DoD's $563M United Launch Services contract for air transportation lacked competition, raising value concerns

Contract Overview

Contract Amount: $563,393,563 ($563.4M)

Contractor: United Launch Services, LLC

Awarding Agency: Department of Defense

Start Date: 2012-11-15

End Date: 2019-03-15

Contract Duration: 2,311 days

Daily Burn Rate: $243.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ELS FY12 MISSIONS

Place of Performance

Location: CENTENNIAL, ARAPAHOE County, COLORADO, 80112

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $563.4 million to UNITED LAUNCH SERVICES, LLC for work described as: ELS FY12 MISSIONS Key points: 1. The contract's value of $563.4 million over its duration suggests significant investment in specialized air transportation services. 2. The lack of competition (sole-source) for this contract is a primary indicator of potential overpayment or suboptimal pricing. 3. Performance risk appears moderate given the definitive contract type and fixed pricing, but the absence of competition limits upside for cost savings. 4. This contract falls within the broader category of logistics and support services for defense operations. 5. The significant dollar amount warrants scrutiny regarding the necessity and efficiency of the sole-source award. 6. The duration of the contract (over 6 years) indicates a long-term need for these specialized transportation services.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar specialized air transportation. However, the lack of competition inherently limits the government's ability to secure the best possible pricing. A firm fixed-price contract provides some cost certainty, but the absence of competitive pressure means the $563.4 million total value may not represent optimal value for taxpayer dollars. Further analysis would require understanding the specific market conditions and the unique requirements that led to a sole-source justification.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, United Launch Services, LLC, was considered. The justification for this approach is not detailed in the provided data, but it typically implies that only one source was capable of meeting the government's needs, or that a compelling reason existed to bypass full and open competition. The lack of multiple bidders means there was no price discovery through a competitive bidding process, potentially leading to higher costs.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall expenditure for the government.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically the Air Force, which relies on these services for its missions. The services delivered are nonscheduled chartered freight air transportation, crucial for moving essential cargo and equipment. The geographic impact is not specified but likely supports global or national defense operations requiring flexible air logistics. Workforce implications are indirect, supporting the logistics and operational readiness of the armed forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award limits opportunities for new entrants and innovation.
Long contract duration without competition could entrench higher costs.
Transparency is reduced due to the absence of a competitive bidding process.

Positive Signals

Firm fixed-price contract provides cost predictability.
Definitive contract structure offers a clear framework for service delivery.
Long-term award suggests a stable and reliable service provider for critical needs.

Sector Analysis

The nonscheduled chartered freight air transportation sector is a niche but critical component of the broader logistics and transportation industry. It supports specialized, often urgent, shipping needs that scheduled carriers cannot fulfill. The market size for such services can fluctuate based on defense spending and global events. This contract represents a significant portion of spending within this specialized segment, particularly for defense-related air cargo.

Small Business Impact

The provided data indicates that small business participation was not a stated factor in this contract award (sb: false). As a sole-source award to a large entity, it is unlikely to have direct subcontracting opportunities for small businesses unless voluntarily initiated by the prime contractor. This contract does not appear to be designed to benefit the small business ecosystem.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract administration by the Department of the Air Force, performance monitoring, and potentially audits by the Defense Contract Audit Agency (DCAA). Transparency is limited due to the sole-source nature. Accountability rests with the contracting officer to ensure the contractor meets the terms of the definitive contract. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency (DLA) Air Cargo Services
Military Sealift Command (MSC) Air Mobility
Global Air Cargo Contracts
Specialized Freight Transportation Services

Risk Flags

Sole-source award
Lack of competition
Significant contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $563.4 million to UNITED LAUNCH SERVICES, LLC. ELS FY12 MISSIONS

Who is the contractor on this award?

The obligated recipient is UNITED LAUNCH SERVICES, 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 $563.4 million.

What is the period of performance?

Start: 2012-11-15. End: 2019-03-15.

What specific mission requirements justified the sole-source award to United Launch Services, LLC for nonscheduled chartered freight air transportation?

The provided data does not detail the specific mission requirements that led to the sole-source award. Typically, sole-source justifications are based on factors such as unique technical capabilities, urgent and compelling needs where competition is not feasible, or when only one responsible source can provide the required service. For nonscheduled chartered freight air transportation, this could involve highly specialized aircraft, unique routing requirements, or time-critical delivery needs for sensitive defense assets or personnel that cannot be met by commercial airlines or scheduled military airlift. Without the official justification document, the precise rationale remains unknown, but it implies a critical gap in available competitive options.

How does the $563.4 million contract value compare to similar nonscheduled air transportation contracts awarded by the DoD?

Direct comparison of this $563.4 million contract value to similar nonscheduled air transportation contracts is difficult without access to a comprehensive database of all such awards, especially sole-source ones. However, the magnitude of this award suggests it covers a substantial volume of services over its nearly seven-year duration. Generally, large-scale, long-term contracts for specialized logistics services can represent significant government expenditure. The lack of competition here means this figure cannot be benchmarked against competitive bids, making it hard to assess if it represents fair market value. Further analysis would require identifying comparable contracts, ideally those awarded competitively, to establish a baseline for pricing.

What are the primary risks associated with a sole-source award of this magnitude and duration?

The primary risks associated with a sole-source award of this magnitude ($563.4 million) and duration (over 6 years) include potential overpayment due to the absence of competitive pricing pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market responsiveness. Taxpayers bear the risk of paying a premium for services that might be procured at a lower cost through competition. Furthermore, the government becomes heavily reliant on a single provider, potentially creating vulnerabilities if that provider faces financial difficulties or operational issues. The long duration exacerbates these risks by locking in terms and prices for an extended period.

What performance metrics or oversight mechanisms are typically in place for such a definitive contract?

For a definitive contract like this, performance metrics are usually defined within the contract's Statement of Work (SOW) or Performance Work Statement (PWS). These could include on-time delivery rates, cargo damage rates, aircraft availability, adherence to safety standards, and response times for charter requests. Oversight is typically managed by a Contracting Officer's Representative (COR) or Technical Monitor, who monitors contractor performance against the SOW, approves invoices, and ensures compliance. Regular performance reviews, site visits, and data reporting by the contractor are common. The firm fixed-price nature also implies that the contractor is responsible for managing costs to meet the agreed-upon price.

Has United Launch Services, LLC had other significant sole-source contracts with the DoD or other federal agencies?

Based on the provided data snippet, we cannot determine if United Launch Services, LLC has had other significant sole-source contracts. The data only pertains to this specific $563.4 million contract. To assess the contractor's track record with sole-source awards, a broader search across federal procurement databases (like FPDS or SAM.gov) would be necessary to identify their complete contract history, including the nature of competition for other awards and their performance on those contracts.

What is the historical spending trend for nonscheduled chartered freight air transportation by the Department of Defense?

The provided data only includes one contract, making it impossible to establish a historical spending trend for nonscheduled chartered freight air transportation by the Department of Defense. To analyze historical spending, one would need to aggregate data for similar contract types (e.g., PSC codes related to air transportation services, specifically nonscheduled charter) across multiple fiscal years. This would allow for the identification of patterns, fluctuations in spending, and the proportion of competitive versus sole-source awards over time. Without this broader dataset, any discussion of historical trends would be speculative.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Freight Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: United Launch Alliance, L.L.C (UEI: 601307601)

Address: 9501 E PANORAMA CIR, CENTENNIAL, CO, 80112

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

Financial Breakdown

Contract Ceiling: $563,393,563

Exercised Options: $563,393,563

Current Obligation: $563,393,563

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline