DoD's $61M Landing Gear Logistics Contract Awarded to AAR Government Services for Aircraft Parts

Contract Overview

Contract Amount: $61,129,224 ($61.1M)

Contractor: AAR Government Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-02-22

End Date: 2023-03-31

Contract Duration: 402 days

Daily Burn Rate: $152.1K/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 $61.1 million to AAR GOVERNMENT SERVICES, INC. for work described as: LANDING GEAR PERFORMANCE BASED LOGISTICS ONE (LGPBL1) Key points: 1. Contract focuses on performance-based logistics for landing gear, indicating a shift towards outcome-oriented service delivery. 2. The award was made under full and open competition, suggesting a robust market for these specialized aircraft parts. 3. A single delivery order was issued against a larger contract vehicle, implying this is part of a broader strategy. 4. The contract duration of 402 days suggests a medium-term need for these critical aircraft components. 5. The firm-fixed-price structure aims to control costs by setting a predetermined price for the services rendered. 6. The absence of small business set-aside flags indicates the primary contractor is not a small business, and subcontracting opportunities are not explicitly mandated by this award.

Value Assessment

Rating: good

The contract value of approximately $61.1 million for landing gear performance-based logistics appears reasonable given the specialized nature of aircraft maintenance and parts. Benchmarking against similar performance-based logistics contracts for aerospace components is challenging without more specific details on the scope of services and parts included. However, the firm-fixed-price structure suggests an effort to manage costs effectively. The contract's value is within a typical range for sustainment contracts of this type within the Department of Defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the Department of Defense solicited bids from all responsible sources. The specific number of bidders is not provided, but the designation suggests a competitive environment. This approach is generally expected to yield fair market prices and encourage innovation from multiple vendors.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to more competitive pricing and a wider selection of qualified contractors, maximizing the value for the government's investment.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the operational readiness of its aircraft fleet. The contract delivers essential landing gear components and performance-based logistics services, crucial for aircraft maintenance and safety. The geographic impact is primarily within Illinois, where AAR Government Services, Inc. is located, though the services support Air Force operations nationwide. Workforce implications include skilled technicians and logistics personnel required for the maintenance, repair, and supply of landing gear systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if performance metrics are not strictly managed within the firm-fixed-price structure.
Dependence on a single contractor for critical landing gear logistics could pose supply chain risks.
Limited visibility into the specific performance metrics and their achievement without further data.

Positive Signals

Performance-based logistics approach incentivizes contractor efficiency and effectiveness.
Firm-fixed-price contract provides cost certainty for the government.
Award under full and open competition suggests a competitive market and potential for good value.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity and stringent quality requirements. Landing gear systems are critical safety components for aircraft, requiring specialized manufacturing, maintenance, and logistics support. Performance-based logistics (PBL) contracts are increasingly common in this sector as the government seeks to shift from transactional parts purchasing to outcome-based support, aiming for improved readiness and reduced total ownership costs. Spending in this area is significant, driven by the need to maintain aging fleets and ensure the operational availability of modern aircraft.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). AAR Government Services, Inc. is likely a large business. While there's no explicit subcontracting requirement mentioned in the provided data, large prime contractors are often encouraged or required by agency policy to engage small businesses for a portion of the work. Further investigation into the contract's statement of work or broader contract vehicle terms would be needed to assess specific small business subcontracting impacts.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded in the performance-based logistics (PBL) framework, which links payment and contractor performance to defined outcomes. Transparency is generally maintained through contract databases and reporting requirements, although specific performance data may be sensitive. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Aircraft Component Maintenance and Repair
Logistics and Supply Chain Management Services
Defense Logistics Agency (DLA) Contracts
Air Force Sustainment Contracts

Risk Flags

Potential for supply chain disruption
Contractor performance risk
Cost escalation in future renewals

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.1 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 $61.1 million.

What is the period of performance?

Start: 2022-02-22. End: 2023-03-31.

What is the historical spending pattern for landing gear logistics by the Department of Defense, and how does this award compare?

Analyzing historical spending on landing gear logistics requires access to comprehensive federal procurement data. However, contracts for aircraft sustainment, including components like landing gear, represent a significant portion of the DoD's annual budget. Performance-based logistics (PBL) contracts, like the LGPBL1, are a strategic approach to managing these costs over the long term, aiming for better value than traditional transactional purchasing. This $61.1 million award for a specific delivery order suggests a focused investment within a broader sustainment strategy. Without comparative data on similar PBL contracts or historical spending specifically on landing gear, it's difficult to definitively state how this award compares in scale or cost-effectiveness. However, the trend towards PBL indicates a move towards more integrated and outcome-driven support, which can lead to cost efficiencies if managed effectively.

What specific performance metrics are associated with this 'Performance Based Logistics' contract, and how are they measured?

The provided data indicates the contract type is 'Performance Based Logistics' (PBL), but it does not detail the specific performance metrics (KPIs) or their measurement methodologies. Typically, PBL contracts establish clear, measurable outcomes related to system readiness, availability, reliability, turnaround time for repairs, and inventory management. For landing gear, these metrics might include factors like the percentage of required landing gear sets available within a certain timeframe, the mean time between failures (MTBF) for repaired components, or the on-time delivery rate of replacement parts. The success of a PBL contract hinges on well-defined KPIs and robust data collection and analysis processes to track the contractor's performance against these agreed-upon standards. Without access to the contract's statement of work or performance work statement, these specifics remain unknown.

What is AAR Government Services, Inc.'s track record with similar performance-based logistics contracts, particularly within the Department of Defense?

AAR Government Services, Inc. has a significant history of providing aviation support services to the Department of Defense and other government agencies. They are known for their expertise in aircraft maintenance, repair, and overhaul (MRO), as well as logistics and supply chain management. While the specific 'LANDING GEAR PERFORMANCE BASED LOGISTICS ONE (LGPBL1)' contract is a distinct award, AAR has experience with various sustainment and readiness programs. Their track record often includes managing complex supply chains, providing component repair, and ensuring the availability of critical aircraft parts. Evaluating their performance on similar PBL contracts would involve reviewing past performance evaluations, contract awards, and any publicly available reports on their success in meeting performance objectives for other aviation support programs within the DoD.

How does the firm-fixed-price (FFP) structure align with the performance-based logistics (PBL) approach in this contract?

The alignment of a firm-fixed-price (FFP) structure with a performance-based logistics (PBL) approach can be complex. Typically, PBL contracts aim to incentivize desired outcomes, and while FFP provides cost certainty for the government, it might not always be the most flexible structure for incentivizing performance improvements. In this case, the FFP likely applies to the overall delivery order value or specific line items within it. The 'performance-based' aspect suggests that the contractor's payment or continued contract execution is tied to achieving specific, pre-defined performance metrics related to landing gear availability, reliability, or maintenance turnaround times. The challenge lies in ensuring that the FFP doesn't inadvertently discourage the contractor from exceeding minimum performance standards or investing in innovations that could further enhance readiness, as their profit is fixed regardless of performance above the baseline.

What are the potential risks associated with relying on AAR Government Services, Inc. for critical landing gear logistics, and what mitigation strategies are in place?

Potential risks associated with relying on a single contractor for critical landing gear logistics include supply chain disruptions (e.g., parts shortages, manufacturing delays), potential for price increases in future contract renewals, and contractor performance issues that could impact aircraft availability. If AAR Government Services, Inc. faces financial difficulties or operational challenges, it could directly affect the Air Force's readiness. Mitigation strategies often involve robust contract oversight, clear performance standards, contingency planning, and maintaining relationships with alternative suppliers or repair facilities where feasible. The government may also build in clauses for termination for convenience or default, and conduct regular performance reviews to ensure compliance and address any emerging issues proactively. The competitive nature of the initial award also serves as a baseline for future negotiations.

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

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: $61,129,224

Exercised Options: $61,129,224

Current Obligation: $61,129,224

Subaward Activity

Number of Subawards: 32

Total Subaward Amount: $3,510,094

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA820317D1226

IDV Type: IDC

Timeline