Protests delay awards of air tanker contracts

Tanker 101, an MD-87
Tanker 101, an MD-87 operated by Erickson Aero Tanker, during the grid retardant test, January 15, 2014. Photo by Jeff Zimmerman. (click to enlarge)

The U.S. Forest Service (FS) had hoped to have as many as seven additional “Next Generation” large air tankers working under contract on May 30, 2015, but protests filed by two companies could push that date back by several months.

The FS first awarded contracts for Next-Gen air tankers in 2013 at the end of a 555-day process that also included protests which delayed the awards. Next-Gen air tankers are required to have capabilities not present in the previous generation of Korean War vintage machines. They must fly faster, be powered by turbine or jet engines, and have a capacity of at least 3,000 gallons of fire retardant.

Two companies have filed protests about this latest round of potential contracts, Coulson Aviation and Erickson Aero Tanker. The protests were lodged with the U.S. Government Accountability Office which has the responsibility of deciding whether the protests have merit, which they are required to do by July 9 for Coulson’s protest and July 17 for Erickson’s. Both companies later amended their original complaints, which complicates the procedure for the GAO, so it is unlikely that anything will be decided much before those mid-July due dates.

No contracts have been awarded yet, nor has the FS announced what their intentions are about the contracts. The two companies are protesting the terms of the solicitation which was first posted on February 19, 2015, and then amended five times. Responses from bidders were due on April 9, 2015.

In researching this article we reached out to Erickson Aero Tanker and Coulson Aviation, but did not receive replies by our publication deadline.

When the awards were announced for the first round of Next-Gen contracts in May, 2013, Neptune Aviation did not receive one of the seven contracts and filed a protest. A few weeks later Neptune dropped their protest which allowed the FS to finalize the contracts form the other seven air tankers. It was disclosed later that the FS and Neptune had entered into a written agreement under which the agency agreed to award Neptune a sole-source contract for two Next-Gen large airtankers in exchange for Neptune withdrawing its protest.

In December, 2013  the FS awarded the promised sole source contract to Neptune for the two air tankers beginning in 2014. The estimated minimum value of the contract was $141,000,000 and had a base period of four years with the possibility of adding five more. If those five years were tacked on it would could have brought the value of the contract up to almost half a billion dollars.

The basis for awarding the non-competitive sole source contract to Neptune, according to the FS, was that the company was in danger of going out of business. The agency used the industrial “mobilization exception” to the requirement to conduct a competitive procurement. Their rationale was that without Neptune, the FS could not field an adequate number of air tankers. In March, 2014 we wrote a very detailed article about the sole source award and how it developed.

That sole source contract was protested by three companies, Coulson Aviation, 10 Tanker Air Carrier, and Minden Air Corp. The GAO upheld the protest, writing in their March 2014 decision that the sole-source award to Neptune in exchange for Neptune’s withdrawal of an earlier protest, was not a reasonable basis for the agency’s action. GAO also disputed the claim that Neptune was in danger of going under, and recommended that the FS reimburse Coulson, 10 Tanker, and Minden for their costs of filing and pursuing the protests, including reasonable attorneys’ fees.

19 thoughts on “Protests delay awards of air tanker contracts”

  1. I’m surprised this hasn’t been discussed earlier. The protests have been public knowledge for over 2 months now. Also, I would like to know more about the current protests but over half of the article is written about something in the past and not the current situation. Also, I am a tad bit confused on your math and the $141 million figure you came up with. According to my math, that would equate to $251,785 as a daily availability rate, which makes no sense. You show me a tanker company that could make half a billion dollars in 9 years with just 2 airplanes and I’ll invest right now! In fact I’ll buy any airplane they want because the return on investment would be huge. You might want to refigure your estimate and subtract about $100 million!

    1. Mr. Randy-

      The dollar figures came from the GAO report that we linked to above. As explained in the article they were based on seven aircraft for nine years, not two. Here is an excerpt from the GAO report:

      A noncompetitive contract was awarded to Neptune on December 12. Although the J&A supported an award of two NextGen large airtankers for up to 9 years at a total estimated cost of $141,774,740, the contract actually awarded to Neptune permitted (by mutual agreement) the addition of two more airtankers to the first CLIN and three more airtankers to the second CLIN in each contract year. AR, Tab 54, Neptune Contract No. AG-024B-C-14-9000, at B-1. Based on all possible aircraft, the total estimated cost of the sole-source contract actually awarded to Neptune is $496,211,590.

      The $496,211,590 figure consists of Neptune’s $70,887,370 total cost per aircraft times seven aircraft. See AR, Tab 49, Neptune J&A, Dec. 9, 2013, attach. A, Calculation of Total Estimated Cost.

  2. Makes no sense at all, help one company screw the rest. You can’t tell me that a BAE146 cost $70,000,000, even with the pressurized system in it cost that. the aircraft they surely aren’t new, which even then they only cost $11,000,000, try about $3 market value, or less. The system is raping the country – pure politics, not good at all for the air tanker community or the country!

    1. Joe, the way I understand it the “$70,887,370 total cost per aircraft” is their cost to own and operate the BAe-146 on fire contracts for nine years. It is not the one-time purchase price of the aircraft.

  3. Folks, this aircraft contracting stuff is very complex unless you work with it every day. Federal contracting for inexpensive crap is enormously complex. But when you’re dealing with billions of dollars for each of these air tanker contract solicitations, simply taking a number or a phrase out of context and making assumptions is dangerous. As we have said before, we try to deal with facts here, unlike some web sites.

    So before you consider accusing a company or agency of “raping the country” or telling someone they need to “refigure”, be damn sure you have your facts straight.

    In the future, we’ll simply delete comments that don’t adhere to this basic common sense approach.

    Our rules for commenting are here.

  4. Here we go again. The ground pounders need air support. It’s pretty sad when the company that held the tanker fleet together when the P3s went away still does not have a next Gen contract. Neptune has been at the front of the pack. They started development and implementation of an all jet tanker before all of these other companies. I wish these other companies would quit protesting every time they don’t get what they want.

    Bill did you ever get any responce from either company or forest service?

  5. What about this so called “fly in” at Boise Id. last month? Where does that put those protesters now? As I understand it; Neptune produced 4 aircraft; 10 Tanker brought 1 airplane (a DC-10); and I think one other vender flew 2 other aircraft in (not sure who they were)… Nonetheless…. What’s up with that? “Fly to Boise and show us your wares” or your protest has no merit was what I thought the FS was getting at… But hey I’m probably wrong….

  6. im just wondering why it seems year after year ,there are protests or some issue that comes up just at the start of fire season (the contracts ect)..why cant the USFS start the contract negotiations at the end of fire season,for the following season with allowances for aircraft mantiance as an “as needed” addon or something?..seems that even before the jets and turbo prop rules (?) there were issues with this stuff.why risk life and property (thats what we called it when i was a groundpounder)at this late date?……..makes no sense to me…i know contracts are a wild animal all their own…but please start sooner (FS,not you Bill,,lol)next year.

    1. Good point, David. It all comes down to short and long range strategic planning. These contracts should be advertised a year before the expected start date, or Mandatory Availability Period. Allow six months for the inevitable protests, and another six months for the vendors to get their aircraft and personnel ready.

      A schedule could be developed for the next 10 to 15 years to include the dates that the contracts will be issued, and the number and type of aircraft for each. This would make it MUCH easier for both the Agency and the contractors, so that a better product could be delivered. Contractors have been asking for this for a very long time.

      Elect me King, and I’ll be sure this happens. 😉

      Here is an excerpt from a statement made in a 2003 Congressional hearing by William R. Broadwell, Executive Director of the Aerial Firefighters Industry Association.

      We need a strategic plan from the Federal agencies that specifies the aerial firefighting resources required to support the agency’s wildland firefighting mission. The operators need this plan in writing so that they know what to buy for. They are not going to put millions of dollars into a program if they do not know what needs to be.

    2. From past D.C. experience, you have to have a solid program defined and solid defensible requirements derived from the plan before you have a chance of defending a multi-year budget for multi-year contracts. The search for budget savings is almost continuous and solid program justification is required to defend any program from the “budget cutters”.

      If annual contracts with option years are used, it might lead you to believe that there are uncertainties in how to defend a multi-year program. In which case, you end up dealing with an annual contract problem.

  7. While the protests and delays are a huge problem for those of us that need tanker support, I think it’s completely inappropriate to blame the contractors. The record of the USFS is pretty poor. There is a lot of money at risk, and I suspect that the contractors look at the risk versus benefit of investing more money in attorney fees before they file a protest.

    I believe that the reason we see so many protests is that the USFS writes favoritism into the contracts. I would guess there would be a way to provide for a short term solution, but that would take some ability to compromise. It would be easy enough to extend contracts until the current situation is resolved. My understanding is there was an ability to grant extensions to the contracts from 2013(?). I don’t really understand why all of those contracts were ended, when they looked like they could have had up to 10 years (from memory). I have worked on the government contract administration side of this (highway construction), and the perceived inability to manage really irritates me.

  8. Sadly not surprising. Federal contracting is a disappearing art in trying to balance between getting something done, and not going in front of Congress or to jail.

    We have a saying in my business “Cost, schedule, performance; pick one of them if you’re good, two if you feel lucky, forget the third.”

  9. It seems to me contractors were allowed respond to a number of factors prior to the contracts being formulated. The questions were sure to include things like maintenance costs, acqusition, operating costs and captalization needs. The operating requirements from contracting are not outrageous and reflect a new generation process and the legacy aircraft as amazing as they were are hitting shelf life like it or not and is why the feds had to reevaluate the program, can anyone in todays budget and political climate honestly say these contract costs were pie in the sky plucked from the air numbers? I think the high numbers are an honest assessment of the costs, we could save millions by using 1966 dodge power wagons with 100 gallon tanks instead of type 3 engines as well but I kind of like that we studied our engine needs and moved on.

    1. “No contracts have been awarded yet, nor has the FS announced what their intentions are about the contracts. The two companies are protesting the terms of the solicitation which was first posted on February 19, 2015, and then amended five times.”

  10. GAO Bid Protest Docket
    Protestor: Coulson Aviation (USA), Inc.
    Solicitation Number: AG-024B-S-15-9003
    Agency: Department of Agriculture : Forest Service
    File Number: B-411306.4 Outcome: Denied Date Decided: Jul 8, 2015

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