DoD awards $600M+ for H-1 upgrades, with Bell Textron Inc. securing the contract for long-lead parts

Contract Overview

Contract Amount: $600,210,577 ($600.2M)

Contractor: Bell Textron Inc

Awarding Agency: Department of Defense

Start Date: 2010-02-05

End Date: 2016-03-10

Contract Duration: 2,225 days

Daily Burn Rate: $269.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: H-1 UPGRADES LOT 8 AAC FOR LONG LEAD PARTS

Place of Performance

Location: HURST, TARRANT County, TEXAS, 76053

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $600.2 million to BELL TEXTRON INC for work described as: H-1 UPGRADES LOT 8 AAC FOR LONG LEAD PARTS Key points: 1. Contract awarded to a single, established manufacturer, potentially limiting broader market engagement. 2. The contract's duration and value suggest a significant, long-term commitment to the H-1 upgrade program. 3. Fixed-price contract type aims to control costs, but long lead times can introduce unforeseen price escalations. 4. Focus on 'long lead parts' indicates a critical supply chain component for ongoing aircraft modernization. 5. The award follows a competitive process, but the exclusion of sources warrants further examination of its impact. 6. Geographic concentration in Texas for the contractor may have regional economic implications.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the H-1 upgrade components and their market prices. However, a $600M+ award over a multi-year period for aircraft parts suggests a substantial investment. The firm fixed-price nature provides some cost certainty, but the 'long lead parts' aspect could introduce risks if material costs or production complexities escalate beyond initial estimates. Comparing this to similar long-lead component procurements for other military aircraft would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while a competitive process was intended, certain sources were excluded, suggesting a limited competition scenario. The specific reasons for exclusion are not detailed, but this approach can sometimes lead to less competitive pricing than a truly open competition. The presence of only one awardee further reinforces the limited nature of the competition.

Taxpayer Impact: Excluding potential bidders limits the number of offers received, potentially increasing the final price paid by taxpayers compared to a fully open solicitation.

Public Impact

The primary beneficiaries are the U.S. military branches operating H-1 helicopters, ensuring the continued modernization and operational readiness of their fleet. Services delivered include the manufacturing and supply of critical long-lead time components essential for the H-1 upgrade program. The geographic impact is concentrated where Bell Textron Inc. operates, primarily in Texas, supporting local employment and the aerospace manufacturing sector. Workforce implications include sustained employment for skilled labor in aircraft manufacturing and supply chain management within the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition due to exclusion of sources may have resulted in a higher price than a fully open bid.
Long lead times for parts can introduce supply chain vulnerabilities and potential cost overruns if market conditions change.
Reliance on a single contractor for critical components could pose a risk if production issues arise.
Lack of transparency regarding the 'exclusion of sources' prevents a full understanding of the competitive landscape.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Award to an established manufacturer like Bell Textron Inc. suggests a focus on reliability and proven capability.
The contract supports a critical military modernization program, ensuring fleet readiness.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector (NAICS 336411), a key segment of the broader aerospace and defense industry. The market is characterized by high barriers to entry, significant R&D investment, and a strong reliance on government contracts, particularly for military aircraft. Spending in this sector is often driven by defense modernization programs and the need for specialized, high-performance components. Bell Textron Inc. is a major player in this market, known for its military rotorcraft. This contract represents a significant portion of spending dedicated to maintaining and upgrading existing platforms rather than developing entirely new ones.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the award to a large prime contractor like Bell Textron Inc. suggests that subcontracting opportunities for small businesses may exist within the supply chain. However, without specific subcontracting plans or goals detailed in the award, the extent of small business participation remains unclear. The focus on specialized, long-lead parts might also limit the types of small businesses that could effectively participate.

Oversight & Accountability

Oversight for this contract would likely be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance with contract terms. The firm fixed-price nature of the contract provides a degree of accountability for cost control. Transparency regarding the 'exclusion of sources' and the specific components procured would enhance oversight. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

H-1 Upgrade Program
Military Helicopter Modernization
Aerospace Component Manufacturing
Defense Supply Chain Management

Risk Flags

Limited competition due to source exclusion
Potential for cost escalation on long-lead items
Supply chain vulnerability for critical components

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $600.2 million to BELL TEXTRON INC. H-1 UPGRADES LOT 8 AAC FOR LONG LEAD PARTS

Who is the contractor on this award?

The obligated recipient is BELL TEXTRON 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 $600.2 million.

What is the period of performance?

Start: 2010-02-05. End: 2016-03-10.

What specific H-1 helicopter variants are being upgraded under this contract, and what is the expected performance improvement?

This contract specifically addresses the H-1 Upgrade Program, which primarily involves the modernization of the U.S. Marine Corps' Bell AH-1Z Viper attack helicopter and Bell UH-1Y Venom utility helicopter. The upgrades aim to enhance survivability, lethality, and operational effectiveness. Key improvements include upgraded avionics, improved engines, enhanced weapons systems, and modernized airframes. The goal is to extend the service life of these platforms and ensure they meet evolving threat environments. Specific performance metrics related to speed, range, payload capacity, and survivability are detailed within the program's technical specifications, but are not publicly disclosed in full detail due to security considerations.

What were the specific reasons for excluding other potential sources in this 'full and open competition after exclusion of sources' award?

The designation 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' implies that a competitive solicitation was issued, but certain potential offerors were deliberately excluded from participating. The specific justifications for such exclusions are typically rooted in factors like proprietary data rights, unique manufacturing capabilities, existing government-furnished equipment, or specific security requirements that only certain contractors could meet. Without access to the detailed justification documents filed with the contract award, the precise reasons remain undisclosed. This exclusion mechanism is intended to ensure best value while acknowledging situations where a limited pool of qualified sources is unavoidable, though it inherently reduces the breadth of competition.

How does the $600M+ contract value compare to historical spending on H-1 upgrades or similar long-lead aircraft parts?

The $600 million+ award for H-1 upgrade long-lead parts represents a significant investment, consistent with the scale of major military aircraft modernization programs. Historical spending on H-1 upgrades has been substantial, reflecting the complexity and duration of these efforts. For instance, previous contract awards for the AH-1Z and UH-1Y programs have also run into hundreds of millions of dollars over several years. Comparing this specific award requires analyzing the 'long lead parts' component against similar procurements for other platforms like the F-35, F-16, or other rotorcraft programs. Such comparisons would reveal if the per-unit cost or overall value is aligned with industry benchmarks for specialized, long-lead aerospace components, considering factors like inflation and technological advancements.

What are the primary risks associated with 'long lead parts' procurement in defense contracts, and how are they mitigated here?

Procuring 'long lead parts' carries inherent risks, primarily related to supply chain disruptions, material cost volatility, and potential obsolescence if program timelines shift. These parts often require specialized manufacturing processes and raw materials that have extended lead times, making them vulnerable to market fluctuations and geopolitical events. Mitigation strategies employed in defense contracts typically include robust contract clauses that address price adjustments, inventory management, and supplier diversification where feasible. The firm fixed-price nature of this contract suggests the government aims to cap costs, placing the risk of cost escalation largely on the contractor. However, the long duration implies that effective risk management and close monitoring by the contracting agency are crucial.

What is Bell Textron Inc.'s track record with the H-1 program and similar large defense contracts?

Bell Textron Inc. has an extensive and well-established track record with the H-1 program, as they are the original equipment manufacturer (OEM) for both the AH-1Z Viper and the UH-1Y Venom helicopters. They have been instrumental in the development, production, and sustainment of these aircraft for the U.S. Marine Corps for many years. Their history with the H-1 platform includes successfully delivering numerous aircraft and components, managing complex production lines, and fulfilling various upgrade and modernization contracts. Bell Textron also holds numerous other large defense contracts across various platforms and services, demonstrating a broad capability in aerospace manufacturing and defense systems. This long-standing relationship and proven performance likely contributed to their selection for this significant long-lead parts contract.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Textron Inc (UEI: 001338979)

Address: 3255 BELL FLIGHT BLVD, FORT WORTH, TX, 76118

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

Financial Breakdown

Contract Ceiling: $600,210,577

Exercised Options: $600,210,577

Current Obligation: $600,210,577

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline