) systems indicates support for essential national security functions.
The incentive fee component, if structured effectively, could drive performance improvements.
Contract addresses a clear need for specialized logistics support in a complex defense sector.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense logistics for aviation assets. The market for defense logistics and maintenance services is substantial, dominated by large aerospace and defense contractors. AAI Corp., as a Textron Systems subsidiary, is a significant player in this space. Benchmarking this contract's value is challenging without more specific details on the services provided and comparable contract awards, especially given its sole-source nature.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false. Furthermore, there is no explicit mention of subcontracting goals for small businesses. This suggests that the primary contract was awarded directly to AAI Corp., a large defense contractor, and opportunities for small businesses may be limited unless they are direct suppliers or subcontractors to AAI Corp. without specific set-aside requirements.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The 'Cost Plus Incentive Fee' (CPIF) nature of the contract necessitates robust financial oversight to monitor costs and ensure that incentive targets are met appropriately. Transparency regarding the justification for the sole-source award and ongoing performance metrics would be key accountability measures.

Related Government Programs

Army Aviation and Missile Command Logistics Support Contracts
Airborne Reconnaissance Systems Maintenance and Support
Defense Logistics and Sustainment Services
Cost Plus Incentive Fee Contracts in Defense
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-reimbursement contract type
Long contract duration
Lack of explicit small business subcontracting goals

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $184.0 million to TEXTRON SYSTEMS CORPORATION. 200308!003068!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0103C0042 !A!N! !Y! !20030501!20040430!003090198!003090198!001527852!N!AAI CORP !YORK RD & INDUSTRY LA !HUNT VALLEY !MD!21030!41100!005!24!HUNT VALLEY !BALTIMORE !MARYLAND !+000004850000!N!N!000000000000!R706!LOGISTICS SUPPORT SERVICES !A1A!AIRFRAMES AND SPARES !1GHL!AIRBORNE RECON LOW (ARL) !541330!E! !1! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is TEXTRON SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $184.0 million.

What is the period of performance?

Start: 2003-05-01. End: 2012-01-12.

What is the specific nature of the 'logistics support services' provided under this contract, and how do they contribute to the operational readiness of the Airborne Reconnaissance Low (ARL) systems?

The contract data indicates the primary service category is 'LOGISTICS SUPPORT SERVICES' with a Product Service Code (PSC) of '541330' (Engineering Services) and a specific description related to 'AIRFRAMES AND SPARES' and 'AIRBORNE RECON LOW (ARL)'. This suggests the services likely encompass a broad range of activities critical for maintaining the operational capability of the ARL systems. These could include scheduled and unscheduled maintenance, repair and overhaul of airframes and associated components, supply chain management for spare parts, technical support, engineering analysis for system improvements or sustainment, and potentially depot-level maintenance. Ensuring the availability and reliability of these specialized reconnaissance aircraft is paramount for intelligence gathering and surveillance missions, directly impacting the readiness of units that depend on them.

How does the 'Cost Plus Incentive Fee' (CPIF) structure work in this contract, and what are the potential risks and benefits for the government?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and also receives a fee that is adjusted based on performance against pre-determined targets. In this contract, AAI Corp. would be reimbursed for its costs incurred in providing logistics support. The 'incentive' part means that if AAI Corp. meets or exceeds certain performance goals (e.g., delivery times, system availability, cost savings targets), its fee will increase above a base amount. Conversely, if performance falls short, the fee could be reduced. The benefit for the government is the potential for improved performance and cost control, as the contractor is motivated to achieve specific objectives. However, the primary risk is that the 'cost plus' nature still means the government bears the cost risk. If the targets are poorly defined, or if the contractor prioritizes achieving the incentive over other critical factors, costs could still escalate. Rigorous oversight is essential to ensure the incentive structure truly aligns with government interests and doesn't inadvertently encourage undesirable outcomes.

Given the sole-source nature of this award, what mechanisms were likely in place to ensure fair pricing and prevent excessive costs?

When a contract is awarded on a sole-source basis, the government loses the benefit of competitive bidding, which is a primary driver of fair pricing. To mitigate this, agencies typically employ other methods to ensure fair and reasonable pricing. This often involves conducting a thorough price analysis, which might include reviewing historical pricing data for similar services, analyzing the contractor's cost proposals in detail (especially for CPIF contracts), and potentially using independent cost estimates. For sole-source procurements, agencies are often required to document extensive justification, demonstrating why competition is not feasible or advantageous. The Defense Contract Audit Agency (DCAA) may also be involved in auditing the contractor's cost proposals. However, without access to the specific price negotiation documentation and justification for the sole-source award, it's difficult to definitively assess the effectiveness of these measures in this particular case.

What is the historical spending pattern for logistics support services related to the Airborne Reconnaissance Low (ARL) systems, and how does this $184M contract compare?

The provided data only details this specific contract (DAAH0103C0042) awarded to AAI Corp. for $184,007,928.20, with a start date of May 1, 2003, and an end date of April 30, 2004, for the base period, but the 'ed' field shows 2012-01-12, indicating a much longer period potentially including options or modifications. To understand historical spending, one would need to analyze contract awards for AAI Corp. and potentially other contractors performing similar services for ARL systems across different fiscal years. This would involve searching federal procurement databases (like FPDS or USASpending) for all contracts related to 'Airborne Reconnaissance Low' or similar platforms and 'logistics support' or 'engineering services' within the Department of Defense. Without that broader analysis, it's impossible to establish a trend or benchmark this $184M award against prior or subsequent spending.

What are the potential risks associated with AAI Corp. (Textron Systems) as the sole contractor for these critical aviation logistics services?

Awarding a significant, long-term contract on a sole-source basis to a single entity like AAI Corp. (a subsidiary of Textron Systems) introduces several potential risks. Firstly, there's the risk of complacency; without competitive pressure, the contractor might have less incentive to innovate or aggressively control costs. Secondly, there's a dependency risk – the government becomes reliant on AAI Corp.'s specific capabilities and infrastructure. If AAI Corp. faces financial difficulties, operational disruptions, or decides to exit this particular market segment, the government could face significant challenges in finding an alternative provider, potentially leading to mission impacts or costly transitions. Thirdly, the lack of competition inherently limits the government's ability to leverage market forces to secure the best possible pricing and terms over the contract's lifecycle. This necessitates a higher degree of government oversight and contract management to ensure continued value and performance.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Contractor Details

Parent Company: Textron Inc (UEI: 001338979)

Address: YORK RD & INDUSTRY LA, HUNT VALLEY, MD, 21030

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline