DoD awards $626M for H-1 upgrades, with Bell Textron Inc. as the sole contractor

Contract Overview

Contract Amount: $626,435,597 ($626.4M)

Contractor: Bell Textron Inc

Awarding Agency: Department of Defense

Start Date: 2008-06-20

End Date: 2017-10-31

Contract Duration: 3,420 days

Daily Burn Rate: $183.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: H-1 UPGRADES LOT VII UH-1Y AND AH-1Z AIRCRAFT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76118

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $626.4 million to BELL TEXTRON INC for work described as: H-1 UPGRADES LOT VII UH-1Y AND AH-1Z AIRCRAFT Key points: 1. This contract represents a significant investment in rotary-wing aircraft modernization. 2. The sole-source nature raises questions about potential price inflation and limited market engagement. 3. Long contract duration suggests a sustained need for these specialized aircraft. 4. Fixed-price contract type aims to control costs, but the lack of competition may undermine this. 5. The absence of small business set-asides warrants further investigation into subcontracting opportunities. 6. Performance context is critical given the advanced nature of the aircraft and potential operational demands.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized equipment involved. Without competitive bids, it's difficult to ascertain if the $626 million awarded represents a fair market price. The fixed-price contract type offers some cost control, but the lack of competition limits the government's leverage to negotiate favorable terms. Further analysis would require comparing the unit costs of these specific H-1 upgrades to similar, competitively procured aircraft programs, which may not be directly analogous.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Bell Textron Inc., indicating that the government did not solicit bids from other potential suppliers. This approach is typically used when a single supplier possesses unique capabilities or intellectual property essential for the requirement. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bidders had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government's ability to secure the best possible price was limited by the sole-source award.

Public Impact

The U.S. Department of Defense is the primary beneficiary, receiving upgraded H-1 series helicopters. These upgrades are crucial for enhancing the capabilities of naval aviation, supporting troop transport and attack missions. The contract impacts the defense industrial base, particularly in aircraft manufacturing. Workforce implications include employment for engineers, technicians, and manufacturing personnel at Bell Textron and its suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of small business set-aside may reduce opportunities for smaller firms in the supply chain.
Long contract duration could mask inefficiencies if not closely monitored.
Specialized nature of aircraft upgrades makes direct cost comparisons difficult.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Bell Textron Inc. is a known entity with established expertise in H-1 aircraft.
The contract addresses a critical defense need for modernized rotary-wing aircraft.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls within the aircraft manufacturing sub-sector, specifically focusing on upgrades for established rotary-wing platforms. The total addressable market for military aircraft and upgrades is substantial, with government contracts forming a significant portion. Bell Textron Inc. is a major player in this market, particularly for helicopters. Comparable spending benchmarks would involve looking at other major aircraft modernization programs within the DoD.

Small Business Impact

This contract does not appear to have included specific small business set-asides. The sole-source nature of the award to a large prime contractor like Bell Textron Inc. suggests that subcontracting opportunities for small businesses would be determined by the prime contractor's procurement practices. It is essential to assess Bell Textron's subcontracting plan to understand the extent to which small businesses will participate in fulfilling this contract and to ensure fair access to the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The Department of Defense's own Inspector General's office may also conduct audits or investigations into contract management and spending. Transparency is facilitated through contract databases, but the sole-source nature limits public insight into the negotiation process and detailed cost breakdowns.

Related Government Programs

H-1 Upgrade Program
Naval Aviation Modernization
Rotary-Wing Aircraft Procurement
Defense Contract Management

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $626.4 million to BELL TEXTRON INC. H-1 UPGRADES LOT VII UH-1Y AND AH-1Z AIRCRAFT

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 $626.4 million.

What is the period of performance?

Start: 2008-06-20. End: 2017-10-31.

What is the historical spending trend for H-1 aircraft upgrades with Bell Textron Inc.?

Analyzing historical spending on H-1 aircraft upgrades with Bell Textron Inc. requires accessing detailed contract databases. While this specific contract (H-1 UPGRADES LOT VII) spans from 2008 to 2017 with a value of $626,435,596.6, it represents a portion of the overall investment in these platforms. Bell Textron has been the incumbent contractor for the H-1 series, including the UH-1Y and AH-1Z, for an extended period. Previous contracts would likely show a consistent, albeit potentially fluctuating, expenditure pattern for research, development, production, and sustainment of these aircraft. Understanding the cumulative spending over decades would provide a clearer picture of the long-term financial commitment to the H-1 platform and Bell Textron's role as the sole provider.

How does the unit cost of the upgraded H-1 aircraft compare to similar military helicopters procured competitively?

Directly comparing the unit cost of these upgraded H-1 aircraft (UH-1Y and AH-1Z) to competitively procured military helicopters is challenging due to the specialized nature of the H-1 platform and the sole-source award. Competitively procured aircraft, such as some variants of the Black Hawk or Apache, may have different baseline costs, mission capabilities, and development histories. The absence of competitive bidding for the H-1 upgrades means there isn't a direct market benchmark for this specific configuration. To perform a robust comparison, one would need to isolate the cost of the upgrades themselves and benchmark them against the cost of similar modernization efforts on other platforms, or analyze the total lifecycle cost of the H-1s versus alternatives, considering operational and support costs.

What are the key performance metrics tracked for the H-1 upgrade program, and how has Bell Textron Inc. performed against them?

Key performance metrics for the H-1 upgrade program would typically include aircraft availability rates, mission readiness, reliability (e.g., mean time between failures), adherence to delivery schedules, and compliance with technical specifications. As the sole-source contractor, Bell Textron Inc.'s performance is monitored by the Defense Contract Management Agency (DCMA). While specific performance data is often sensitive, contract awards and modifications typically reflect ongoing assessments. Positive performance signals might include timely deliveries and meeting technical requirements, while negative signals could involve delays, cost overruns (though less likely with fixed-price contracts unless scope changes), or deficiencies in aircraft reliability. Publicly available contract modification histories and performance reports, if released, would offer more granular insights.

What is the risk associated with relying on a single contractor for critical aircraft upgrades like the H-1 program?

The primary risk associated with relying on a single contractor, such as Bell Textron Inc. for the H-1 upgrades, is the potential for reduced competition, which can lead to higher prices and less incentive for innovation. This sole-source dependency creates a vulnerability if the contractor experiences financial difficulties, production issues, or decides to exit the market. Furthermore, the government has limited leverage in price negotiations and contract terms. Mitigating these risks often involves robust contract oversight, exploring potential future competition through technology insertion or alternative platforms, and ensuring strong government-furnished information and technical data rights to facilitate future support or competition.

How has the total federal spending on the H-1 aircraft program evolved over time, and what are the projections?

Total federal spending on the H-1 aircraft program, encompassing both the UH-1Y Venom and AH-1Z Viper, has been substantial over the years, reflecting the long-term commitment to these platforms. This specific contract for H-1 UPGRADES LOT VII represents a significant portion of that spending, valued at over $626 million. Historical spending would include R&D, initial procurement, and subsequent upgrade contracts awarded to Bell Textron Inc. Projections for future spending would depend on the remaining service life of the aircraft, planned modernization efforts, operational tempo, and potential replacement strategies. The Department of the Navy's future aviation plans and budget allocations will dictate the trajectory of H-1 program spending.

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: Textron Inc

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: $630,139,770

Exercised Options: $630,035,291

Current Obligation: $626,435,597

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline