DoD's $179M Sikorsky H-60 Weapon System contract awarded without competition, raising value concerns

Contract Overview

Contract Amount: $179,180,760 ($179.2M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2012-12-03

End Date: 2015-11-06

Contract Duration: 1,068 days

Daily Burn Rate: $167.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF THIS DELIVERY ORDER IS TO EXECUTE THE REQUIREMENT FOR THE TECHNICAL, ENGINEERING, LOGISTICAL, SERVICES AND SUPPLIES FOR THE H-60 WEAPON SYSTEM, THE THIRD CONTRACT REQUIREMENT.

Place of Performance

Location: ARECIBO, ARECIBO County, PUERTO RICO, 00614

Plain-Language Summary

Department of Defense obligated $179.2 million to SIKORSKY AIRCRAFT CORPORATION for work described as: THE PURPOSE OF THIS DELIVERY ORDER IS TO EXECUTE THE REQUIREMENT FOR THE TECHNICAL, ENGINEERING, LOGISTICAL, SERVICES AND SUPPLIES FOR THE H-60 WEAPON SYSTEM, THE THIRD CONTRACT REQUIREMENT. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value for aircraft system sustainment and logistics services. 3. Focus on H-60 weapon system indicates a critical, long-term defense asset. 4. Performance period spans over three years, suggesting a substantial operational requirement. 5. Lack of competition is a key risk indicator for value for money. 6. Contractor is a major player in the aerospace and defense sector.

Value Assessment

Rating: questionable

The contract's value of approximately $179 million for sustainment and logistics services for the H-60 weapon system is substantial. However, the absence of competition makes it difficult to benchmark against similar contracts or assess if the pricing represents fair market value. Without competitive bids, there's an inherent risk that the government may not be achieving optimal value for its investment. Further analysis would be needed to compare specific service components and pricing with industry standards for similar helicopter platforms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Sikorsky Aircraft Corporation, was solicited. This approach bypasses the standard competitive procurement process, which typically involves multiple bidders vying for the contract. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium, as there was no market pressure to drive down prices. This also reduces transparency in the pricing structure.

Public Impact

The U.S. Army benefits from continued sustainment and logistical support for its H-60 fleet. Services include technical, engineering, logistical support, and supplies for the H-60 weapon system. The contract supports the operational readiness of critical military aviation assets. Workforce implications include potential employment for engineers, logisticians, and technical specialists.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in pricing due to non-competitive nature.
Dependence on a single contractor for critical weapon system support.

Positive Signals

Sikorsky Aircraft Corporation is an established provider with expertise in the H-60 platform.
Contract duration suggests a stable, long-term need for these services.
Focus on a critical weapon system ensures continued operational capability.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for weapon system sustainment, like this one for the H-60, are crucial for maintaining military readiness. The market for such services is often dominated by a few large, specialized contractors. Benchmarking spending in this area requires comparing it to other sustainment contracts for similar rotary-wing aircraft, considering factors like fleet size, age, and operational tempo.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The sole-source nature of the award further limits the potential for small business participation through competitive subcontracting. This suggests that the primary benefits of this contract will accrue to the prime contractor and its direct supply chain, rather than fostering broader small business engagement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined by the contract terms and conditions, including performance metrics and payment schedules. Transparency might be limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases. The Inspector General's office within the Department of Defense could investigate any allegations of fraud, waste, or abuse.

Related Government Programs

H-60 Helicopter Program
DoD Aviation Sustainment Contracts
Military Logistics and Support Services
Aircraft Engine and Engine Parts Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $179.2 million to SIKORSKY AIRCRAFT CORPORATION. THE PURPOSE OF THIS DELIVERY ORDER IS TO EXECUTE THE REQUIREMENT FOR THE TECHNICAL, ENGINEERING, LOGISTICAL, SERVICES AND SUPPLIES FOR THE H-60 WEAPON SYSTEM, THE THIRD CONTRACT REQUIREMENT.

Who is the contractor on this award?

The obligated recipient is SIKORSKY AIRCRAFT CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $179.2 million.

What is the period of performance?

Start: 2012-12-03. End: 2015-11-06.

What is Sikorsky Aircraft Corporation's track record with the H-60 weapon system and similar DoD contracts?

Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, has a long and established history with the H-60 family of helicopters, including the UH-60 Black Hawk and MH-60 variants. They are the original equipment manufacturer and have been involved in the design, production, and sustainment of these aircraft for decades. Their track record with the H-60 is extensive, encompassing numerous previous contracts for production, upgrades, and support services. This deep familiarity provides them with unique institutional knowledge and technical expertise regarding the weapon system. However, their extensive history also means they are a dominant player, which, in the context of this sole-source award, reinforces the lack of competitive alternatives.

How does the $179 million contract value compare to historical spending on H-60 sustainment?

Without access to detailed historical spending data specifically for H-60 sustainment by the Department of the Army, a direct comparison is challenging. However, the $179 million figure represents a significant investment over the contract's duration (approximately three years). Given the H-60's widespread use across multiple military branches and its critical role, annual sustainment costs can easily run into tens or hundreds of millions of dollars depending on the scope of services, number of aircraft supported, and operational tempo. This particular contract appears to cover a substantial portion of the weapon system's lifecycle support, including technical, engineering, and logistical services. A more precise comparison would require analyzing annual spending trends for similar support contracts over the past decade.

What are the primary risks associated with a sole-source award for critical weapon system support?

The primary risks associated with a sole-source award for critical weapon system support, such as this H-60 contract, revolve around cost, innovation, and contractor performance. Firstly, the absence of competition removes the incentive for the contractor to offer the most competitive pricing, potentially leading to inflated costs for the government and taxpayers. Secondly, without the pressure of competing for future work, the contractor might have less motivation to innovate or improve service delivery. Thirdly, the government becomes highly dependent on a single provider, increasing vulnerability if the contractor faces financial difficulties, operational issues, or decides to significantly increase prices in subsequent negotiations. This dependence can also limit the government's flexibility in adopting new technologies or alternative support strategies.

What is the expected program effectiveness or outcome of this contract?

The expected program effectiveness of this contract is to ensure the continued operational readiness and sustainment of the U.S. Army's H-60 weapon system fleet. This includes providing essential technical expertise, engineering support for maintenance and upgrades, logistical services for parts and supply chain management, and potentially repair services. By securing these services, the Army aims to maintain the availability and reliability of its H-60 helicopters, which are vital for various missions, including troop transport, medical evacuation, and special operations. The successful execution of this contract should translate into a well-maintained and mission-capable fleet, directly supporting the Army's operational objectives and national security requirements.

Are there any specific performance metrics or deliverables outlined in the contract that indicate success?

The provided data does not detail specific performance metrics or deliverables for this contract. Typically, contracts of this nature would include clauses related to response times for technical support, delivery timelines for parts, quality of engineering services, and potentially availability rates for the supported aircraft. The 'FIRM FIXED PRICE' (FFP) contract type suggests that the contractor is obligated to provide the specified goods and services for a set price, implying that performance failures could lead to financial penalties or contract remedies. However, without the full contract document, the precise measures of success and accountability remain unspecified in this summary.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 6900 MAIN ST, STRATFORD, CT, 06614

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

Financial Breakdown

Contract Ceiling: $179,180,760

Exercised Options: $179,180,760

Current Obligation: $179,180,760

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W58RGZ13D0001

IDV Type: IDC

Timeline