Contracted Out Air-To-Air Refueling (AAR) for the
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Posted On: 08/31/2019 9:07:21 PM
Contracted Out Air-To-Air Refueling (AAR) for the US Navy - Updated August 31, 2019.
Military AAR is explained in the detailed authoritative brief here:
https://investorshangout.com/post/view?id=5518962
The need for contractor provided / contractor operated AAR tankers to supplement US DoD assets will persist throughout the various programs planned to replace the legacy Cold War fleets over the next 25 to 50 years.
Indeed, future reviews of planned replacement programs may lead to significant elements of the overall DoD AAR task being contracted out.
Since 2000, the USN has contracted out elements of its overall AAR task to Omega - usually renewed annually without competition.
In March 2018, $TMPS became the #2 largest owner of AAR tanker aircraft worldwide when it acquired 6 x ex-RAF Tristar aircraft (4 to be used operationally - 2 to be used for spares).
https://www.tempus-as.com/media-press-release-L1011.php
By comparison, #1 is Airtanker with 14 x A330 Voyager aircraft providing the entire AAR capability for the RAF under a 27-year contract worth $16.5 Billion.
https://en.wikipedia.org/wiki/AirTanker_Services
http://www.airtanker.co.uk/
#3 is Omega with 2 x KC-707 and 1 x KDC-10.
The $TMPS Tristar fleet enjoys the following technical advantages over the mixed Omega fleet:
- Twice the fuel offload capacity.
- Greater earning potential due to higher fuel capacity and hence more time on task with less flight hours against contract wasted on transit to / from the AAR area.
- Lower maintenance costs due to less takeoffs / landing cycles for any given fuel offload quantity which means higher profit margins.
- Better airfield performance than the KC-707 - meaning more airfield are suitable for use..
- Wired for Defensive Aids System - could be refitted for use in areas with a terrorist shoulder launched surface-to-air missile threat.
On April 18, 2019, $TMPS was awarded a sole-provider, $121M contract for "on-call" provision of AAR for up to 5 years.
https://www.defense.gov/Newsroom/Contracts/Co...e/1818371/
Subsequently, Omega submitted 2 protests - by August 20, 2019 both had been dismissed by the GAO:
https://www.gao.gov/docket/B-417751.1
https://www.gao.gov/mobile/docket/B-417751.2
On August 22, 2019, $TMPS announced that it had been notified that the USN "intends" to cancel the contract awarded April 18, 2019 for "corrective action".
As at August 30, 2019, no such cancellation had been promulgated at https://www.defense.gov/Newsroom/Contracts/
On August 30, issued a "Special Notice" for a Contracted Air Services (CAS) AAR Services Industry Day to be held on September 12, 2019.
The purpose of the Industry Day is to provide industry with the opportunity to review the proposed draft CAS Aerial Refueling Services Performance Work Statement (PWS) and for NAVAIR to have a two-way dialogue with industry regarding concerns, suggestions and comments.
Interested parties need not participate in the Industry Day as a prerequisite for responding to the final RFP.
Both large and small industry businesses are requested to attend [remember Omega's first protest was claiming that $TMPS was not a 'small business"].
Most importantly, the USN is assessing the potential of a new, faster and more flexible acquisition strategy to obtain AAR services. It is considering an Indefinite Delivery / Indefinite Quantity (ID/IQ) Multiple Award Contract (MAC).
The resulting ID/IQ MAC will have one 5-year base ordering period and one 5-year option period for a total ordering period of 10 years.
https://www.fbo.gov/index.php?s=opportunity&a...p;_cview=0
The official definitions of ID/IQ MAC are to be found here:
Q: What is an "indefinite delivery, indefinite quantity" contract?
A: An indefinite-delivery, indefinite quantity contract is used to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at the time of contract award.
https://www.gsa.gov/buying-selling/purchasing.../faqs#idiq
Q: What is a multiple award contract, and why is it better than other contract types?
A: A multiple-award contract confirms that multiple companies have the basic qualifications to perform a general type of work. This type of contract puts into effect the government’s preference for multiple awards for IDIQ-type contracts in order to maximize competition and choice for specific supplies and services.
Q: You contend that this approach will save me time and resources. How is that possible with nine firms to learn about and choose from?
A: The contact center services industry is competitive. It is not uncommon for you to receive bids from more than 20 vendors if the procurement is done through a full and open competition process. The amount of time and resources needed to support a procurement effort through a full and open competition process is greater than through the streamlined competition process our new approach affords.
https://www.gsa.gov/buying-selling/purchasing...faqs#multi
In short this means that with a MAC the DoD would consider awarding a contract to 2 or more providers (for instance $TMPS and Omega) to provide AAR on an "on call as required" basis.
The value of this contract - if proceeded with - would be way more than $121M as it would be for twice the period and the $TMPS Tristar tanker fleet has a 2:1 fuel capacity offload advantage over Omega's mixed smaller fleet and reduced operating costs / increased profit margin due to less aircraft maintenance cycles for a given fuel offload quantity.
Note in the Special Notice that the USN has indicated that the previous contract arrangement with just Omega has been incapable of meeting an ever increasing demand.
In the last 5 years, the CAS AAR delivered has increased from 1,726 flight hours to 2,773 flight hours.
The USN now estimates it needs 4,000 flight hours and has asked potential bidders to consider their costs of provision of various building block options within that.
The USN has given exceptionally detailed guidance on how it wants costs broken down and justified - including start up costs and monthly fixed costs.
See the entire list here in the Special Notice here:
https://www.fbo.gov/index.php?s=opportunity&a...p;_cview=0
I do believe that the USN was disappointed that the Omega protests delayed the start of the $TMPS contract for almost 4 months and hence why they are considering the fast-track approach of the ID/IQ MAC process.
During the discussion process, Omega will undoubtedly have pointed out that they have provided a reliable "on call" contracted out AAR service to the USN for over 18 years. However, Omega currently lacks the required capacity.
Despite $TMPS having the superior capability - twice the off-load capacity and lower operating costs due to larger aircraft doing less take offs / landings in a year and hence less maintenance cycles - with both companies only being able to provide a small fraction of the overall AAR requirement, there is no reason why both should not be included in the next contract.
Worldwide, there are currently only 2 companies - $TMPS and Omega - with aircraft available right now to provide AAR to the USN.
The #1 contractor in the world - Airtanker UK - was formed specifically to provide the entire AAR capability to the Royal Air Force on a $16.5 Billion 27-year contract and only has precisely the right number of aircraft in its inventory for that task - with a number of them earning revenue on civilian airliner route / charter flights when not required for a maximum military effort during hostilities.
Any company that can contribute to the discussions at the Industry Day on September 12, 2019 is likely to be there. The only obvious attendees will be $TMPS and Omega.
In particular, since the USN is now willing to consider start up costs as part of the equation - very relevant to $TMPS crew training if they have to pay for use of the Northrop / Grumman Tristar simulator and for aircraft relocation costs - I would imagine that $TMPS will want to book one of the offered one-on-one sessions..
In addition, we might see the "big boys" Airbus Industries and Northrop / Grumman - who are looking for a possible large USAF contract as well - turning up with long-term proposals for a contractor provided / contractor operated solution using a much larger fleet of new build aircraft but that is not likely to be a factor in an almost immediate contract.for the first 5-year term.
In addition, Airbus - if they attended - would undoubtedly be doing a sales pitch to $TMPS and Omega on options for purchasing / leasing new build aircraft to expand their fleets later:
- A330 MRTT - as used by the RAF and almost every other AAR capable nation.
- A400M MRTT - cheaper turboprop powered aircraft that is also a tactical transporter superior to the USN's old KC-130H/J.
Military AAR is explained in the detailed authoritative brief here:
https://investorshangout.com/post/view?id=5518962
The need for contractor provided / contractor operated AAR tankers to supplement US DoD assets will persist throughout the various programs planned to replace the legacy Cold War fleets over the next 25 to 50 years.
Indeed, future reviews of planned replacement programs may lead to significant elements of the overall DoD AAR task being contracted out.
Since 2000, the USN has contracted out elements of its overall AAR task to Omega - usually renewed annually without competition.
In March 2018, $TMPS became the #2 largest owner of AAR tanker aircraft worldwide when it acquired 6 x ex-RAF Tristar aircraft (4 to be used operationally - 2 to be used for spares).
https://www.tempus-as.com/media-press-release-L1011.php
By comparison, #1 is Airtanker with 14 x A330 Voyager aircraft providing the entire AAR capability for the RAF under a 27-year contract worth $16.5 Billion.
https://en.wikipedia.org/wiki/AirTanker_Services
http://www.airtanker.co.uk/
#3 is Omega with 2 x KC-707 and 1 x KDC-10.
The $TMPS Tristar fleet enjoys the following technical advantages over the mixed Omega fleet:
- Twice the fuel offload capacity.
- Greater earning potential due to higher fuel capacity and hence more time on task with less flight hours against contract wasted on transit to / from the AAR area.
- Lower maintenance costs due to less takeoffs / landing cycles for any given fuel offload quantity which means higher profit margins.
- Better airfield performance than the KC-707 - meaning more airfield are suitable for use..
- Wired for Defensive Aids System - could be refitted for use in areas with a terrorist shoulder launched surface-to-air missile threat.
On April 18, 2019, $TMPS was awarded a sole-provider, $121M contract for "on-call" provision of AAR for up to 5 years.
https://www.defense.gov/Newsroom/Contracts/Co...e/1818371/
Subsequently, Omega submitted 2 protests - by August 20, 2019 both had been dismissed by the GAO:
https://www.gao.gov/docket/B-417751.1
https://www.gao.gov/mobile/docket/B-417751.2
On August 22, 2019, $TMPS announced that it had been notified that the USN "intends" to cancel the contract awarded April 18, 2019 for "corrective action".
As at August 30, 2019, no such cancellation had been promulgated at https://www.defense.gov/Newsroom/Contracts/
On August 30, issued a "Special Notice" for a Contracted Air Services (CAS) AAR Services Industry Day to be held on September 12, 2019.
The purpose of the Industry Day is to provide industry with the opportunity to review the proposed draft CAS Aerial Refueling Services Performance Work Statement (PWS) and for NAVAIR to have a two-way dialogue with industry regarding concerns, suggestions and comments.
Interested parties need not participate in the Industry Day as a prerequisite for responding to the final RFP.
Both large and small industry businesses are requested to attend [remember Omega's first protest was claiming that $TMPS was not a 'small business"].
Most importantly, the USN is assessing the potential of a new, faster and more flexible acquisition strategy to obtain AAR services. It is considering an Indefinite Delivery / Indefinite Quantity (ID/IQ) Multiple Award Contract (MAC).
The resulting ID/IQ MAC will have one 5-year base ordering period and one 5-year option period for a total ordering period of 10 years.
https://www.fbo.gov/index.php?s=opportunity&a...p;_cview=0
The official definitions of ID/IQ MAC are to be found here:
Q: What is an "indefinite delivery, indefinite quantity" contract?
A: An indefinite-delivery, indefinite quantity contract is used to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at the time of contract award.
https://www.gsa.gov/buying-selling/purchasing.../faqs#idiq
Q: What is a multiple award contract, and why is it better than other contract types?
A: A multiple-award contract confirms that multiple companies have the basic qualifications to perform a general type of work. This type of contract puts into effect the government’s preference for multiple awards for IDIQ-type contracts in order to maximize competition and choice for specific supplies and services.
Q: You contend that this approach will save me time and resources. How is that possible with nine firms to learn about and choose from?
A: The contact center services industry is competitive. It is not uncommon for you to receive bids from more than 20 vendors if the procurement is done through a full and open competition process. The amount of time and resources needed to support a procurement effort through a full and open competition process is greater than through the streamlined competition process our new approach affords.
https://www.gsa.gov/buying-selling/purchasing...faqs#multi
In short this means that with a MAC the DoD would consider awarding a contract to 2 or more providers (for instance $TMPS and Omega) to provide AAR on an "on call as required" basis.
The value of this contract - if proceeded with - would be way more than $121M as it would be for twice the period and the $TMPS Tristar tanker fleet has a 2:1 fuel capacity offload advantage over Omega's mixed smaller fleet and reduced operating costs / increased profit margin due to less aircraft maintenance cycles for a given fuel offload quantity.
Note in the Special Notice that the USN has indicated that the previous contract arrangement with just Omega has been incapable of meeting an ever increasing demand.
In the last 5 years, the CAS AAR delivered has increased from 1,726 flight hours to 2,773 flight hours.
The USN now estimates it needs 4,000 flight hours and has asked potential bidders to consider their costs of provision of various building block options within that.
The USN has given exceptionally detailed guidance on how it wants costs broken down and justified - including start up costs and monthly fixed costs.
See the entire list here in the Special Notice here:
https://www.fbo.gov/index.php?s=opportunity&a...p;_cview=0
I do believe that the USN was disappointed that the Omega protests delayed the start of the $TMPS contract for almost 4 months and hence why they are considering the fast-track approach of the ID/IQ MAC process.
During the discussion process, Omega will undoubtedly have pointed out that they have provided a reliable "on call" contracted out AAR service to the USN for over 18 years. However, Omega currently lacks the required capacity.
Despite $TMPS having the superior capability - twice the off-load capacity and lower operating costs due to larger aircraft doing less take offs / landings in a year and hence less maintenance cycles - with both companies only being able to provide a small fraction of the overall AAR requirement, there is no reason why both should not be included in the next contract.
Worldwide, there are currently only 2 companies - $TMPS and Omega - with aircraft available right now to provide AAR to the USN.
The #1 contractor in the world - Airtanker UK - was formed specifically to provide the entire AAR capability to the Royal Air Force on a $16.5 Billion 27-year contract and only has precisely the right number of aircraft in its inventory for that task - with a number of them earning revenue on civilian airliner route / charter flights when not required for a maximum military effort during hostilities.
Any company that can contribute to the discussions at the Industry Day on September 12, 2019 is likely to be there. The only obvious attendees will be $TMPS and Omega.
In particular, since the USN is now willing to consider start up costs as part of the equation - very relevant to $TMPS crew training if they have to pay for use of the Northrop / Grumman Tristar simulator and for aircraft relocation costs - I would imagine that $TMPS will want to book one of the offered one-on-one sessions..
In addition, we might see the "big boys" Airbus Industries and Northrop / Grumman - who are looking for a possible large USAF contract as well - turning up with long-term proposals for a contractor provided / contractor operated solution using a much larger fleet of new build aircraft but that is not likely to be a factor in an almost immediate contract.for the first 5-year term.
In addition, Airbus - if they attended - would undoubtedly be doing a sales pitch to $TMPS and Omega on options for purchasing / leasing new build aircraft to expand their fleets later:
- A330 MRTT - as used by the RAF and almost every other AAR capable nation.
- A400M MRTT - cheaper turboprop powered aircraft that is also a tactical transporter superior to the USN's old KC-130H/J.
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A very apposite motto for those who trade successfully in the OTC market..
All posts are my opinion - trade at your own risk.
A very apposite motto for those who trade successfully in the OTC market..
All posts are my opinion - trade at your own risk.
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