DoD awards $3.4B for CH-53K helicopter long-lead items to Sikorsky Aircraft Corporation

Contract Overview

Contract Amount: $3,422,749,299 ($3.4B)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2021-12-06

End Date: 2027-12-31

Contract Duration: 2,216 days

Daily Burn Rate: $1.5M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CH-53K FRP LOT 7 LONG LEAD ITEMS

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $3.42 billion to SIKORSKY AIRCRAFT CORPORATION for work described as: CH-53K FRP LOT 7 LONG LEAD ITEMS Key points: 1. Contract awarded for long-lead items, indicating a commitment to future production phases. 2. Sole-source award raises questions about potential price inflation and lack of competitive pressure. 3. High dollar value suggests significant investment in a critical defense platform. 4. Contract duration of nearly six years points to a long-term production and sustainment plan. 5. Fixed-price contract type shifts some financial risk to the contractor. 6. Focus on long-lead items suggests a need to secure critical components and maintain production schedules.

Value Assessment

Rating: questionable

The contract value of $3.4 billion for long-lead items is substantial. Without comparable sole-source awards for similar helicopter components, a precise value-for-money assessment is difficult. However, sole-source procurements inherently lack the price discovery mechanisms of competition, potentially leading to higher costs than if multiple bidders were involved. Benchmarking against industry standards for similar long-lead component procurements would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Sikorsky Aircraft Corporation, was solicited. This approach is typically used when only one responsible source is available or when a compelling justification exists for excluding competition. The lack of competition means there was no opportunity for other manufacturers to bid, potentially limiting price negotiation and innovation.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not benefit from price reductions that could arise from a competitive environment.

Public Impact

The primary beneficiaries are the U.S. Marine Corps, which will receive critical components for the CH-53K King Stallion heavy-lift helicopter. This contract supports the production and delivery of essential parts needed for the ongoing CH-53K program. The contract's geographic impact is primarily centered in Connecticut, where Sikorsky Aircraft Corporation is located, supporting local jobs and the aerospace industry. Workforce implications include the potential for sustained employment at Sikorsky and its supply chain partners involved in manufacturing these long-lead items.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
High contract value necessitates rigorous oversight to ensure funds are used efficiently.
Long contract duration increases the risk of cost overruns or scope creep if not managed effectively.

Positive Signals

Fixed-price contract type provides some cost certainty and shifts risk to the contractor.
Awarding long-lead items ensures program continuity and timely delivery of critical components.
CH-53K is a vital platform for the Marine Corps, and this contract supports its modernization efforts.

Sector Analysis

The CH-53K King Stallion is a heavy-lift helicopter program within the aerospace and defense sector. This contract focuses on the manufacturing of long-lead items, which are components that require significant lead time to produce and are essential for the overall assembly of the aircraft. The aerospace manufacturing market is characterized by high barriers to entry, specialized technology, and significant government investment. Comparable spending benchmarks would involve other major defense aircraft production contracts, which often run into billions of dollars.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses explicitly detailed in the provided data. As a sole-source award to a large prime contractor, the direct impact on small business set-asides is minimal. However, Sikorsky Aircraft Corporation will likely engage its supply chain, which may include small businesses for component manufacturing, but the extent of this subcontracting is not specified.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Navy, likely through the Naval Air Systems Command (NAVAIR). Accountability measures will include contract performance monitoring, milestone tracking, and financial audits. Transparency is typically maintained through contract award databases and reporting requirements. The Inspector General of the Department of Defense may also have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

CH-53K Helicopter Program
Naval Air Systems Command (NAVAIR) Contracts
Heavy-Lift Helicopter Procurement
Aerospace Manufacturing Contracts

Risk Flags

Sole-source procurement
Potential for cost overruns
Program schedule adherence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.42 billion to SIKORSKY AIRCRAFT CORPORATION. CH-53K FRP LOT 7 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 $3.42 billion.

What is the period of performance?

Start: 2021-12-06. End: 2027-12-31.

What is Sikorsky Aircraft Corporation's track record with the CH-53K program and similar large defense contracts?

Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, has a long history of developing and manufacturing helicopters, including previous variants of the CH-53. They are the prime contractor for the CH-53K King Stallion program, responsible for its design, development, and production. Their track record with this specific program involves navigating complex development phases and initial production. For large defense contracts, Sikorsky has experience managing multi-billion dollar programs, often involving fixed-price and cost-plus contract types. However, the CH-53K program has faced scrutiny regarding cost and schedule overruns during its development, which is a relevant aspect of their track record for this platform.

How does the $3.4 billion value for long-lead items compare to the total expected cost of the CH-53K program?

The $3.4 billion awarded for CH-53K Lot 7 long-lead items represents a significant portion of the overall program cost, but it is not the total program cost. Long-lead items are components that require substantial manufacturing time and must be ordered well in advance of final assembly to maintain production schedules. The total program cost for the CH-53K, encompassing research, development, testing, production, and sustainment of the entire fleet, is estimated to be much higher, potentially tens of billions of dollars over its lifecycle. This specific award is for a defined set of components within a particular production lot, not for the entire aircraft or the full program.

What are the primary risks associated with a sole-source award for long-lead items in a major defense program?

The primary risks associated with a sole-source award for long-lead items in a major defense program include a lack of competitive pricing, which can lead to higher costs for the government and taxpayers. Without competition, there is less incentive for the sole contractor to innovate or reduce costs aggressively. There's also a risk of contractor over-reliance, where the government becomes dependent on a single supplier, potentially leading to supply chain vulnerabilities. Furthermore, the absence of competitive benchmarking makes it harder to assess whether the awarded price represents fair and reasonable value. This can also extend to schedule and quality risks if the sole provider faces internal production challenges.

What is the strategic importance of the CH-53K helicopter and its long-lead item procurement for the U.S. military?

The CH-53K King Stallion is the U.S. Marine Corps' next-generation heavy-lift helicopter, designed to replace the aging CH-53E Super Stallion. Its strategic importance lies in its significantly increased payload capacity, range, and technological capabilities, enabling the transport of troops, equipment, and supplies in challenging environments. The procurement of long-lead items is crucial for maintaining the program's momentum and ensuring the timely delivery of these vital aircraft. This capability is essential for expeditionary warfare, disaster relief, and supporting naval amphibious operations, making the CH-53K a cornerstone of future Marine Corps operational readiness.

How has spending on the CH-53K program evolved over the years, and what does this award signify in that context?

Spending on the CH-53K program has evolved significantly since its inception, reflecting its transition from initial development and testing phases to full-rate production. Early years saw substantial investment in research, design, and prototyping. As the program matured, spending shifted towards procuring components, manufacturing aircraft, and associated support systems. This $3.4 billion award for Lot 7 long-lead items signifies the program's progression into a later stage of production, indicating continued commitment and funding for the CH-53K fleet. It reflects ongoing investment in securing the necessary parts to build a substantial number of these critical heavy-lift helicopters.

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: N0001922R0043

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: $3,422,749,299

Exercised Options: $3,422,749,299

Current Obligation: $3,422,749,299

Subaward Activity

Number of Subawards: 757

Total Subaward Amount: $1,144,327,375

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline