Interior Department awards $20.4M for Lear Jet services, highlighting fixed-price adjustments

Contract Overview

Contract Amount: $20,384,500 ($20.4M)

Contractor: Phoenix AIR Group, Inc.

Awarding Agency: Department of the Interior

Start Date: 2005-11-10

End Date: 2011-03-08

Contract Duration: 1,944 days

Daily Burn Rate: $10.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: LEAR JET AIRCRAFT SERVICES IN SUPPORT OF DOD-NAVY

Place of Performance

Location: CARTERSVILLE, BARTOW County, GEORGIA, 30120

State: Georgia Government Spending

Plain-Language Summary

Department of the Interior obligated $20.4 million to PHOENIX AIR GROUP, INC. for work described as: LEAR JET AIRCRAFT SERVICES IN SUPPORT OF DOD-NAVY Key points: 1. Contract value represents a significant investment in specialized aviation support. 2. Fixed-price with economic price adjustment structure may expose the government to cost fluctuations. 3. The contract was awarded through full and open competition, suggesting a competitive bidding process. 4. The duration of the contract (over 1900 days) indicates a long-term need for these services. 5. The specific North American Industry Classification System (NAICS) code points to a niche service area. 6. The award ceiling of $10.5M suggests potential for cost overruns or scope expansion.

Value Assessment

Rating: fair

The total award amount of $20.4M for Lear Jet aircraft services appears substantial. Without specific performance metrics or detailed cost breakdowns, it's challenging to definitively benchmark value. However, the fixed-price with economic price adjustment (FP-EPA) contract type introduces a degree of uncertainty regarding final costs. The award ceiling of $10.5M, significantly lower than the total award, warrants further investigation into the contract's funding and potential for modification or exercise of options.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of two bids suggests a moderate level of competition for this specialized service. While competition is generally positive for price discovery, the specific number of bidders (two) might not represent the full market potential, potentially limiting the downward pressure on pricing.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple vendors to offer their best prices. However, with only two bidders, the potential for achieving the most cost-effective outcome may have been constrained compared to a scenario with a larger number of competitive offers.

Public Impact

The Department of the Interior benefits from essential aviation services for its operations. These services likely support critical functions such as transportation of personnel, equipment, or surveillance activities. The contract's geographic scope is not explicitly defined but likely supports national or regional operational needs. The contract supports the aviation services sector, potentially involving skilled pilots and maintenance personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The fixed-price with economic price adjustment (FP-EPA) clause introduces risk of cost escalation beyond initial projections.
The award ceiling of $10.5M being significantly lower than the total award value ($20.4M) raises questions about funding allocation and potential for future modifications.
Limited competition (two bidders) may have resulted in a less competitive price than if more vendors had participated.

Positive Signals

Awarded through full and open competition, maximizing the opportunity for diverse vendors to participate.
The contract duration suggests a stable, long-term requirement, providing predictability for the contractor and ensuring service continuity.
The specific NAICS code indicates a specialized service, potentially leading to high-quality, expert delivery.

Sector Analysis

The contract falls within the broader aerospace and defense sector, specifically focusing on specialized air transportation services. This niche market often involves high-value, low-volume operations requiring specific aircraft and skilled personnel. Comparable spending benchmarks would typically involve analyzing other government contracts for similar executive or specialized aircraft charter and support services, considering factors like aircraft type, mission profile, and contract duration.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (sb: false). There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless the prime contractor voluntarily engages small businesses for support services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Interior's contracting and financial management offices. Accountability measures would be embedded in the contract terms, including performance standards and payment clauses. Transparency is facilitated by the contract's public availability, though detailed operational performance data may be internal. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of the Interior Aviation Management
DOD-NAVY Air Support Contracts
Federal Aviation Services Procurement
Fixed-Wing Aircraft Charter Services

Risk Flags

Potential for cost overruns due to FP-EPA clause.
Limited competition may have impacted final pricing.
Award ceiling significantly lower than total award value requires clarification.
Long contract duration necessitates ongoing performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $20.4 million to PHOENIX AIR GROUP, INC.. LEAR JET AIRCRAFT SERVICES IN SUPPORT OF DOD-NAVY

Who is the contractor on this award?

The obligated recipient is PHOENIX AIR GROUP, INC..

Which agency awarded this contract?

Awarding agency: Department of the Interior (Departmental Offices).

What is the total obligated amount?

The obligated amount is $20.4 million.

What is the period of performance?

Start: 2005-11-10. End: 2011-03-08.

What is the historical spending pattern for Lear Jet aircraft services by the Department of the Interior?

Analyzing historical spending for Lear Jet aircraft services by the Department of the Interior requires access to comprehensive federal procurement databases. Based on the provided data, this specific contract awarded in 2005 for $20.4M represents a significant, long-term investment. To establish a broader pattern, one would need to query databases for similar contracts over multiple fiscal years, looking for trends in contract values, durations, and the number of awarded contracts for this specific service. This would help determine if this $20.4M award is an outlier, a consistent expenditure, or indicative of increasing/decreasing demand for such services within the agency.

How does the pricing of this contract compare to similar government aviation service contracts?

Benchmarking the pricing of this $20.4M Lear Jet services contract against similar government aviation contracts is complex without detailed cost breakdowns and specific service level agreements. Key comparison points would include the hourly rates, daily rates, and total contract value relative to aircraft type, age, operational range, and required support services (e.g., maintenance, crew, fuel). Contracts awarded through full and open competition with multiple bidders generally offer better price discovery. However, the FP-EPA structure introduces variability. A thorough comparison would involve analyzing contracts for similar aircraft (e.g., other light/mid-size jets) procured by agencies like the Department of Defense or other civilian agencies for comparable missions (e.g., VIP transport, logistical support) over the same time period.

What are the primary risks associated with a Fixed Price with Economic Price Adjustment (FP-EPA) contract for aviation services?

The primary risk associated with an FP-EPA contract for aviation services is cost escalation. While the 'fixed price' component provides a baseline, the 'economic price adjustment' allows for increases based on fluctuations in specific economic factors, such as fuel prices, labor costs, or material costs. For aviation services, fuel is a significant variable cost, making this clause particularly relevant. This means the total cost to the government could exceed the initial fixed price estimate, potentially impacting budget predictability. The government bears the risk of these upward price adjustments, necessitating careful monitoring of the economic indicators tied to the adjustment clause.

What is the significance of the award ceiling ($10.5M) being lower than the total award value ($20.4M)?

The discrepancy between the total award value ($20.4M) and the award ceiling ($10.5M) suggests a contract structure that includes base award amounts and potential for future modifications, options, or task orders up to the ceiling. It's common for contracts, especially those with longer durations or uncertain future needs, to have a total value that represents the maximum the government *could* spend, while the initial award or a specific period's funding might be lower. In this case, the $10.5M ceiling might represent the maximum value for a specific period or set of options, with the remaining value allocated to other contract line items or future exercises. This structure allows for flexibility but also requires careful management to ensure spending stays within authorized limits and that the ceiling is appropriately justified.

How does the NAICS code '481219 - Other Nonscheduled Air Transportation' define the scope of services for this contract?

The NAICS code 481219, 'Other Nonscheduled Air Transportation,' defines the scope of services for this contract as providing air transportation on a non-scheduled basis. This typically includes charter services using aircraft like Lear Jets for transporting passengers or cargo. Unlike scheduled airlines, these services are arranged on demand for specific trips. This category encompasses a wide range of operations, from executive charter flights to specialized transport missions, as long as they are not part of a regular, published flight schedule. The 'Other' designation suggests it covers services not specifically classified under other nonscheduled air transport codes.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Other Nonscheduled Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRAVEL, LODGING, RECRUITMENT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 8005-42

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 100 PHOENIX AIR DR SW, CARTERSVILLE, GA, 11

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

Financial Breakdown

Contract Ceiling: $22,787,795

Exercised Options: $20,384,500

Current Obligation: $20,384,500

Timeline