DoD's $83.3M Landing Gear Logistics Contract Awarded to AAR Government Services Shows Fair Competition

Contract Overview

Contract Amount: $83,330,308 ($83.3M)

Contractor: AAR Government Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-04-01

End Date: 2019-03-31

Contract Duration: 364 days

Daily Burn Rate: $228.9K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LANDING GEAR PERFORMANCE BASED LOGISTICS ONE (LGPBL1)

Place of Performance

Location: WOOD DALE, DUPAGE County, ILLINOIS, 60191

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $83.3 million to AAR GOVERNMENT SERVICES, INC. for work described as: LANDING GEAR PERFORMANCE BASED LOGISTICS ONE (LGPBL1) Key points: 1. The contract value of $83.3 million represents a significant investment in aircraft parts and auxiliary equipment manufacturing. 2. AAR Government Services, Inc. secured this contract through full and open competition, indicating a robust bidding process. 3. The contract duration of 364 days suggests a focused, short-term need for landing gear logistics. 4. The firm-fixed-price contract type helps mitigate cost overrun risks for the government. 5. The absence of small business set-aside flags suggests the primary contractor is not a small business, and subcontracting opportunities may be limited. 6. The contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, placing it within a specialized industrial sector.

Value Assessment

Rating: good

The contract value of $83.3 million for landing gear performance-based logistics appears reasonable given the scope of supporting aircraft parts and auxiliary equipment. Benchmarking against similar large-scale logistics contracts for military aviation components suggests that this award falls within expected spending ranges. The firm-fixed-price structure provides cost certainty, which is a positive indicator of value for money. Without specific performance metrics or detailed cost breakdowns, a precise value-for-money assessment is challenging, but the competitive award process lends confidence.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, meaning all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but the designation implies a competitive environment that should drive price discovery and potentially lead to more favorable terms for the government. The open nature of the competition suggests that the Department of the Air Force sought the best possible solution and price from the market.

Taxpayer Impact: A full and open competition generally benefits taxpayers by ensuring that the government receives competitive pricing and the most advantageous offers, preventing potential overspending that could occur with less competitive procurement methods.

Public Impact

The primary beneficiaries of this contract are the Department of Defense and specifically the Department of the Air Force, ensuring the operational readiness of aircraft. The services delivered include performance-based logistics for landing gear, crucial for aircraft safety and functionality. The contract is based in Illinois (IL), indicating a potential geographic concentration of operations or contractor presence. The contract supports the aerospace and defense industrial base, potentially sustaining jobs within the sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to fully assess the 'performance-based' aspect of the contract.
The absence of small business participation details raises questions about broader economic impact and subcontracting opportunities.
Limited information on the number of bidders prevents a deeper analysis of the competitive intensity.

Positive Signals

Awarded through full and open competition, suggesting a robust and fair bidding process.
Firm-fixed-price contract type provides cost certainty and reduces government risk.
The contract addresses a critical component (landing gear) for aircraft operational readiness.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft parts and auxiliary equipment manufacturing. The market for military aircraft logistics and maintenance is substantial, driven by the need for high operational readiness and specialized support. Contracts like this are essential for maintaining complex defense systems. Comparable spending benchmarks in this area would typically involve multi-million dollar awards for specialized components and integrated logistics support, reflecting the high costs associated with military aviation.

Small Business Impact

The data indicates that this contract was not awarded as a small business set-aside (ss: false, sb: false). This suggests that the primary contract was likely awarded to a large business. Without specific subcontracting plans or goals detailed in the award, it is difficult to assess the direct impact on the small business ecosystem. However, large prime contractors often engage small businesses for specialized services or components, so there may be indirect opportunities, but these are not explicitly guaranteed by the contract information provided.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods or services at an agreed-upon price. Transparency is generally facilitated through contract award databases, though detailed performance data may be less accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Logistics Support Services
Defense Logistics Agency Contracts
Air Force Maintenance, Repair, and Overhaul (MRO)
Performance-Based Logistics Contracts

Risk Flags

Potential for cost overruns if unforeseen technical issues arise in landing gear logistics.
Risk of contractor prioritizing profit over optimal performance in a fixed-price environment without strong oversight.
Limited visibility into specific performance metrics and their achievement.
Uncertainty regarding small business subcontracting opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $83.3 million to AAR GOVERNMENT SERVICES, INC.. LANDING GEAR PERFORMANCE BASED LOGISTICS ONE (LGPBL1)

Who is the contractor on this award?

The obligated recipient is AAR GOVERNMENT SERVICES, INC..

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 $83.3 million.

What is the period of performance?

Start: 2018-04-01. End: 2019-03-31.

What is the track record of AAR Government Services, Inc. in fulfilling similar defense contracts, particularly those involving performance-based logistics?

AAR Government Services, Inc. has a significant history of supporting defense logistics and aviation needs. While specific details on past landing gear performance-based logistics contracts are not provided here, the company is known for its broad capabilities in aircraft maintenance, repair, and overhaul (MRO), as well as supply chain management for military aviation. Their experience often includes managing complex inventories, providing technical support, and ensuring timely delivery of critical components. Reviewing their broader contract portfolio with the Department of Defense and other government agencies would provide further insight into their performance reliability and expertise in similar operational environments. Past performance evaluations and contract close-out data, if publicly available, would offer the most direct evidence of their track record.

How does the awarded amount of $83.3 million compare to historical spending on landing gear logistics by the Department of the Air Force?

Comparing the $83.3 million award for the LGPBL1 contract to historical spending requires access to detailed historical procurement data for landing gear logistics. This specific contract covers a 364-day period, making direct comparisons to multi-year contracts or broader fleet support agreements challenging without normalization. However, landing gear is a critical and often costly component of aircraft maintenance. Expenditures in this area typically range from millions to tens of millions annually per major aircraft platform, depending on fleet size, age, and operational tempo. Given the specialized nature of performance-based logistics, which aims to optimize support and potentially reduce overall costs through contractor incentives, this award appears to be within a plausible range for supporting a significant segment of the Air Force's landing gear needs for the contract period. A comprehensive analysis would involve examining spending trends over several fiscal years and across different aircraft types.

What are the key performance indicators (KPIs) associated with this 'performance-based logistics' contract, and how are they measured?

The provided data does not specify the key performance indicators (KPIs) for this Landing Gear Performance Based Logistics One (LGPBL1) contract. Performance-based logistics (PBL) contracts typically tie contractor payment and incentives to achieving specific, measurable outcomes related to system readiness, availability, reliability, and cost efficiency. For landing gear, potential KPIs could include metrics such as on-time delivery of parts, turnaround time for repairs, component reliability rates (e.g., mean time between failures), inventory availability levels, and cost per flight hour. The effectiveness of the PBL approach hinges on clearly defined, measurable, and achievable KPIs that align with the government's operational requirements. Without access to the contract's Performance Work Statement (PWS) or Statement of Objectives (SOO), a detailed assessment of these KPIs and their measurement methodologies is not possible.

What is the potential risk associated with a firm-fixed-price contract for complex logistics, and what mitigation strategies are in place?

Firm-fixed-price (FFP) contracts, while offering cost certainty, can introduce risks if the scope of work is not precisely defined or if unforeseen technical challenges arise. For complex logistics like landing gear support, the primary risk is that the contractor may face higher-than-anticipated costs due to factors such as supply chain disruptions, unexpected repair complexities, or increased demand. This could lead to the contractor seeking contract modifications or potentially delivering subpar service to protect their profit margin. Mitigation strategies often include robust contract language defining deliverables and performance standards, clear processes for change management, and strong government oversight. The 'performance-based' aspect of this contract suggests that incentives are tied to achieving specific outcomes, which can help align contractor and government interests and mitigate risks associated with simply meeting the minimum FFP requirements.

How does the NAICS code '336413 - Other Aircraft Parts and Auxiliary Equipment Manufacturing' influence the competitive landscape for this contract?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' defines the specific industry segment for this contract. This code encompasses establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment, except engines, engine parts, propellers, and avionics. This classification suggests that the competition for this contract likely involved companies specializing in the production or overhaul of landing gear systems and related components. The competitive landscape within this niche industry might be characterized by a limited number of highly specialized firms possessing the necessary technical expertise, certifications, and manufacturing capabilities. While the contract was awarded under 'full and open competition,' the pool of eligible bidders is inherently constrained by the specialized nature of the products and services required, potentially leading to fewer bidders than in broader manufacturing categories.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Aarcorp (UEI: 005425814)

Address: 1100 N WOOD DALE RD, WOOD DALE, IL, 60191

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

Financial Breakdown

Contract Ceiling: $83,330,308

Exercised Options: $83,330,308

Current Obligation: $83,330,308

Subaward Activity

Number of Subawards: 131

Total Subaward Amount: $37,115,146

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA820317D1226

IDV Type: IDC

Timeline