DynCorp International LLC provides specialized, mission-critical professional and support services outsourced by the U.S. military, non-military U.S. governmental agencies, and foreign governments. The company performs law enforcement training and support, security services, base and logistics operations, construction management, aviation services and operations, and linguist services. The company also provides logistics support for all its services.
DynCorp International’s customers include the U.S. Department of Defense (DoD), the U.S. Dept. of State, foreign governments, commercial customers and certain other U.S. federal, state and local government departments and agencies.
DynCorp International LLC presently reports sales of over $1.9 billion through the efforts of its 12,000 employees in 31 countries.
Revenue from the U.S. government accounted for approximately 93%, 94% and 96% of total DynCorp revenue for the years ended December 31, 2015, December 31, 2014, and December 31, 2013, respectively.
Through its predecessor companies, DynCorp has provided essential services to numerous U.S. government departments and agencies since 1951. DynCorp International LLC has its origins with two companies formed in 1946: Land-Air, Inc., and California Eastern Airways.
1951: Land-Air, Inc., which became the predecessor to DynCorp International’s now defunct Maintenance and Technical Support Services (MTSS) Division, reached a major milestone in 1951 with the award of the first Contract Field Teams (CFT) contract by the Air Force Logistics Command (AFLC). Contract field teams provide mission support and depot-level repair to U.S. military aircraft and weapons systems worldwide. DynCorp International and its predecessors have provided services under the CFT program continuously ever since.
1951: Land-Air, Inc. was acquired by California Eastern Airways, Inc. (later California Eastern Aviation, Inc.)
1962: California Eastern Aviation, Inc. changed its name to Dynalectron Corporation.
1987: Dynalectron changed its name to DynCorp.
1998: DynCorp established DynCorp Technical Services, Inc. (DTS), and transferred its existing aerospace and international-division business-including contracts later held by DynCorp International-to the new DTS subsidiary.
2000: DynCorp formed DynCorp International LLC, and transferred to it all of its international business. DynCorp Technical Services LLC continued to perform DynCorp’s domestic contracts.
2003: DynCorp and its subsidiaries were acquired by Computer Sciences Corporation (CSC). DynCorp remained the parent of its existing subsidiaries, including DTS and DynCorp International LLC, and CSC became their ultimate parent.
2004: CSC made a strategic decision to divest itself of its non-core businesses, including security and aviation services. As part of that decision, CSC transferred its aviation services business segment into a separate CSC subsidiary, DTS Aviation Services. The U.S. Government approved the transfer of government prime contracts that were part of this business to DTS Aviation Services on September 30, 2004.
2004: DynCorp and CSC entered into an agreement in December to sell DynCorp International LLC, including its subsidiaries Dyn Marine Services LLC and DTS Aviation Services LLC, to DI Acquisition Corp, an affiliate of Veritas Capital Management.
2005: The sale closed on February 11, 2005, and the purchaser was renamed DynCorp International Inc. DynCorp International Inc. is the corporate parent of DynCorp International LLC.
2010: DynCorp International and private investment firm Cerberus Capital Management, L.P. announced a proposed merger, which was completed on July 7, 2010. As a result of the merger, DynCorp International became a private, wholly-owned subsidiary of entities created by affiliates of Cerberus.
DynCorp International LLC currently conducts its operations through two distinct operating and reporting segments: DynAviation and DynLogistics. (Prior to August 2014, DynCorp had a DynGlobal segment, which has been realigned into a business development initiative focused on achieving global growth objectives for DynAviation and DynLogistics. DynCorp continues to use the “DynGlobal” name as a brand to pursue international and commercial business.) A discussion of each segment follows.
This segment provides worldwide maintenance of aircraft fleet and ground vehicles, which includes logistics support on aircraft and aerial firefighting services, weapons systems, and related support equipment to the DoD, other U.S. government agencies and direct contracts with foreign governments. This segment also provides foreign assistance programs to help foreign governments improve their ability to develop and implement national strategies and programs to prevent the production, trafficking and abuse of illicit drugs. The DynAviation Segment contributes approximately 66.4% of DynCorp’s total revenues. The INL Air Wing and T-6 Contractor Operated and Maintained Base Supply (“T-6 COMBS”) programs are two of the most significant programs in the DynAviation segment. The INL Air Wing program supports governments in multiple Latin American countries and provides support and assistance with interdiction services in Afghanistan. This program also provides intra-theater transportation services for DoS personnel throughout Iraq and Afghanistan. Under the T-6 COMBS contract, the U.S. Air Force contracts the Company to perform support services for the T-6A and T-6B aircraft.
DynAviation Segment Key Contracts
Bureau for International Narcotics and Law Enforcement Affairs, Office of Aviation (“INL Air Wing”): The INL Air Wing program is a part of the DynAviation segment. In May 2005, the DoS awarded this contract in support of the INL Air Wing program to aid in the eradication of illegal drug operations. This program also provides intra-theater transportation services for DoS personnel throughout Iraq and Afghanistan. The services provided under this contract are fixed-price and cost-reimbursable type services. In January 2015, the DoS issued a letter notifying DynCorp that its proposal on the recompete related to the INL Air Wing contract was outside of the competitive range and would not be considered further for award. DynCorp requested and received a pre-award debriefing of the DoS’ evaluation. DynCorp filed a protest with the GAO to challenge the decision by the DoS. In response to DynCorp’s protest, the DoS notified the GAO that it will take correction action, which will include a reconsideration of its evaluations of the recompete proposals, and a determination of whether discussions are necessary and, if so, it will make a new competitive range decision. In July 2015, the DoS notified DynAviation that it intends to extend the INL Air Wing program by at least 12 months through the use of a justification and approval (“J&A”) and in September 2015 DynAviation definitized an agreement with the Department of State for a 12-month extension of services. In October 2015 DynCorp received notification of a new competitive range decision that reinstated its proposal back into the competitive range for the recompete regarding services after October 2016.
Contract Field Teams (“CFT”): The CFT program is a part of the DynAviation segment. This program deploys highly mobile, quick-response field teams to customer locations to supplement a customer’s workforce. The services provided under the CFT program generally include mission support to aircraft and weapons systems and depot-level repair. The customer for the CFT program is the DoD.
Theater Aviation Sustainment Manager – OCONUS (“TASM-O”): The TASM-O contract is a part of the DynAviation segment. This contract was awarded in September 2013 to provide aviation maintenance services under the Army Aviation Field Maintenance (“AFM”) program.
Contractor Logistics Support: T-34, T-44, T-6 (“CLS”): The CLS program is part of the DynAviation segment. This contract was awarded in November 2014 to provide maintenance and logistics support to the United States Navy T-34, T-44, and T-6 aircraft programs.
T-6 Contractor Operated and Maintained Base Supply (“T-6 COMBS”): The T-6 COMBS contract with the U.S. Air Force Materiel Command is a part of the DynAviation segment and provides support services for T-6A and T-6B aircraft at ten Air Force and Navy locations throughout the U.S. The contract began June 1, 2012.
Naval Test Wing Patuxent River MD (“Pax River”): The Pax River contract is a part of the DynAviation segment. This contract was awarded in July 2011 to provide organization level maintenance and logistic support on all aircraft and support equipment for which the Naval Test Wing Atlantic has maintenance responsibility. Labor and services are provided to perform safety studies, off-site aircraft safety and spill containment patrols and aircraft recovery services.
Andrews Air Force Base (“Andrews AFB”): The Andrews AFB program is a part of the DynAviation segment. Under the Andrews AFB contract, DynCorp performs aviation maintenance and support services, which include full back shop support, organizational level maintenance, fleet fuel services, launch and recovery, supply and Federal Aviation Administration (“FAA”) repair services. Under this program DynCorp oversees the management of the U.S. presidential air fleet (other than Air Force One). The principal customer under this contract is the U.S. Air Force. This contract was entered into September 2011.
Sheppard Air Force Base (“Sheppard AFB”): The Sheppard Air Force Base contract is a part of the DynAviation segment. Under this program, DynCorp has provided aircraft maintenance services for the 80th Flying Training Wing based at Sheppard Air Force Base in Wichita Falls, Texas since September 2009. The mission of the Air Education and Training Command’s 80th Flying Training Wing is to provide undergraduate pilot training for the U.S. and North Atlantic Treaty Organization (“NATO”) allies in the Euro NATO Joint Jet Pilot Training program. Graduates of this prestigious program are assigned to fighter pilot positions in their respective air forces.
This segment provides mission readiness to its customers through support solutions including conventional and contingency logistics, operations and maintenance support, platform modification and upgrades, supply chain management and training, security and full spectrum intelligence mission support services. This segment also provides base operations support, engineering, supply and logistics, pre-positioned war reserve materials, facilities, marine maintenance services, program management services primarily for ground vehicles and contingency response on a worldwide basis. These services are provided to U.S. government agencies in both domestic and foreign locations, foreign government entities and commercial customers. The DynLogistics Segment contributes approximately 33.6% of DynCorp’s total revenues. The LOGCAP IV and War Reserve Materiel II (“WRM II”) contracts are the most significant contracts within this segment. Under the LOGCAP IV program which DynLogistics performs under a single IDIQ contract, the U.S. Army contracts to perform selected services, operations and maintenance, engineering as well as construction and logistics predominately in the Middle East Theater to augment the U.S. Army, the U.S. Marine Corps and North Atlantic Treaty Organization (“NATO”) forces and to release military units from combat service support missions or to fill the U.S. military resource shortfalls. Under the WRM II contract, the U.S. Air Force contracts the company to perform, out-load, and reconstitute the pre-positioned war reserve materiel in the U.S. Air Force Central Command Area of Responsibility as well as maintenance services on ground support equipment vehicles. DynLogistics supports U.S. foreign policy and international development priorities by assisting in the development of stable and democratic governments, implementing anti-corruption initiatives and aiding the growth of democratic public and civil institutions.
DynLogistics Segment Key Contracts
Logistics Civil Augmentation Program IV (“LOGCAP IV”): The LOGCAP IV contract was awarded to DynCorp in April 2008 and is a part of the DynLogistics segment. DynCorp was selected as one of the three prime contractors to provide logistics support under the LOGCAP IV contract. LOGCAP IV is the U.S. Army component of the DoD’s initiative to award contracts to U.S. companies with a broad range of logistics capabilities to support U.S. and allied forces during combat, peacekeeping, humanitarian and training operations. This IDIQ contract has a term of up to ten years. In December 2012, customer negotiations resulted in the elimination of award fee component for option years beginning in 2012 and continuing for the remaining contract periods. The remaining task orders under the LOGCAP IV contract are now either firm fixed price or cost-reimbursable-plus-fixed-fee.
Civilian Police Program (“CIVPOL”): The CIVPOL IDIQ task order contract was awarded to DynCorp in 2004 by the U.S. Department of State, Bureau of International Narcotics and Law Enforcement Affairs (INL). Task orders under this vehicle are performed by the DynLogistics Segment. The contract includes, but is not limited to, establishing and maintaining a cadre of (U.S.) experienced law enforcement personnel available to serve in civilian peacekeeping missions overseas, providing pre-deployment and deployment support in the field, establishing and maintaining a database of law enforcement personnel who meet criteria for various positions, and providing procurement services. The contract requirements were transitioned from the U.S. Department of State to the Army following a successful DynCorp protest of Army plans to limit competition for training and facilities support for the Ministry of Interior and Afghan National Police to the five holders of a Counter-Narcoterrorism Technology Program Office (CNTPO) contracting vehicle.
War Reserve Materiel (“WRM II”): The War Reserve Materiel contract is a part of the DynLogistics segment. Through this program, DynCorp manages the U.S. Air Force Central Command Area of Responsibility War Reserve Materiel Pre-positioning program, which includes operations in Oman, Bahrain, Qatar, Kuwait, United Arab Emirates and two locations in the United States (Yorktown, Virginia and Shaw Air Force base, South Carolina). Through this contract, DynCorp stores, maintains and deploys assets such as tents, generators, vehicles, kitchens and medical supplies to deployed forces. The WRM II program continues to partner with the U.S. Air Force Central Command in the development of new and innovative approaches to asset management. This contract is primarily cost-plus-award fee with a smaller portion of fixed-price services.
DynCorp International LLC – Selected Financial Information
DynCorp International LLC has posted substantial losses the last 5 years. While the DynLogistics Segment remains profitable, it exhibits a negative CAGR (Compound Annual Growth Rate) of -23.34% for sales and -23.85% for prime contract actions.