DoD's $785M contract with Vertex Aerospace for electronic equipment repair shows fair value, but limited competition raises concerns
Contract Overview
Contract Amount: $78,552,445 ($78.6M)
Contractor: Vertex Aerospace LLC
Awarding Agency: Department of Defense
Start Date: 2003-06-23
End Date: 2010-12-31
Contract Duration: 2,748 days
Daily Burn Rate: $28.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Place of Performance
Location: SHEPPARD AFB, WICHITA County, TEXAS, 76311
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $78.6 million to VERTEX AEROSPACE LLC for work described as: Key points: 1. The contract value of $785.5 million over seven years suggests a significant investment in specialized repair services. 2. Competition was full and open, indicating a potentially competitive bidding process. 3. Potential risks include the long duration and the specific nature of the services, which might limit future competition. 4. The sector is focused on defense maintenance, crucial for operational readiness.
Value Assessment
Rating: fair
The contract value of $785.5 million over approximately seven years averages to about $112 million annually. Benchmarking this against similar large-scale defense maintenance contracts is difficult without more specific service details, but the price appears within a reasonable range for specialized, long-term support.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting multiple bidders participated. This method generally promotes price discovery and competitive pricing, although the final price is influenced by the specific technical requirements and the long-term nature of the agreement.
Taxpayer Impact: Taxpayer funds are utilized for essential defense readiness. The competitive award process aims to ensure efficient use of these funds, but the substantial total value warrants ongoing scrutiny.
Public Impact
Ensures operational readiness of Air Force electronic equipment through specialized repair and maintenance. Supports a significant number of jobs within the defense contracting sector. Long-term nature of the contract provides stability for Vertex Aerospace and the supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (7 years) may limit flexibility and future cost savings.
- High total contract value requires diligent oversight to ensure continued value for money.
- Specific repair services are niche, potentially limiting the pool of future competitors.
Positive Signals
- Awarded under full and open competition, maximizing potential bidder participation.
- Firm Fixed Price contract type shifts cost risk to the contractor.
- Contract supports critical defense assets, ensuring mission capability.
Sector Analysis
This contract falls within the Defense sector, specifically focusing on the maintenance and repair of electronic and precision equipment. Spending in this area is critical for maintaining the operational readiness of military assets. Benchmarks are highly specific to the type of equipment and services provided.
Small Business Impact
The data does not indicate whether small businesses were involved as subcontractors. The primary contractor, Vertex Aerospace LLC, is a significant entity, and analysis of its subcontracting practices would be necessary to assess small business participation.
Oversight & Accountability
The Department of the Air Force, under the Department of Defense, is responsible for oversight. The long duration and substantial value necessitate robust contract management, performance monitoring, and regular reviews to ensure compliance and value.
Related Government Programs
- Other Electronic and Precision Equipment Repair and Maintenance
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- High contract value requires sustained oversight.
- Long duration may lead to obsolescence or reduced flexibility.
- Dependence on a single contractor for critical repair services.
- Potential for cost increases if unforeseen technical issues arise.
Tags
other-electronic-and-precision-equipment, department-of-defense, tx, dca, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $78.6 million to VERTEX AEROSPACE LLC. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is VERTEX AEROSPACE 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 $78.6 million.
What is the period of performance?
Start: 2003-06-23. End: 2010-12-31.
How does the annual cost of this contract compare to industry benchmarks for similar electronic equipment repair and maintenance services?
The annual cost averages approximately $112 million. Direct comparison to industry benchmarks is challenging without detailed service scope and equipment specifics. However, for specialized, long-term defense contracts, this figure appears within a plausible range, assuming high technical complexity and stringent performance requirements. Further analysis would require access to proprietary cost data and detailed service level agreements.
What are the primary risks associated with the long duration and firm-fixed-price nature of this contract?
The primary risk of the long duration is potential technological obsolescence of equipment or repair techniques, leading to reduced value over time. A firm-fixed-price contract shifts cost overrun risk to Vertex Aerospace, but if costs escalate unexpectedly due to unforeseen technical challenges or material price increases, the contractor might seek contract modifications or reduce quality to maintain profitability, potentially impacting long-term performance.
How effectively does this contract ensure the long-term readiness and cost-efficiency of the Air Force's electronic equipment maintenance?
The contract aims for effectiveness by securing specialized repair capabilities through a competitive process. The firm-fixed-price structure incentivizes contractor efficiency. However, long-term cost-efficiency depends on vigilant oversight, managing scope creep, and ensuring Vertex Aerospace maintains high-quality standards throughout the contract's seven-year span to prevent costly failures or premature equipment retirement.
Industry Classification
NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance
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: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)
Address: 555 INDUSTRIAL DR S, MADISON, MS, 03
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $74,369,251
Exercised Options: $78,552,445
Current Obligation: $78,552,445
Contract Characteristics
Cost or Pricing Data: NO
Timeline
Start Date: 2003-06-23
Current End Date: 2010-12-31
Potential End Date: 2010-12-31 00:00:00
Last Modified: 2012-03-23
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