DoD's $54.7M contract with Vertex Aerospace for electronic equipment repair shows fair competition and good value

Contract Overview

Contract Amount: $54,684,166 ($54.7M)

Contractor: Vertex Aerospace LLC

Awarding Agency: Department of Defense

Start Date: 2010-10-29

End Date: 2015-09-30

Contract Duration: 1,797 days

Daily Burn Rate: $30.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MICROPURCHASE

Place of Performance

Location: SHEPPARD AFB, WICHITA County, TEXAS, 76311

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $54.7 million to VERTEX AEROSPACE LLC for work described as: MICROPURCHASE Key points: 1. Contract value of $54.7M over 5 years suggests a steady demand for specialized repair services. 2. Full and open competition indicates a healthy market with multiple potential providers. 3. The firm-fixed-price structure helps manage cost certainty for the government. 4. Awarded to Vertex Aerospace LLC, a company with a significant presence in aerospace support. 5. The contract's duration of nearly 5 years points to a stable, long-term requirement. 6. Geographic location in Texas may indicate a concentration of relevant aerospace infrastructure.

Value Assessment

Rating: good

The contract's total value of $54.7 million over approximately 5 years averages to about $10.9 million annually. This figure appears reasonable for specialized electronic and precision equipment repair and maintenance services, especially within the defense sector where complexity and security requirements can drive costs. Benchmarking against similar contracts would provide a more precise value assessment, but the scale suggests a significant operational need being met.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that the Department of Defense actively sought bids from all responsible sources. With two bidders identified, this suggests a competitive environment, though the exact number of proposals received and the evaluation process would offer deeper insights into the intensity of the competition. A competitive process generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that is likely to have driven down costs compared to a sole-source award. The presence of multiple bidders suggests that the government received competitive pricing, maximizing the value of taxpayer dollars.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, ensuring the operational readiness of critical electronic and precision equipment. Services delivered include repair and maintenance for a range of electronic and precision equipment, crucial for military operations. The contract's geographic impact is centered in Texas, suggesting a concentration of Air Force assets or maintenance facilities in the region. Workforce implications include the potential for skilled technicians and support staff employed by Vertex Aerospace and potentially its subcontractors in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specialized knowledge is highly concentrated with Vertex Aerospace.
Reliance on a single awardee for critical repair services could pose a risk if performance issues arise.
The firm-fixed-price contract, while good for cost certainty, might limit flexibility if unforeseen technical challenges emerge requiring scope adjustments.

Positive Signals

Full and open competition suggests a robust market and potential for multiple qualified vendors.
The firm-fixed-price contract provides cost predictability for the government.
The contract's duration indicates a stable, ongoing need, suggesting the service is valued and effective.
Award to an established entity like Vertex Aerospace may imply a track record of successful performance in similar contracts.

Sector Analysis

This contract falls within the broader aerospace and defense services sector, specifically focusing on maintenance, repair, and overhaul (MRO) for electronic and precision equipment. The market for defense MRO is substantial, driven by the need to maintain aging fleets and complex weapon systems. Spending in this area is critical for national security, ensuring equipment availability and reducing lifecycle costs. Comparable spending benchmarks would likely be found within other large MRO contracts for aviation or electronic systems within the DoD.

Small Business Impact

The contract details indicate that small business participation was not a primary set-aside consideration (ss: false, sb: false). While Vertex Aerospace LLC is the prime contractor, there is no explicit information regarding subcontracting goals for small businesses within this specific award. The impact on the small business ecosystem would depend on Vertex's subcontracting practices; a lack of set-aside does not preclude opportunities, but it also doesn't guarantee them.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Air Force. Accountability measures are embedded in the firm-fixed-price contract terms, requiring Vertex Aerospace to deliver specified services within agreed-upon costs. Transparency is facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency (DLA) Maintenance, Repair, and Overhaul Services
Air Force Sustainment Center Contracts
Aerospace Component Repair Contracts
Electronic Systems Maintenance Contracts

Risk Flags

Potential for cost overruns if scope is not clearly defined.
Risk of performance degradation if contractor prioritizes profit over quality.
Dependence on a single contractor for critical repair services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.7 million to VERTEX AEROSPACE LLC. MICROPURCHASE

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 $54.7 million.

What is the period of performance?

Start: 2010-10-29. End: 2015-09-30.

What is Vertex Aerospace LLC's track record with similar Department of Defense contracts?

Vertex Aerospace LLC has a history of performing contracts for the Department of Defense, often related to aviation support, maintenance, and logistics. While this specific contract focuses on electronic and precision equipment repair, the company's broader experience in aerospace services suggests familiarity with DoD requirements, procurement processes, and performance expectations. Analyzing their past performance ratings, any contract modifications, and the types of equipment they have serviced previously would provide a more detailed picture of their capabilities and reliability. Publicly available data indicates they have held various contracts across different branches of the military, underscoring their established presence in the defense contracting landscape.

How does the annual spending on this contract compare to industry benchmarks for similar repair services?

The average annual spending of approximately $10.9 million ($54.7M / ~5 years) for electronic and precision equipment repair and maintenance is substantial. Within the defense sector, such figures are not uncommon for specialized MRO services supporting complex military assets. However, direct industry benchmarks are challenging to establish without knowing the precise nature of the equipment and the specific services rendered. Compared to commercial aviation MRO, defense contracts can be higher due to stricter specifications, security protocols, and smaller production runs. A more accurate comparison would involve analyzing other DoD contracts for similar equipment types or services provided by different defense contractors.

What are the primary risks associated with this firm-fixed-price contract for electronic equipment repair?

The primary risk with a firm-fixed-price (FFP) contract, especially for complex repair services, is the potential for the contractor to cut corners on quality or scope to maintain profitability if unforeseen technical difficulties arise or costs escalate beyond initial estimates. While FFP provides cost certainty for the government, it places the cost risk on the contractor. If the contractor underestimates the complexity or labor required, they may face financial losses, potentially impacting their motivation or ability to perform. Conversely, if the contractor significantly overestimates costs, the government may pay a premium. Effective oversight and clear performance metrics are crucial to mitigate these risks.

How effective is the 'full and open competition' approach in ensuring value for this type of specialized repair service?

The 'full and open competition' approach is generally considered highly effective in ensuring value for specialized repair services. It maximizes the pool of potential offerors, increasing the likelihood of receiving competitive bids that reflect fair market prices. For electronic and precision equipment repair, where multiple companies may possess the necessary technical expertise and certifications, open competition allows the government to identify the best technical solution at the most advantageous price. The presence of two bidders, as indicated, suggests a degree of competition, but the true measure of effectiveness lies in whether this competition led to a price significantly below what might have been expected from a sole-source or limited competition scenario.

What is the historical spending trend for electronic and precision equipment repair and maintenance within the Department of Defense?

Historical spending trends for electronic and precision equipment repair and maintenance within the Department of Defense are generally characterized by consistent, significant investment. The DoD operates a vast array of complex electronic systems across all branches, requiring ongoing sustainment, upgrades, and repairs. Spending in this category is influenced by factors such as the age of equipment, technological advancements, operational tempo, and strategic priorities. While specific aggregate figures fluctuate annually, the overall demand for these services remains robust due to the critical role such equipment plays in national defense. Contracts like the one awarded to Vertex Aerospace represent a portion of this larger, sustained spending pattern.

What are the potential implications of this contract being awarded in Texas?

The award of this contract in Texas has several potential implications. Texas is a major hub for aerospace and defense activities, hosting numerous military installations and private sector companies. This geographic concentration suggests that Vertex Aerospace may have a significant operational presence or key facilities in the state, potentially leveraging existing infrastructure and a skilled local workforce. For the local economy, it signifies job creation and business opportunities within the defense support sector. Furthermore, it may indicate that the specific Air Force units or equipment requiring these repair services are based in or frequently operate within the region, making a Texas-based contractor a logistical advantage.

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

Solicitation ID: FA300209R0040

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3 Technologies, Inc. (UEI: 008898884)

Address: 555 INDUSTRIAL DR S, MADISON, MS, 39110

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

Financial Breakdown

Contract Ceiling: $54,684,166

Exercised Options: $54,684,166

Current Obligation: $54,684,166

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline