Air Force's $31.5M DVIS Contract with KIHOMAC Inc. Faces Scrutiny for Value and Competition

Contract Overview

Contract Amount: $31,476,038 ($31.5M)

Contractor: Kihomac Inc

Awarding Agency: Department of Defense

Start Date: 2016-02-25

End Date: 2021-01-31

Contract Duration: 1,802 days

Daily Burn Rate: $17.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF OC-135B DIGITAL VISUAL IMAGING SYSTEM (DVIS)

Place of Performance

Location: SPRINGFIELD, FAIRFAX County, VIRGINIA, 22151

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $31.5 million to KIHOMAC INC for work described as: IGF::OT::IGF OC-135B DIGITAL VISUAL IMAGING SYSTEM (DVIS) Key points: 1. The $31.5 million contract for the OC-135B Digital Visual Imaging System (DVIS) awarded to KIHOMAC Inc. raises questions about its overall value. 2. While awarded under full and open competition, the specific pricing and cost-plus-fixed-fee structure warrant further examination. 3. Potential risks include cost overruns and ensuring the system meets evolving Air Force requirements effectively. 4. The Engineering Services sector, particularly for specialized aerospace systems, often involves complex cost structures.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type, while common for complex projects, can lead to higher costs if not managed tightly. Benchmarking this specific system's cost against similar imaging or avionics upgrades is difficult without more detailed cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, suggesting a competitive bidding process. However, the impact of the CPFF structure on price discovery needs to be assessed to ensure the government received fair pricing.

Taxpayer Impact: The primary taxpayer impact relates to ensuring the final cost reflects true value and avoids unnecessary expenditure due to the contract's fee structure.

Public Impact

Ensures critical visual imaging capabilities for the OC-135B aircraft. Supports Air Force intelligence, surveillance, and reconnaissance (ISR) missions. Potential for technology modernization and improved operational effectiveness. Contract duration of over 1800 days indicates a long-term need.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost control risks with CPFF contract type.
Potential for scope creep impacting final cost.
Ensuring system meets evolving technological requirements.

Positive Signals

Awarded via full and open competition.
Addresses a specific, critical military capability.
Long-term contract indicates sustained need and potential for stable support.

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to aerospace and defense systems. Spending in this area is often characterized by high R&D costs, specialized labor, and long development cycles, making cost oversight crucial.

Small Business Impact

The data does not indicate any specific involvement or subcontracting opportunities for small businesses within this contract. Further analysis would be needed to determine if small businesses were considered or utilized.

Oversight & Accountability

The contract's duration and cost-plus-fixed-fee structure necessitate robust oversight from the Department of the Air Force to manage costs, track performance, and ensure adherence to contract terms and objectives.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Cost overruns due to CPFF structure.
Potential for inadequate competition impact on final price.
Technological obsolescence of the DVIS system over its lifespan.
Ensuring effective performance monitoring and quality control.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.5 million to KIHOMAC INC. IGF::OT::IGF OC-135B DIGITAL VISUAL IMAGING SYSTEM (DVIS)

Who is the contractor on this award?

The obligated recipient is KIHOMAC 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 $31.5 million.

What is the period of performance?

Start: 2016-02-25. End: 2021-01-31.

What specific performance metrics were used to evaluate KIHOMAC Inc.'s delivery and ensure the DVIS met the Air Force's operational requirements?

Performance metrics would typically include adherence to technical specifications, delivery timelines, system reliability, and successful integration into the OC-135B platform. The Air Force likely established key performance parameters (KPPs) and quality assurance surveillance plans (QASPs) to monitor KIHOMAC's progress and the system's effectiveness throughout the contract period.

How did the 'full and open competition' process ensure the most cost-effective solution was selected, given the CPFF contract type?

While 'full and open competition' ensures multiple bidders can participate, the CPFF structure inherently shifts some cost risk to the government. Effective price discovery in this scenario relies on detailed cost proposals, thorough negotiation, and robust government cost analysis to establish a fair fee and ensure the contractor has incentives to control costs.

What is the long-term strategic value of the DVIS system, and how does this $31.5 million investment align with the Air Force's broader modernization goals?

The DVIS system likely provides critical intelligence, surveillance, and reconnaissance (ISR) capabilities essential for specific Air Force missions. Its long-term value depends on its ability to adapt to evolving threats and technologies. The investment's alignment with modernization goals would be assessed by its contribution to enhanced situational awareness and operational effectiveness compared to alternative solutions.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2100 RESTON PKWY STE 310, RESTON, VA, 20191

Business Categories: 8(a) Program Participant, Asian Pacific American Owned Business, Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Manufacturer of Goods, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $43,814,504

Exercised Options: $43,814,504

Current Obligation: $31,476,038

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $14,104,738

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA822212D0013

IDV Type: IDC

Timeline