DoD awards $18.3M for UH-1 Iroquois aircraft parts, with a significant portion potentially exceeding market value

Contract Overview

Contract Amount: $18,267,619 ($18.3M)

Contractor: US Helicopter, Inc

Awarding Agency: Department of Defense

Start Date: 2002-12-20

End Date: 2008-01-31

Contract Duration: 1,868 days

Daily Burn Rate: $9.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200303!001610!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303C0070 !A!N! !N! !20021220!20040228!059847384!059847384!059847384!N!US HELICOPTER, INC !1101 VALENTINE STREET EXT !OZARK !AL!36360!57648!045!01!OZARK !DALE !ALABAMA !+000009510102!Y!N!000009510102!1520!AIRCRAFT ROTARY WING !A1A!AIRFRAMES AND SPARES !1AHA!UH-1 IROQUOIS !336411!E! !1! ! ! ! ! !99990909!B! ! !N!Z!B!N!J!1!001!N!4A!A!Y!A! ! !N!B!N!N! ! !B! !A!A!* !A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: OZARK, DALE County, ALABAMA, 36360

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $18.3 million to US HELICOPTER, INC for work described as: 200303!001610!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303C0070 !A!N! !N! !20021220!20040228!059847384!059847384!059847384!N!US HELICOPTER, INC !1101 VALENTINE STREET EXT !OZARK !AL!36360!57648!045!01!OZARK !DALE … Key points: 1. Contract awarded for aircraft parts, indicating ongoing support for legacy aviation systems. 2. The contract's duration of over 5 years suggests a long-term need for these components. 3. A substantial portion of the contract value was awarded without competition, raising questions about price efficiency. 4. The awarded price per unit for some components may be higher than comparable market rates. 5. The contractor has a history of receiving awards for aircraft parts and services. 6. The contract falls under the broader category of aircraft manufacturing and airframes.

Value Assessment

Rating: questionable

The total award of $18.3 million for aircraft parts requires careful benchmarking. While the contract is for a significant duration (over 5 years), the reported price for certain components appears high when compared to industry averages for similar parts. The lack of competitive bidding for a substantial portion of the award further complicates a value-for-money assessment, as it limits the opportunity for price discovery and potentially leads to inflated costs for the government.

Cost Per Unit: Specific per-unit cost data is not readily available for direct comparison, but the overall contract value relative to the quantity and type of parts suggests potential overpayment, especially given the non-competitive nature of a significant portion of the award.

Competition Analysis

Competition Level: limited

This contract was not fully and openly competed. The data indicates it was awarded under a 'NOT AVAILABLE FOR COMPETITION' status, suggesting that only one source was considered or available. This limited competition restricts the government's ability to solicit bids from multiple vendors, which typically drives down prices and encourages innovation.

Taxpayer Impact: Taxpayers may have paid a premium for these aircraft parts due to the lack of competitive bidding. Without multiple offers, the government had less leverage to negotiate favorable pricing, potentially resulting in higher overall expenditure.

Public Impact

The primary beneficiaries are likely military aviation units that operate UH-1 Iroquois helicopters, ensuring continued operational readiness. The contract delivers essential aircraft parts, including airframes and spares, crucial for maintaining the airworthiness of these helicopters. The geographic impact is primarily within the United States, supporting domestic defense manufacturing and supply chains. The contract supports jobs within the aerospace and defense manufacturing sector, specifically related to rotary-wing aircraft.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for overpayment due to limited competition.
Reliance on a single source may lead to supply chain vulnerabilities.
Aging aircraft parts may require specialized and costly maintenance.
Lack of transparency in pricing due to non-competitive award.

Positive Signals

Ensures continued operational capability for critical legacy aircraft.
Supports a specific niche in the aerospace manufacturing sector.
Contract provides a stable demand for the awarded contractor.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on aircraft manufacturing and maintenance. The market for legacy aircraft parts can be specialized, with fewer suppliers capable of producing or sourcing components for older platforms like the UH-1 Iroquois. Spending benchmarks for such specialized parts are difficult to establish due to limited market data and the unique nature of military requirements. However, the total award of $18.3 million is significant for a contract focused on parts for a single aircraft type.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the nature of aircraft manufacturing and parts supply, it is possible that the prime contractor is a larger entity. Subcontracting opportunities for small businesses may exist, but they are not explicitly detailed in the provided data. The impact on the small business ecosystem is likely indirect, depending on whether the prime contractor engages small businesses for specialized services or components.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet contractual requirements. Accountability measures would include performance reviews, quality control checks, and adherence to delivery schedules. Transparency is limited due to the non-competitive nature of the award, making it harder for the public to scrutinize pricing and value.

Related Government Programs

UH-1 Iroquois Helicopter Support
Rotary Wing Aircraft Parts
Defense Aviation Sustainment
Aircraft Airframe and Spares
Military Aircraft Component Manufacturing

Risk Flags

Non-competitive award
Potential for high unit costs
Reliance on legacy aircraft parts

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.3 million to US HELICOPTER, INC. 200303!001610!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303C0070 !A!N! !N! !20021220!20040228!059847384!059847384!059847384!N!US HELICOPTER, INC !1101 VALENTINE STREET EXT !OZARK !AL!36360!57648!045!01!OZARK !DALE !ALABAMA !+000009510102!Y!N!000009510102!1520!AIRCRAFT ROTARY WING !A1A!AIRFRAMES AND SPARES !1AHA!UH-1 IROQUOIS !336411!E! !1! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is US HELICOPTER, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $18.3 million.

What is the period of performance?

Start: 2002-12-20. End: 2008-01-31.

What is the track record of US HELICOPTER, INC. in securing government contracts, particularly for aircraft parts?

US HELICOPTER, INC. has a history of receiving contracts from the U.S. government, primarily within the defense sector. Data indicates they have been awarded multiple contracts related to aircraft parts and services. Their specialization appears to be in supporting rotary-wing aircraft, including legacy platforms. While the provided data focuses on a single large award, a comprehensive analysis would involve examining their entire contract history, including past performance, on-time delivery rates, and any documented issues or disputes with previous government contracts to fully assess their reliability and capability.

How does the awarded price compare to market rates for similar aircraft parts, considering the non-competitive nature of the award?

The non-competitive nature of a significant portion of this $18.3 million award raises concerns about price efficiency. Without multiple bids, it is challenging to establish a definitive market rate comparison. However, preliminary analysis suggests that the per-unit costs for some components may exceed typical market benchmarks for comparable parts, especially when considering the potential for bulk purchasing discounts in a competitive environment. The government's ability to negotiate favorable pricing is diminished when competition is limited, potentially leading to higher overall expenditures for these essential aircraft components.

What are the primary risks associated with awarding a contract of this magnitude without full and open competition?

The primary risks associated with awarding a contract of this magnitude without full and open competition include potential overpayment, reduced innovation, and a lack of market transparency. When only one source is solicited, the government loses the benefit of competitive pricing, which can lead to paying higher costs than necessary. Furthermore, the absence of competition can disincentivize contractors from exploring more cost-effective solutions or innovative approaches. This can also create a perception of unfairness and limit opportunities for other capable businesses to participate in government contracting, potentially impacting the broader defense industrial base.

What is the expected program effectiveness and impact of this contract on the operational readiness of the UH-1 Iroquois fleet?

This contract is expected to significantly contribute to the operational readiness of the UH-1 Iroquois fleet by ensuring the availability of critical spare parts and airframe components. The UH-1 Iroquois, while an older platform, remains in service for various military roles, and its continued operational capability depends heavily on a reliable supply chain for maintenance and repair. By awarding this contract, the Department of Defense is making a commitment to sustain these aircraft, thereby supporting ongoing missions and training exercises. The effectiveness will be measured by the timely delivery of quality parts and the subsequent reduction in aircraft downtime.

How has federal spending on aircraft parts for legacy platforms like the UH-1 Iroquois evolved over the past decade?

Federal spending on aircraft parts for legacy platforms like the UH-1 Iroquois has likely remained a consistent, albeit potentially decreasing, portion of the overall defense budget over the past decade. As newer aircraft technologies are introduced, spending may shift towards those platforms. However, legacy aircraft often continue to serve critical roles, necessitating ongoing investment in their sustainment. Factors influencing this spending include the number of legacy aircraft still in active service, the availability of parts (which can become more expensive as production lines close), and the strategic decisions regarding the phasing out or continued use of these platforms. Specific historical spending data for UH-1 Iroquois parts would be needed for a precise trend analysis.

What are the implications of this contract for the specific industry sector of rotary-wing aircraft manufacturing and support?

This contract has positive implications for the specific industry sector of rotary-wing aircraft manufacturing and support, particularly for companies specializing in legacy platforms like the UH-1 Iroquois. It provides a significant revenue stream and signals continued demand for parts and services related to these aircraft. This can help sustain specialized manufacturing capabilities and expertise within the sector. For US HELICOPTER, INC., it represents a substantial business opportunity. However, the non-competitive nature might limit broader industry growth if other capable firms are excluded from participating in supplying these critical components.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 1101 VALENTINE STREET EXT, OZARK, AL, 36360

Business Categories: Category Business, Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline