DoD's $240M E-6B logistics contract awarded to IAP World Services, Inc. shows fair value

Contract Overview

Contract Amount: $240,000,292 ($240.0M)

Contractor: IAP World Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-12-01

End Date: 2015-11-30

Contract Duration: 1,825 days

Daily Burn Rate: $131.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CONTRACTOR LOGISITICS SUPPORT E-6B

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73145

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $240.0 million to IAP WORLD SERVICES, INC. for work described as: CONTRACTOR LOGISITICS SUPPORT E-6B Key points: 1. Contract value appears reasonable given the scope of specialized aviation support. 2. Full and open competition suggests a competitive bidding process. 3. Contract duration of five years indicates a long-term need for these services. 4. Fixed-price contract type shifts risk to the contractor. 5. Contractor has a track record with government contracts. 6. Geographic location in Oklahoma may influence operational costs.

Value Assessment

Rating: good

The contract's total value of approximately $240 million over five years averages to $48 million annually. This figure seems aligned with the specialized nature of logistics support for complex military aircraft like the E-6B. Benchmarking against similar high-level aviation support contracts would provide a more precise value-for-money assessment, but initial indications suggest fair pricing for the services rendered. The firm fixed-price structure further supports value by incentivizing contractor efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. While the specific number of bidders is not provided, this procurement method generally fosters a competitive environment, which is expected to drive down prices and improve service quality. The agency's decision to use full and open competition suggests confidence in the market's ability to provide suitable solutions.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible price and performance for essential defense logistics. Full and open competition increases the likelihood of achieving cost savings compared to less competitive award methods.

Public Impact

The primary beneficiaries are the U.S. Air Force and Navy units operating the E-6B Mercury aircraft, ensuring mission readiness. Services include critical logistics support, maintenance, and supply chain management for specialized aviation assets. The contract's geographic impact is centered around Tinker Air Force Base in Oklahoma, a key hub for aircraft maintenance and support. Workforce implications include employment opportunities for skilled technicians, logistics personnel, and support staff in the Oklahoma region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical issues arise with the E-6B fleet.
Dependence on a single contractor for critical logistics could pose supply chain risks.
Contract duration might not fully align with potential future technology refreshes for the E-6B.

Positive Signals

Firm fixed-price contract type transfers cost overrun risk to the contractor.
Full and open competition suggests a robust market offering competitive solutions.
Contractor's experience in government logistics is a positive indicator of capability.
Awarded by the Defense Contract Management Agency, indicating established oversight processes.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aviation support services. The market for specialized military aircraft logistics is characterized by high barriers to entry due to technical expertise, security clearances, and established relationships. Spending in this area is critical for maintaining the operational readiness of aging but vital military platforms. Comparable spending benchmarks would likely involve other large, long-term contracts for fleet support within the DoD.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary contractor, IAP World Services, Inc., will likely handle the majority of the work. Further analysis would be needed to determine if any subcontracting opportunities exist for small businesses within the scope of this large contract and its impact on the small business ecosystem.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services to ensure compliance with terms and conditions. The firm fixed-price nature of the contract inherently includes accountability for cost control by the contractor. Transparency is generally maintained through contract award databases and reporting requirements, though specific oversight details are not provided. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

E-6B Mercury Aircraft Sustainment
DoD Aviation Logistics Support
Military Airlift Command Services
Fleet Readiness Support Contracts

Risk Flags

Contract duration is lengthy, potentially exposing the government to price changes over time.
Lack of specific bidder numbers limits assessment of competitive intensity.
No explicit small business subcontracting goals mentioned.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $240.0 million to IAP WORLD SERVICES, INC.. CONTRACTOR LOGISITICS SUPPORT E-6B

Who is the contractor on this award?

The obligated recipient is IAP WORLD SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $240.0 million.

What is the period of performance?

Start: 2010-12-01. End: 2015-11-30.

What is the track record of IAP World Services, Inc. with similar large-scale government logistics contracts?

IAP World Services, Inc. has a significant history of performing large-scale logistics and support services for government agencies, including the Department of Defense. They have been involved in various aviation support, base operations, and facility management contracts. While specific details on past E-6B related work are not immediately available from this data, their general experience suggests a capacity to handle complex requirements. A deeper dive into their contract history would reveal the scale, duration, and performance metrics of their previous engagements, providing a clearer picture of their reliability and expertise in managing contracts of this magnitude and complexity.

How does the annual cost of this contract compare to other major military aircraft support contracts?

The annual cost of this contract, averaging approximately $48 million ($240M / 5 years), needs to be benchmarked against similar support contracts for specialized military aircraft. Contracts for platforms like the C-17, F-35, or other strategic assets often involve substantial annual expenditures due to the complexity of maintenance, supply chain, and operational requirements. Without direct comparative data on contracts for aircraft with similar operational roles and technological sophistication as the E-6B, it's challenging to definitively state if $48 million per year is high or low. However, for a dedicated fleet support contract of this nature, the figure appears within a plausible range for high-value military aviation sustainment.

What are the primary risks associated with a five-year firm fixed-price contract for specialized aviation logistics?

A primary risk with a five-year firm fixed-price contract for specialized aviation logistics is the potential for the contractor to face unforeseen cost increases that erode profit margins, potentially leading to quality compromises or contractor default if not managed effectively. For the government, the risk lies in locking in a price that might become uncompetitive if market rates decrease significantly over the contract period, or if the contractor's performance falters due to financial strain. Additionally, the fixed-price nature can disincentivize innovation or proactive improvements if not carefully structured with performance incentives. The long duration also means the contract might not adapt easily to evolving technological requirements or strategic shifts without costly modifications.

How effective is the firm fixed-price contract type in ensuring performance and value for this E-6B logistics contract?

The firm fixed-price (FFP) contract type is generally effective in ensuring performance and value by placing the primary cost risk on the contractor. This incentivizes IAP World Services, Inc. to manage its resources efficiently and control costs to maintain profitability. For the government, FFP provides budget certainty, as the price is fixed regardless of the contractor's actual costs. However, the effectiveness hinges on the accuracy of the initial cost estimates and the clarity of the performance work statement. If the scope is poorly defined or unforeseen technical challenges arise, the contractor might struggle to meet performance standards within the fixed price, potentially leading to disputes or reduced service quality. Robust oversight and clear performance metrics are crucial to maximize the value derived from an FFP contract.

What are the historical spending patterns for E-6B logistics support, and how does this contract compare?

Historical spending data for E-6B logistics support prior to this contract (2010-2015) is not provided in the current dataset. To assess how this $240 million contract compares, one would need to examine previous contracts awarded for the sustainment of the E-6B fleet. This would involve looking at contract values, durations, and the scope of services provided in earlier periods. Understanding historical spending trends, including any significant increases or decreases, would help contextualize the current contract's value and identify potential efficiencies or cost escalations over time. Without this historical perspective, a direct comparison of spending patterns is not possible.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

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: N0001909R0300

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7315 N ATLANTIC AVE, CAPE CANAVERAL, FL, 32920

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

Financial Breakdown

Contract Ceiling: $250,804,908

Exercised Options: $250,612,408

Current Obligation: $240,000,292

Subaward Activity

Number of Subawards: 60

Total Subaward Amount: $3,417,630

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline