Navy awards $52.1M for helicopter transport services in Guam, highlighting firm fixed-price contract

Contract Overview

Contract Amount: $52,146,344 ($52.1M)

Contractor: AIR Center Helicopters, Inc

Awarding Agency: Department of Defense

Start Date: 2018-10-15

End Date: 2024-08-17

Contract Duration: 2,133 days

Daily Burn Rate: $24.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: N102B - J.CASTELLAT: VERTREP DET C

Place of Performance

Location: SANTA RITA, GUAM County, GUAM, 96915

Plain-Language Summary

Department of Defense obligated $52.1 million to AIR CENTER HELICOPTERS, INC for work described as: N102B - J.CASTELLAT: VERTREP DET C Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. Firm fixed-price contract type aims to provide cost certainty for the government. 3. Long contract duration of over 5 years may indicate a need for sustained services. 4. The contract is for nonscheduled chartered freight air transportation, a niche service. 5. Awardee has a track record with government contracts, requiring further review. 6. Geographic focus on Guam suggests specific operational needs in that region.

Value Assessment

Rating: fair

The contract value of $52.1 million over approximately five years for nonscheduled chartered freight air transportation in Guam appears to be within a reasonable range for specialized aviation services. However, without specific benchmarks for per-flight hour costs or comparable service contracts in the region, a definitive value-for-money assessment is challenging. The firm fixed-price structure provides cost predictability, but the total expenditure warrants scrutiny against service delivery and operational efficiency.

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 bids. The presence of two bidders suggests a moderate level of competition for this specialized service. While two bidders are better than one, a higher number of bids would typically lead to more robust price discovery and potentially lower costs for the government.

Taxpayer Impact: The full and open competition, despite only two bidders, suggests that taxpayers likely benefited from a competitive pricing environment, though further analysis of bid specifics could reveal opportunities for greater savings.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational units in Guam, receiving essential air transportation services. Services delivered include nonscheduled chartered freight air transportation, crucial for logistics and support in remote locations. Geographic impact is concentrated in Guam, supporting military readiness and operations in the Indo-Pacific region. Workforce implications may include pilots, maintenance crews, and logistical support personnel employed by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to complacency or reduced incentive for cost optimization over time.
Limited competition (two bidders) may have restricted the potential for achieving the lowest possible price.
Dependence on a single contractor for critical air transport services in a remote location poses a logistical risk.
Firm fixed-price contracts can sometimes lead to contractors cutting corners on quality if not adequately monitored.

Positive Signals

Firm fixed-price contract provides budget certainty and reduces the risk of cost overruns for the government.
Full and open competition, even with two bidders, ensures a baseline level of market engagement.
The contract award to a specific entity suggests they met the required technical and performance standards.
The contract's long duration indicates a recognized and ongoing need for these vital services.

Sector Analysis

The nonscheduled chartered freight air transportation sector is a specialized segment of the aviation industry, often serving niche markets like military logistics, emergency response, or remote cargo delivery. This contract fits within the broader defense logistics and support services market. Comparable spending benchmarks are difficult to establish without detailed service level agreements and specific route data, but the overall value suggests a significant operational requirement.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no explicit mention of subcontracting plans for small businesses. This suggests that the primary award went to a larger entity, and the direct impact on the small business ecosystem through this specific contract may be limited unless the prime contractor actively engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified services. Transparency is generally maintained through contract award databases, though detailed performance metrics and specific oversight activities are often internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Air Transport Services
Logistics and Support Contracts
Aviation Services
Department of Defense Procurement
Guam Defense Operations

Risk Flags

Potential for limited competition impacting price.
Risk of service degradation over long contract duration.
Dependence on contractor for critical services in remote location.
Need for robust performance monitoring to ensure quality.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.1 million to AIR CENTER HELICOPTERS, INC. N102B - J.CASTELLAT: VERTREP DET C

Who is the contractor on this award?

The obligated recipient is AIR CENTER HELICOPTERS, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $52.1 million.

What is the period of performance?

Start: 2018-10-15. End: 2024-08-17.

What is the contractor's past performance record with the Department of Defense and other federal agencies, particularly concerning on-time delivery and safety compliance for similar air charter servi

Assessing the contractor's past performance is crucial for understanding the reliability and quality of services provided under this $52.1 million contract. A review of the contractor's history with the Department of Defense and other federal agencies would involve examining contract databases for performance evaluations, any documented instances of delays, safety incidents, or contract disputes. For nonscheduled chartered freight air transportation, on-time delivery and stringent safety compliance are paramount. Positive performance indicators would include a history of meeting delivery schedules, maintaining high safety standards with minimal incidents, and receiving favorable past performance ratings. Conversely, a record of frequent delays, safety violations, or contract terminations would raise significant concerns about the contractor's ability to fulfill the current contract effectively and represent a potential risk to operational continuity in Guam.

How does the per-flight hour cost or per-mile cost for this contract compare to industry benchmarks for similar nonscheduled chartered freight air transportation services, especially in the Pacific re

Benchmarking the per-flight hour or per-mile cost against industry standards is essential for determining if the $52.1 million awarded represents good value for the taxpayer. This analysis would involve researching average rates charged by other air charter companies for similar aircraft types and service levels, considering factors like fuel costs, crew, maintenance, and insurance. The Pacific region may present unique cost drivers due to geographic isolation, higher operational complexity, and potentially limited competition, which could justify higher rates compared to mainland operations. A comparison would reveal whether the firm fixed-price contract secured competitive pricing or if there is potential for cost savings through renegotiation or exploring alternative providers in future solicitations. Without specific cost breakdown data, this comparison remains an estimate but is vital for assessing cost-effectiveness.

What are the specific risks associated with the long contract duration (over 5 years) and the limited number of bidders (2) in terms of potential cost escalation, service degradation, or contractor de

The long contract duration of over five years, coupled with only two bidders, introduces several potential risks. For cost escalation, a fixed-price contract mitigates direct price increases, but the initial price might have been set higher to account for long-term uncertainties. Service degradation is a risk as a contractor might become complacent over an extended period, especially if competition is limited. The dependency on a single provider for critical air transport in Guam could lead to significant operational disruptions if the contractor faces financial difficulties, aircraft issues, or personnel shortages. This situation also reduces the government's leverage for demanding service improvements or cost reductions during the contract term. Future solicitations should aim to increase competition to mitigate these long-term risks.

How effectively does the firm fixed-price contract structure incentivize the contractor to maintain high service quality and operational efficiency throughout the contract period, given the remote loc

The firm fixed-price (FFP) contract structure is designed to incentivize the contractor to manage costs effectively and deliver services within the agreed-upon price. For this nonscheduled chartered freight air transportation contract, the FFP means the contractor assumes the risk of cost overruns. This can incentivize efficiency and cost control. However, in a remote location like Guam, with potentially limited oversight resources and a long contract duration, there's a risk that the contractor might prioritize cost savings over optimal service quality or proactive maintenance if not rigorously monitored. The government's ability to enforce performance standards through contract clauses, inspections, and potential penalties is crucial to ensure that the FFP structure does not lead to a decline in service quality or operational reliability.

What is the historical spending trend for nonscheduled chartered freight air transportation services by the Department of the Navy, and how does this $52.1M award fit into that pattern?

Analyzing historical spending for similar services by the Department of the Navy provides context for the $52.1 million award. This would involve examining procurement data over the past several years to identify trends in contract values, durations, and the number of awarded contracts for nonscheduled chartered freight air transportation. Understanding whether this award represents a typical expenditure, an increase, or a decrease in spending can indicate shifts in operational requirements, strategic priorities, or market pricing. For instance, if historical spending has been significantly lower, it might suggest an increased demand for these services or a rise in market rates. Conversely, if spending has been consistently high, this award aligns with established patterns. This historical perspective is vital for assessing the scale and significance of the current contract within the Navy's broader logistics and aviation support framework.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N3220518R2001

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 308 EAST RENFRO STE. 104, BURLESON, TX, 76028

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

Financial Breakdown

Contract Ceiling: $88,333,000

Exercised Options: $52,146,344

Current Obligation: $52,146,344

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline