DoD awards $2.3B for CH-53K helicopter long lead items, a sole-source contract

Contract Overview

Contract Amount: $2,309,393,186 ($2.3B)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2020-03-26

End Date: 2027-08-31

Contract Duration: 2,714 days

Daily Burn Rate: $850.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CH-53K LRIP LOT 5/6 LONG LEAD ITEMS

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $2.31 billion to SIKORSKY AIRCRAFT CORPORATION for work described as: CH-53K LRIP LOT 5/6 LONG LEAD ITEMS Key points: 1. Contract awarded to Sikorsky Aircraft Corporation for long lead items for CH-53K helicopters. 2. The contract is a sole-source award, indicating limited competition. 3. The duration of the contract is over 4.5 years, suggesting a long-term commitment. 4. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 5. This award represents a significant investment in heavy-lift helicopter capabilities for the Navy. 6. The contract is for Lot 5/6, implying it's part of a larger production program.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and focus on long lead items. However, the total award amount of $2.3 billion for a specific lot of long lead components suggests a substantial investment. Without competitive bids, it's difficult to definitively assess if the pricing represents the best value for taxpayers. Further analysis would require comparing the cost of these specific components to historical data for similar long lead procurements or to independent cost estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Sikorsky Aircraft Corporation. This means that the Department of the Navy did not conduct a competitive bidding process for this specific award. Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bidders had participated.

Taxpayer Impact: Taxpayers may not be receiving the most cost-effective pricing due to the absence of a competitive bidding process. The government relies on negotiation and justification of costs rather than market-driven price determination.

Public Impact

The primary beneficiaries are the U.S. Marine Corps, who will operate the CH-53K King Stallion heavy-lift helicopters. This contract ensures the continued production and delivery of critical components for the CH-53K program. The CH-53K is designed for troop transport, cargo lift, and humanitarian assistance/disaster relief missions. The contract supports jobs in the aerospace manufacturing sector, particularly in Connecticut where Sikorsky is based.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long lead time components can be susceptible to supply chain disruptions and cost overruns.
Reliance on a single contractor for critical components may create vendor lock-in.
The overall cost-effectiveness of the CH-53K program has been a subject of scrutiny in the past.

Positive Signals

Firm Fixed Price contract shifts cost risk to the contractor.
Awarding long lead items ensures program continuity and timely delivery of aircraft.
Sikorsky has a long history and established expertise in manufacturing heavy-lift helicopters.
The CH-53K is a critical capability for the U.S. military's strategic objectives.

Sector Analysis

The CH-53K King Stallion program falls within the aerospace and defense manufacturing sector, specifically focusing on rotary-wing aircraft. This sector is characterized by high research and development costs, long production cycles, and significant government procurement. The CH-53K is intended to replace the aging CH-53E Super Stallion, providing enhanced payload capacity and operational range. Comparable spending benchmarks would involve other large, complex military aircraft programs, which often involve multi-billion dollar awards over their lifecycle.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Sikorsky Aircraft Corporation, the prime contractor, is a large business. While the prime contract is not set aside for small businesses, there may be subcontracting opportunities for small businesses within Sikorsky's supply chain. However, the direct impact on the small business ecosystem from this specific award is not detailed.

Oversight & Accountability

Oversight for this contract will be provided by the Department of the Navy and potentially the Department of Defense's Inspector General. The contract is a Firm Fixed Price type, which inherently provides some cost control by fixing the price. Transparency is generally maintained through contract award announcements and reporting requirements. However, the sole-source nature of the award means that the justification for the price and the lack of competition would be key areas for oversight.

Related Government Programs

CH-53K Helicopter Program
Naval Air Systems Command (NAVAIR) Procurement
Heavy-Lift Helicopter Procurement
Department of Defense Aircraft Manufacturing Contracts

Risk Flags

Sole-source award
Potential for cost overruns on long lead items
Program schedule dependency on single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.31 billion to SIKORSKY AIRCRAFT CORPORATION. CH-53K LRIP LOT 5/6 LONG LEAD ITEMS

Who is the contractor on this award?

The obligated recipient is SIKORSKY AIRCRAFT CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $2.31 billion.

What is the period of performance?

Start: 2020-03-26. End: 2027-08-31.

What is Sikorsky Aircraft Corporation's track record with the CH-53 family of helicopters?

Sikorsky Aircraft Corporation has a long and established history with the CH-53 family of helicopters, dating back to the original CH-53 Sea Stallion in the 1960s. They have been the sole manufacturer for all variants, including the CH-53D, CH-53E Super Stallion, and now the CH-53K King Stallion. This extensive experience provides them with deep institutional knowledge of the platform's design, manufacturing processes, and operational requirements. Their track record includes delivering thousands of helicopters to the U.S. military and international partners. While generally successful, like any complex defense program, the CH-53K has faced development challenges and cost reviews, but Sikorsky's continuity as the prime contractor underscores their critical role and expertise in this specific niche of heavy-lift aviation.

How does the $2.3 billion award for long lead items compare to the total program cost?

The $2.3 billion award for CH-53K LRIP Lot 5/6 long lead items represents a significant portion of the overall program expenditure, but it is not the total program cost. The CH-53K program is a multi-billion dollar acquisition program with a projected lifecycle cost that includes research, development, testing, production, and sustainment over several decades. This specific award covers 'long lead items,' which are components that require extensive manufacturing time and must be ordered well in advance to maintain the production schedule for the aircraft themselves. Therefore, while substantial, this figure is a component of the larger acquisition strategy and does not encompass the full cost of all aircraft to be delivered or their operational lifespan.

What are the primary risks associated with this sole-source contract for long lead items?

The primary risks associated with this sole-source contract are related to cost and potential lack of innovation. Without competitive bidding, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to higher costs for the government and taxpayers. Furthermore, a sole-source arrangement can limit the introduction of new technologies or more efficient manufacturing processes that might be brought forward by competing firms. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single supplier for critical components, potentially impacting future negotiations and supply chain resilience. Finally, sole-source contracts require robust government oversight to ensure fair pricing and adherence to contract terms, as the usual market checks and balances are absent.

What is the expected impact of this contract on the CH-53K program's delivery schedule?

This contract for long lead items for Lot 5/6 is crucial for maintaining the CH-53K program's delivery schedule. Long lead items, such as specialized engine components, complex gearbox parts, or advanced avionics, often have manufacturing lead times that extend for many months, or even years. By awarding this contract now, the Department of the Navy ensures that these critical components will be ordered and produced in time to support the assembly of future CH-53K aircraft lots. Failure to secure these long lead items promptly could result in significant delays to the overall production timeline, impacting the Marine Corps' ability to field the required number of aircraft by their planned operational dates.

How does the Firm Fixed Price (FFP) contract type mitigate risks for the government in this context?

The Firm Fixed Price (FFP) contract type is generally favorable for the government when procuring well-defined products like long lead items for an established aircraft program. Under an FFP contract, the contractor agrees to a total price for the specified goods or services, and assumes the responsibility for any cost overruns. This shifts the financial risk from the government to the contractor. For the government, this provides cost certainty, as the final price is fixed unless the contract is formally modified. In the context of long lead items, where the scope of work is relatively clear, FFP helps protect the government from unexpected increases in material or labor costs that might occur during the manufacturing period, contributing to better budget predictability.

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: N0001919R0089

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 6900 MAIN ST, STRATFORD, CT, 06614

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: $2,310,726,486

Exercised Options: $2,310,726,486

Current Obligation: $2,309,393,186

Subaward Activity

Number of Subawards: 1053

Total Subaward Amount: $922,406,106

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline