Ministry of Defence awards $29.7M for C-130J MK5 Hercules aircraft manufacturing

Contract Overview

Contract Amount: $29,763,335 ($29.8M)

Contractor: Ministry of Defence

Awarding Agency: Department of Defense

Start Date: 2019-06-13

End Date: 2020-09-12

Contract Duration: 457 days

Daily Burn Rate: $65.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C-130J MK5 HERCULES AIRCRAFT

Plain-Language Summary

Department of Defense obligated $29.8 million to MINISTRY OF DEFENCE for work described as: C-130J MK5 HERCULES AIRCRAFT Key points: 1. Contract awarded for aircraft manufacturing, indicating a need for specialized aviation capabilities. 2. The contract was not competed, raising questions about potential cost efficiencies and market fairness. 3. A firm fixed-price contract suggests predictable costs for the government, but may limit flexibility. 4. The duration of the contract (457 days) indicates a medium-term project. 5. The specific aircraft model (C-130J MK5 Hercules) points to a requirement for a proven, heavy-lift transport aircraft. 6. The absence of small business involvement suggests this contract is focused on large-scale industrial production.

Value Assessment

Rating: questionable

The contract value of $29.7 million for aircraft manufacturing is difficult to benchmark without specific details on the scope of work, such as the number of aircraft or specific modifications. As this was a sole-source award, a direct comparison to similar competed contracts is not feasible. The firm fixed-price structure provides cost certainty, but the lack of competition means there's no market validation of the pricing. Further analysis would require understanding the specific components and labor involved in manufacturing the C-130J MK5 Hercules.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competitive bidding. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or is the sole manufacturer of a specific item. The lack of competition means that the Ministry of Defence did not benefit from the price discovery and potential cost savings that typically arise from a competitive bidding process. This can lead to higher prices than might be achieved in an open market.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a bidding process, there is less assurance that the price reflects the best possible value for the funds expended.

Public Impact

The primary beneficiaries are likely the Ministry of Defence, which will receive the C-130J MK5 Hercules aircraft, enhancing its logistical and transport capabilities. The services delivered involve the manufacturing of specialized military aircraft. The geographic impact is likely concentrated where the manufacturing facilities are located, potentially creating or sustaining jobs in that region. Workforce implications include employment for skilled labor in aircraft manufacturing, engineering, and related support roles.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source awards can reduce transparency and accountability in the procurement process.
Dependence on a single supplier could create future supply chain risks.

Positive Signals

Firm fixed-price contract provides budget certainty for the Ministry of Defence.
Awarding to a specific manufacturer ensures the delivery of a known and potentially critical aircraft type.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant capital investment, and stringent regulatory requirements. Contracts for military aircraft are often awarded to a limited number of specialized firms due to the complexity and proprietary nature of the technology involved. The C-130J Hercules is a well-established platform, and its manufacturing requires specific expertise and production lines. This contract fits within the defense aerospace sub-sector, which is a significant portion of overall defense spending.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the nature of aircraft manufacturing, it is likely that the prime contractor is a large aerospace firm. Subcontracting opportunities for small businesses may exist within the supply chain for components or specialized services, but this is not explicitly detailed in the provided data. The overall impact on the small business ecosystem is likely indirect, depending on the prime contractor's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would typically fall under the Ministry of Defence's internal procurement and financial oversight bodies. Given it's a sole-source award, scrutiny might be higher to ensure the price is justified. Accountability measures would be tied to the contract's performance clauses and delivery schedules. Transparency is limited due to the non-competitive nature, but contract award details are usually made public. Inspector General jurisdiction would depend on the specific defense ministry's structure and the nature of any potential issues.

Related Government Programs

C-130 Hercules aircraft procurement
Military aircraft manufacturing contracts
Defense logistics and transport aircraft
Sole-source defense procurements

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (inherent in sole-source)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.8 million to MINISTRY OF DEFENCE. C-130J MK5 HERCULES AIRCRAFT

Who is the contractor on this award?

The obligated recipient is MINISTRY OF DEFENCE.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $29.8 million.

What is the period of performance?

Start: 2019-06-13. End: 2020-09-12.

What is the track record of the contractor in delivering similar military aircraft?

The provided data does not specify the contractor's name, only the procuring agency (Ministry of Defence). To assess the contractor's track record, one would need to identify the specific company awarded this contract. Generally, manufacturers of large military aircraft like the C-130J Hercules are established aerospace companies with extensive experience in defense production. A thorough analysis would involve reviewing their past performance on similar contracts, including on-time delivery, adherence to specifications, and any history of cost overruns or quality issues. Without the contractor's identity, a specific assessment is not possible.

How does the value of this contract compare to other C-130J aircraft procurements?

Comparing the $29.7 million contract value directly to other C-130J procurements is challenging without knowing the exact scope. This figure could represent the manufacturing of a single aircraft, a batch of aircraft, or specific upgrades and modifications. The C-130J Super Hercules, for example, has had unit costs reported in the range of $60-80 million in the past, but this can vary significantly based on configuration, quantity, and the specific variant (e.g., J-30, J-38). Furthermore, this contract is with the Ministry of Defence, and international procurements can differ in pricing due to currency exchange rates, different support packages, and varying government requirements. A precise comparison would require identifying the specific variant and quantity being manufactured under this $29.7 million award.

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

The primary risks associated with a sole-source award for aircraft manufacturing include potential cost inflation, reduced innovation, and a lack of market discipline. Without competition, the sole manufacturer may not have the same incentive to offer the most competitive price, potentially leading to higher costs for the Ministry of Defence and taxpayers. There's also a risk that the government becomes overly reliant on a single supplier, which can create vulnerabilities in the supply chain and limit future flexibility. Furthermore, the absence of multiple bidders means less opportunity for exploring alternative solutions or technologies that might be offered by other companies. This can stifle innovation and potentially lead to the acquisition of less optimal systems in the long run.

What is the expected program effectiveness based on the contract type and duration?

The contract is a Firm Fixed Price (FFP) type with a duration of 457 days. An FFP contract is generally favored for well-defined requirements where the scope of work is clear, aiming to transfer risk to the contractor and provide cost certainty to the government. This suggests the Ministry of Defence has a clear understanding of what is needed. The duration of 457 days (approximately 15 months) indicates a medium-term project, likely for the manufacturing of a specific number of aircraft or a defined production run. Program effectiveness will largely depend on the contractor's ability to meet the defined specifications and delivery schedule within the fixed price. The sole-source nature, however, introduces a risk that the 'effectiveness' in terms of value for money might be compromised compared to a competitive scenario.

What are the historical spending patterns for C-130J aircraft by the Ministry of Defence?

The provided data only pertains to this specific $29.7 million contract awarded in 2019. To understand historical spending patterns for C-130J aircraft by the Ministry of Defence, a broader dataset covering multiple years and contracts would be necessary. This would involve searching procurement databases for previous awards related to C-130J variants, including acquisition, upgrades, maintenance, and support services. Analyzing these historical patterns would reveal trends in spending volume, average contract values, frequency of awards, and the types of contracts utilized (competed vs. sole-source). Without this broader context, it's impossible to describe historical spending patterns based solely on this single data point.

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

Solicitation ID: N0001918R0004

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Department of Health

Address: WALKER HOUSE, LIVERPOOL

Business Categories: Category Business, Foreign Government, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $29,763,335

Exercised Options: $29,763,335

Current Obligation: $29,763,335

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline