DoD Awards $31M for Aircraft Tech Development, Raising Value Concerns
Contract Overview
Contract Amount: $30,974,788 ($31.0M)
Contractor: Piasecki Aircraft Corp
Awarding Agency: Department of Defense
Start Date: 2000-10-01
End Date: 2011-09-22
Contract Duration: 4,008 days
Daily Burn Rate: $7.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 107
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: 200109!001763!1700!AC524 !NAVAL AIR SYSTEMS COMMAND !N0001900C0284 !A!N!*!N! !20000928!20041227!002266609!002266609!002266609!N!PIASECKI AIRCRAFT CORPORATION !WEST TERMINUS OF 2ND STREE!ESSINGTON !PA!19029!24112!045!42!ESSINGTON !DELAWARE !PENN !+000007779550!N!N!000000000000!AC13!RDTE/AIRCRAFT-ADV TECH DEV !A1C!OTHER AIRCRAFT EQUIPMENT !2AHV!SH-60 SEAHAWK !541710!*!*!3! ! ! !*!*!*!B!*!*!B! !A !N!U!2!107!E! !A!Y!Z! ! !N!B!N!N! ! !A! !A!A!000!A!B!N! ! ! ! ! ! !0001!
Place of Performance
Location: ESSINGTON, DELAWARE County, PENNSYLVANIA, 19029
Plain-Language Summary
Department of Defense obligated $31.0 million to PIASECKI AIRCRAFT CORP for work described as: 200109!001763!1700!AC524 !NAVAL AIR SYSTEMS COMMAND !N0001900C0284 !A!N!*!N! !20000928!20041227!002266609!002266609!002266609!N!PIASECKI AIRCRAFT CORPORATION !WEST TERMINUS OF 2ND STREE!ESSINGTON !PA!19029!24112!045!42!ESSINGTON !DELAW… Key points: 1. Contract value significantly exceeds initial estimates, indicating potential cost overruns. 2. Limited competition may have led to suboptimal pricing. 3. The project's long duration and cost-plus structure increase financial risk. 4. Focus on advanced R&D suggests high technical risk but potential for innovation.
Value Assessment
Rating: concerning
The final award of $30,974,787.98 is substantially higher than the initial estimated value of $7,779,550. This nearly fourfold increase suggests significant underestimation or scope creep, raising concerns about initial pricing and ongoing cost management.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
While the contract was awarded under full and open competition, the significant increase in value suggests that the initial price discovery may have been flawed or that unforeseen technical challenges drove up costs substantially. The fixed fee component on a cost-plus contract can also limit the incentive for cost control.
Taxpayer Impact: The substantial increase in contract value beyond initial estimates represents a significant potential impact on taxpayer funds, necessitating close scrutiny of the cost escalation.
Public Impact
Taxpayers may be footing a bill far exceeding initial projections for advanced aircraft technology. The extended contract period and cost-plus structure could lead to further budget increases. The success of this advanced development project is critical for future defense capabilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Significant cost overrun from initial estimate
- Long contract duration (4008 days)
- Cost-plus contract type can incentivize higher spending
- Potential for scope creep given R&D nature
Positive Signals
- Awarded under full and open competition
- Focus on advanced technology development
- Contract supports critical defense capabilities
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on advanced aircraft technology. Spending in this area is crucial for maintaining technological superiority but often involves higher risk and less predictable costs compared to procurement of existing systems.
Small Business Impact
The data does not indicate whether small businesses were involved as subcontractors. The primary contractor, PIASECKI AIRCRAFT CORPORATION, is not typically classified as a small business in this context.
Oversight & Accountability
The significant increase in contract value warrants thorough oversight from the Naval Air Systems Command and the Defense Contract Management Agency to ensure costs remain justified and the project stays on track.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Significant cost overrun
- Long contract duration
- Cost-plus contract type
- Potential for R&D scope creep
- Limited visibility into subcontractor involvement
Tags
research-and-development-in-the-physical, department-of-defense, pa, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $31.0 million to PIASECKI AIRCRAFT CORP. 200109!001763!1700!AC524 !NAVAL AIR SYSTEMS COMMAND !N0001900C0284 !A!N!*!N! !20000928!20041227!002266609!002266609!002266609!N!PIASECKI AIRCRAFT CORPORATION !WEST TERMINUS OF 2ND STREE!ESSINGTON !PA!19029!24112!045!42!ESSINGTON !DELAWARE !PENN !+000007779550!N!N!000000000000!AC13!RDTE/AIRCRAFT-ADV TECH DEV !A1C!OTHER AIRCRAFT EQUIPMENT !2AHV!SH-60 SEAHAWK !541710!*!*!3! ! ! !*!*!*!B!*!*!B!
Who is the contractor on this award?
The obligated recipient is PIASECKI AIRCRAFT CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $31.0 million.
What is the period of performance?
Start: 2000-10-01. End: 2011-09-22.
What factors led to the nearly fourfold increase in the contract's value from the initial estimate to the final award?
The substantial increase likely stems from the inherent uncertainties in research and development projects. Unforeseen technical challenges, evolving requirements, and the complexity of developing advanced aircraft technologies often necessitate adjustments to scope and budget. The cost-plus fixed-fee structure, while allowing for flexibility, can also contribute to cost growth if not meticulously managed and monitored.
How effectively did the full and open competition process ensure competitive pricing given the eventual cost escalation?
While full and open competition is designed to foster competitive pricing, the significant cost escalation suggests that either the initial baseline was underestimated, or the competitive bids did not fully anticipate the project's eventual scope and challenges. The nature of R&D means that initial cost estimates are often speculative, and the winning bid may have been based on assumptions that proved inaccurate as the project progressed.
What is the expected return on investment or strategic benefit for the significant taxpayer expenditure on this advanced aircraft development?
The strategic benefit lies in advancing critical defense capabilities, potentially leading to next-generation aircraft with enhanced performance, survivability, or mission effectiveness. The return on investment is measured not just in immediate cost savings but in long-term national security advantages, technological leadership, and potential future applications or spin-offs from the developed technologies.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: BASIC RESEARCH
Offers Received: 107
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: WEST TERMINUS OF 2ND STREE, ESSINGTON, PA, 19029
Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $36,294,541
Exercised Options: $36,294,541
Current Obligation: $30,974,788
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2000-10-01
Current End Date: 2011-09-22
Potential End Date: 2011-09-22 00:00:00
Last Modified: 2023-07-28
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