Coast Guard's $275M HC-144A aircraft acquisition shows limited competition and potential value concerns

Contract Overview

Contract Amount: $274,637,759 ($274.6M)

Contractor: Airbus US Space & Defense Inc

Awarding Agency: Department of Homeland Security

Start Date: 2010-07-29

End Date: 2016-08-30

Contract Duration: 2,224 days

Daily Burn Rate: $123.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION AND DELIVERY OF HC-144A MARITIME PATROL AIRCRAFT (MPA) FOR THE UNITED STATES COAST GUARD

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $274.6 million to AIRBUS US SPACE & DEFENSE INC for work described as: PRODUCTION AND DELIVERY OF HC-144A MARITIME PATROL AIRCRAFT (MPA) FOR THE UNITED STATES COAST GUARD Key points: 1. The contract for maritime patrol aircraft was awarded on a sole-source basis, limiting price discovery. 2. The fixed-price contract structure shifts some risk to the government, especially if costs escalate. 3. The duration of the contract (2224 days) suggests a long-term commitment with potential for cost overruns. 4. The acquisition falls within the broader 'Aircraft Manufacturing' sector, which has its own market dynamics. 5. The absence of small business set-asides indicates a focus on large prime contractors. 6. The contract's value, while significant, needs benchmarking against similar platforms for true value assessment.

Value Assessment

Rating: fair

Benchmarking the value of the HC-144A acquisition is challenging without direct comparisons to similar sole-source procurements. The firm fixed-price nature suggests an attempt to control costs, but the total award amount of $274.6 million over its period of performance warrants scrutiny. Without competitive bidding, it's difficult to ascertain if the government secured the best possible price. Further analysis would require comparing the capabilities and cost per flight hour of the HC-144A to other available maritime patrol aircraft, both domestically and internationally, to establish a clearer value proposition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means that the U.S. Coast Guard did not benefit from the price reductions and innovation that can arise from a competitive bidding process. This can lead to higher prices and potentially less favorable contract terms for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing bids, there is less assurance that the government obtained the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the United States Coast Guard, which receives critical maritime patrol capabilities. The contract delivers HC-144A Maritime Patrol Aircraft (MPA) essential for surveillance, search and rescue, and law enforcement missions. The geographic impact is national, supporting Coast Guard operations across U.S. waters and international areas of interest. Workforce implications include jobs in aircraft manufacturing, maintenance, and support roles, primarily with the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration (2224 days) increases exposure to cost fluctuations and scope creep.
Firm fixed-price contract shifts some risk to the government if contractor costs exceed estimates.
Lack of small business participation may limit broader economic benefits and subcontracting opportunities.

Positive Signals

Acquisition of specialized maritime patrol aircraft enhances Coast Guard operational capabilities.
Firm fixed-price contract provides cost certainty if contractor performance is as expected.
Contract award supports a critical national security and public safety function.

Sector Analysis

The HC-144A acquisition falls within the broader aerospace and defense sector, specifically aircraft manufacturing. This sector is characterized by high barriers to entry, significant R&D investment, and often involves complex, long-term government contracts. The market for specialized maritime patrol aircraft is relatively niche, with a limited number of capable manufacturers. The total value of this contract, approximately $275 million, is substantial but must be viewed within the context of the overall defense and homeland security spending, which runs into hundreds of billions annually.

Small Business Impact

This contract did not include a small business set-aside, indicating that the primary award went to a large business entity. Consequently, there are no direct subcontracting requirements mandated for small businesses within this specific award. The absence of a set-aside means that opportunities for small businesses to participate in this particular procurement are limited to potential indirect roles or through the prime contractor's voluntary subcontracting efforts. This contract does not appear to actively foster the small business ecosystem for this specific acquisition.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Homeland Security's procurement oversight mechanisms and the U.S. Coast Guard's program management. As a definitive contract, it is subject to standard contract administration and compliance checks. Transparency is generally maintained through contract databases like FPDS, though detailed performance metrics and cost breakdowns may not always be publicly available. The Inspector General for the Department of Homeland Security would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Other Coast Guard Aircraft Procurements
Maritime Surveillance Programs
Homeland Security Aircraft Acquisitions
Fixed-Wing Aircraft Manufacturing Contracts

Risk Flags

Sole-source award
Potential for overpayment due to lack of competition
Long contract duration increases risk exposure
Limited transparency on performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $274.6 million to AIRBUS US SPACE & DEFENSE INC. PRODUCTION AND DELIVERY OF HC-144A MARITIME PATROL AIRCRAFT (MPA) FOR THE UNITED STATES COAST GUARD

Who is the contractor on this award?

The obligated recipient is AIRBUS US SPACE & DEFENSE INC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $274.6 million.

What is the period of performance?

Start: 2010-07-29. End: 2016-08-30.

What is the track record of AIRBUS US SPACE & DEFENSE INC with similar sole-source contracts?

AIRBUS US SPACE & DEFENSE INC, as a major defense contractor, has a history of large-scale sole-source and competed contracts across various platforms. Analyzing their past performance on sole-source awards for similar complex systems, such as other aircraft or defense platforms, would provide insight into their ability to manage costs and deliver on schedule without competitive pressure. Specific data on cost overruns, delivery delays, or quality issues on prior sole-source contracts would be crucial for assessing risk associated with this HC-144A acquisition. Without this granular data, it's difficult to definitively assess their reliability in this specific context, though their established presence suggests a degree of operational capability.

How does the cost per flight hour of the HC-144A compare to alternative maritime patrol aircraft?

Determining the cost per flight hour for the HC-144A is essential for a comprehensive value assessment, but this data is not readily available in the provided summary. To benchmark effectively, one would need to compare it against similar aircraft like the P-3 Orion, the future P-8 Poseidon (though a different class), or even international equivalents. Factors influencing cost per flight hour include fuel consumption, maintenance requirements, crew size, and avionics complexity. A higher cost per flight hour for the HC-144A, especially given its sole-source acquisition, would indicate a potentially lower value proposition for the Coast Guard's mission effectiveness compared to competitively sourced alternatives.

What are the specific risks associated with a sole-source award for aircraft manufacturing?

The primary risk of a sole-source award in aircraft manufacturing is the lack of competitive pricing, which can lead to the government overpaying for the asset. Without competing bids, the contractor has less incentive to offer the lowest possible price. Additionally, sole-source procurements can limit innovation, as there is no external pressure from competitors to develop more cost-effective or technologically advanced solutions. There's also a risk of vendor lock-in, making it difficult and expensive to switch providers or platforms in the future. For long-term sustainment and upgrades, this lack of competition can continue to impact costs throughout the aircraft's lifecycle.

What is the historical spending trend for maritime patrol aircraft by the U.S. Coast Guard?

Historical spending data for U.S. Coast Guard maritime patrol aircraft reveals a pattern of significant investment in maintaining and upgrading its aerial surveillance capabilities. Prior to the HC-144A, the service operated platforms like the HU-25 Falcon. The transition to new platforms often involves substantial capital outlays, as seen with the HC-144A acquisition. Analyzing past spending on similar platforms would show whether the current investment is consistent with historical trends, or if it represents a significant deviation. Understanding these patterns helps contextualize the $274.6 million award and assess its alignment with the Coast Guard's long-term strategic needs and budget realities.

What performance metrics are typically tracked for maritime patrol aircraft contracts?

For maritime patrol aircraft contracts, key performance metrics typically include mission readiness rates, availability rates (percentage of time aircraft are operational), on-time delivery of aircraft, adherence to technical specifications, and cost performance against the contract budget. For the HC-144A, the Coast Guard would likely monitor factors such as the number of flight hours logged, the success rate of patrol missions (e.g., interdictions, search and rescue events), and the Mean Time Between Failures (MTBF) for critical components. The effectiveness of the aircraft in fulfilling its intended roles (surveillance, law enforcement, SAR) is paramount. Data on these metrics would provide a clearer picture of the contract's success beyond just the financial outlay.

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

Address: 1616 FORT MYER DR STE 1500, ARLINGTON, VA, 22209

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

Financial Breakdown

Contract Ceiling: $356,067,024

Exercised Options: $274,637,759

Current Obligation: $274,637,759

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline