Sikorsky Aircraft awarded $3.5B for rotary wing aircraft, with a significant portion for airframes and spares

Contract Overview

Contract Amount: $3,518,934,933 ($3.5B)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2002-09-26

End Date: 2020-01-31

Contract Duration: 6,336 days

Daily Burn Rate: $555.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200212!002339!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2302C0006 !A!N! !N! !20020926!20071231!835551474!835551474!001344142!N!SIKORSKY AIRCRAFT CORPORATION !6900 MAIN STREET !STRATFORD !CT!06615!74260!001!09!STRATFORD !FAIRFIELD !CONN !+000223785585!N!Y!001534999153!1520!AIRCRAFT ROTARY WING !A1A!AIRFRAMES AND SPARES !1000!NOT DISCERNABLE OR CLASSIFIED !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!J!1!001!N!1G!A!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001!

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06615

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $3.52 billion to SIKORSKY AIRCRAFT CORPORATION for work described as: 200212!002339!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2302C0006 !A!N! !N! !20020926!20071231!835551474!835551474!001344142!N!SIKORSKY AIRCRAFT CORPORATION !6900 MAIN STREET !STRATFORD !CT!06615!74260!001!09!STRATFORD !FAIRFIELD !CONN !+000223785585!N!Y!001534999153!1520!A… Key points: 1. Contract value exceeds $3.5 billion, primarily for aircraft manufacturing and related spares. 2. This is a definitive contract, indicating a long-term agreement for goods or services. 3. The contract was not competed, raising questions about potential price efficiencies. 4. The duration of the contract spans over 16 years, from 2002 to 2020. 5. The primary product service code is for aircraft rotary wing, suggesting a focus on helicopters. 6. The contractor, Sikorsky Aircraft Corporation, is a major player in the aerospace industry.

Value Assessment

Rating: questionable

The total contract value of $3.5 billion over 16 years is substantial. Without a competitive bidding process, it is difficult to benchmark the value for money. The firm fixed-price nature suggests cost certainty for the government, but the lack of competition may have led to a higher price than could have been achieved through open bidding. Further analysis would require comparing pricing for similar aircraft and spare parts procured through competitive means.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This means that only one bidder, Sikorsky Aircraft Corporation, was considered for this award. The lack of competition limits the government's ability to leverage market forces to secure the best possible pricing and terms. It suggests that either there were unique capabilities required that only Sikorsky could provide, or the procurement strategy did not prioritize open competition.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price reflects the lowest reasonable cost for the required aircraft and spares.

Public Impact

The U.S. Army benefits from the acquisition of rotary wing aircraft and essential spare parts. This contract supports the operational readiness of aviation units within the Department of Defense. The contract's duration implies a sustained need for these aircraft and maintenance support. The workforce at Sikorsky Aircraft Corporation and its supply chain are likely impacted by this significant award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in suboptimal pricing for taxpayers.
The extended contract duration could mask inefficiencies if not actively managed.
Reliance on a single source for critical aircraft components poses a potential supply chain risk.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Sikorsky Aircraft Corporation is an established manufacturer with a track record in rotary wing aircraft.
The contract specifies airframes and spares, indicating a comprehensive support package.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on rotary wing aircraft. The aerospace industry is characterized by high R&D costs, complex supply chains, and significant government procurement. The total value of the contract, over $3.5 billion, places it among substantial defense awards. Comparable spending benchmarks would involve analyzing other large-scale aircraft procurement contracts, particularly those for helicopters and their associated parts, to assess cost-effectiveness.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans within the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is unclear. However, large defense contracts often involve subcontracting opportunities, and the extent to which Sikorsky engages small businesses in its supply chain would be a key factor in assessing the overall impact on the small business ecosystem.

Oversight & Accountability

The provided data does not detail specific oversight mechanisms for this contract. As a Department of Defense contract, it would typically be subject to oversight by the relevant agency, potentially including contract officers, auditors, and the Inspector General. Transparency regarding the justification for the sole-source award and ongoing performance monitoring would be crucial for accountability.

Related Government Programs

Rotary Wing Aircraft Procurement
Aviation Support Services
Defense Manufacturing Contracts
Airframe and Component Spares

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may obscure cost efficiencies.
Potential for vendor lock-in.
Limited transparency on specific justification for non-competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.52 billion to SIKORSKY AIRCRAFT CORPORATION. 200212!002339!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2302C0006 !A!N! !N! !20020926!20071231!835551474!835551474!001344142!N!SIKORSKY AIRCRAFT CORPORATION !6900 MAIN STREET !STRATFORD !CT!06615!74260!001!09!STRATFORD !FAIRFIELD !CONN !+000223785585!N!Y!001534999153!1520!AIRCRAFT ROTARY WING !A1A!AIRFRAMES AND SPARES !1000!NOT DISCERNABLE OR CLASSIFIED !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!J!1!001!N!1G!A!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001!

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 $3.52 billion.

What is the period of performance?

Start: 2002-09-26. End: 2020-01-31.

What is the historical spending trend for Sikorsky Aircraft Corporation with the Department of Defense for similar rotary wing aircraft?

Analyzing historical spending for Sikorsky Aircraft Corporation with the Department of Defense reveals a long-standing relationship, particularly concerning the UH-60 Black Hawk and related platforms. Prior to and following this specific $3.5 billion contract (DAAH2302C0006), Sikorsky has consistently secured significant funding for the production, modification, and sustainment of rotary wing aircraft. For instance, data from previous fiscal years shows multi-billion dollar awards for Black Hawk helicopters and their associated spare parts, often through sole-source or limited competition vehicles due to the specialized nature of the platforms and the contractor's established role. This pattern suggests that the $3.5 billion award is part of a sustained, high-value procurement strategy for critical rotary wing assets, reflecting both the ongoing operational needs of the military and Sikorsky's dominant position in this market segment.

How does the per-unit cost of the aircraft procured under this contract compare to market rates or similar government contracts?

Determining the precise per-unit cost for the aircraft procured under DAAH2302C0006 is challenging with the available data, as the contract value encompasses both aircraft and a significant quantity of spare parts over a long duration. However, given that this was a sole-source award, a direct comparison to market rates or competitively procured contracts is difficult and likely unfavorable. Typically, sole-source contracts do not benefit from the price reductions that competition can drive. To perform a robust comparison, one would need to isolate the cost of a specific aircraft model and configuration, then benchmark it against prices paid by the government or commercial entities for similar aircraft acquired through competitive bids or established commercial price lists. Without such granular data, it's reasonable to infer that the per-unit cost may be higher than what could have been achieved in a competitive environment.

What specific risks are associated with a sole-source contract of this magnitude and duration?

A sole-source contract of this magnitude ($3.5 billion) and duration (over 16 years) presents several significant risks. Firstly, the lack of competition can lead to inflated pricing, as the contractor faces no external pressure to offer the most cost-effective solution. Secondly, there's a risk of contractor complacency or reduced innovation, as the absence of competitive threats may lessen the incentive to improve efficiency or develop more advanced technologies. Thirdly, a long-term sole-source arrangement can create vendor lock-in, making it difficult and costly to switch to alternative suppliers even if better options emerge later. Finally, the government's negotiating power is diminished, potentially leading to less favorable terms and conditions over the life of the contract. These risks underscore the importance of rigorous justification for sole-source awards and robust contract management.

What was the justification provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. While the specific justification document is not included, common reasons for sole-source awards in defense procurement include: unique capabilities or proprietary technology possessed by only one source, urgent and compelling needs where competition is not feasible, or situations where a specific system has been developed and only the original manufacturer can provide necessary upgrades or sustainment. For complex aircraft like those likely produced by Sikorsky, justifications often revolve around maintaining interoperability, leveraging existing infrastructure and training, or the highly specialized nature of the required modifications or components that only the original equipment manufacturer can supply. A formal Justification and Approval (J&A) document would typically detail these reasons.

What is the significance of the Product Service Code (PSC) '336411' (Aircraft Rotory Wing) in the context of this contract?

The Product Service Code (PSC) '336411' specifically designates 'Aircraft Rotory Wing' within the federal procurement system. This code clearly categorizes the primary good being procured under contract DAAH2302C0006 as helicopters or similar rotary-wing aircraft. Its significance lies in providing a standardized way for agencies to classify their purchases and for analysts to identify and aggregate spending on specific types of equipment. For this contract, PSC 336411 confirms the focus is on the acquisition and potentially the sustainment of helicopters, which are critical assets for various military operations, including troop transport, attack, reconnaissance, and medical evacuation. The value associated with this PSC highlights the substantial investment the Department of the Army places in rotary-wing aviation capabilities.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 6900 MAIN STREET, STRATFORD, CT, 06615

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $3,517,296,229

Exercised Options: $3,517,296,229

Current Obligation: $3,518,934,933

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline