DoD awards $3.6B for CH-53K helicopter long-lead items, with no competition

Contract Overview

Contract Amount: $3,605,014,855 ($3.6B)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2023-12-15

End Date: 2034-02-28

Contract Duration: 3,728 days

Daily Burn Rate: $967.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CH-53K FRP LOT 9 AND OPTION FRP LOT 10 LONG LEAD ITEMS

Place of Performance

Location: STRATFORD, GREATER BRIDGEPORT County, CONNECTICUT, 06615

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $3.61 billion to SIKORSKY AIRCRAFT CORPORATION for work described as: CH-53K FRP LOT 9 AND OPTION FRP LOT 10 LONG LEAD ITEMS Key points: 1. Significant investment in critical aviation components for the CH-53K King Stallion program. 2. Sole-source award raises questions about price competitiveness and potential for cost overruns. 3. Long contract duration (over 10 years) necessitates robust oversight to ensure value. 4. Focus on long-lead items suggests a strategic approach to managing complex supply chains. 5. The contract's fixed-price nature aims to transfer some cost risk to the contractor. 6. This award represents a substantial portion of the CH-53K program's overall lifecycle cost.

Value Assessment

Rating: questionable

The contract value of $3.6 billion for long-lead items is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The firm-fixed-price structure offers some cost certainty, but the absence of competition means taxpayers may not be receiving the best possible value. Further analysis of historical pricing for similar components and the contractor's cost structure would be necessary to fully assess value for money.

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 considered. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified vendors. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they limit price discovery and can lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers are not benefiting from the potential cost savings that a competitive bidding process could generate. This could result in a higher overall expenditure for the CH-53K program.

Public Impact

The U.S. Marine Corps will benefit from the continued production and modernization of its heavy-lift helicopter fleet. Services delivered include the manufacturing of critical long-lead components essential for the CH-53K helicopter. The geographic impact is primarily within Connecticut, where Sikorsky Aircraft Corporation is based. Workforce implications include sustained employment for skilled labor in aerospace manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Long contract duration increases exposure to potential cost escalations and performance issues.
Lack of transparency in pricing due to non-competitive nature.
Reliance on a single contractor for critical components could pose supply chain risks.

Positive Signals

Firm-fixed-price contract shifts some cost risk to the contractor.
Focus on long-lead items addresses critical path requirements for aircraft production.
Award supports a key modernization program for the U.S. military.
Contractor has established expertise in heavy-lift helicopter manufacturing.

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 R&D costs, complex supply chains, and significant government procurement. The total addressable market for such heavy-lift helicopters is relatively niche, primarily serving military requirements. Comparable spending benchmarks would involve other large-scale military aircraft development and production contracts, which often run into billions of dollars.

Small Business Impact

This contract does not appear to include specific small business set-asides, as indicated by 'sb': false. Furthermore, the prime contractor, Sikorsky Aircraft Corporation, is a large business. While large prime contractors are often required to subcontract portions of their work to small businesses, the absence of explicit set-asides in the contract details means the direct impact on small business participation is not guaranteed and would depend on subcontracting plans. This could limit opportunities for small businesses in the aerospace supply chain for this specific program.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's acquisition and program management offices. Accountability measures will be tied to the firm-fixed-price contract terms, delivery schedules, and quality specifications. Transparency may be limited due to the sole-source nature of the award. The Inspector General of the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

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

Risk Flags

Sole-source award
High contract value
Long contract duration
Potential for cost overruns without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.61 billion to SIKORSKY AIRCRAFT CORPORATION. CH-53K FRP LOT 9 AND OPTION FRP LOT 10 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 $3.61 billion.

What is the period of performance?

Start: 2023-12-15. End: 2034-02-28.

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 CH-53 Sea Stallion and its successors. They have been the prime contractor responsible for the design, development, and production of these heavy-lift rotorcraft for decades. This includes the CH-53E Super Stallion, which the CH-53K is intended to replace. Their extensive experience with previous variants provides a deep understanding of the operational requirements, engineering challenges, and manufacturing complexities associated with this platform. This historical performance is a key factor often cited in justifying sole-source awards for follow-on or derivative programs, as it implies a reduced technical risk and a proven capability to deliver.

How does the $3.6 billion value compare to previous CH-53K procurements or similar aircraft programs?

The $3.6 billion awarded for long-lead items for Lot 9 and Option Lot 10 represents a significant investment, consistent with the high costs associated with developing and producing advanced military aircraft. While specific figures for previous lots of CH-53K components are not detailed here, the overall program cost is known to be substantial, running into tens of billions of dollars. Comparing this to other major defense aircraft programs, such as the F-35 or B-21, reveals similar multi-billion dollar investments for various production lots and long-lead material. However, the absence of competition for this specific award makes a direct value-for-money comparison difficult. Without competitive bids, it's challenging to ascertain if this price reflects optimal market value or if a more competitive process could have yielded savings.

What are the primary risks associated with a sole-source award for critical helicopter components?

The primary risks associated with a sole-source award for critical helicopter components like those for the CH-53K are related to cost and innovation. Without competition, the government loses the leverage to negotiate the lowest possible price, potentially leading to higher expenditures. There is also a reduced incentive for the sole contractor to aggressively pursue cost efficiencies or innovative solutions if they are guaranteed the contract regardless of competitive pressure. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the contractor experiences production issues, delays, or financial instability, the entire program could be jeopardized. This lack of alternative suppliers also limits the government's options if performance or quality issues arise.

What is the expected impact of this contract on the CH-53K program's overall timeline and readiness?

This contract, awarded for long-lead items for Lot 9 and Option Lot 10, is crucial for maintaining the CH-53K program's production schedule and ensuring the timely delivery of new aircraft to the U.S. Marine Corps. Long-lead items are components that require significant manufacturing time, often starting well before the final assembly of the aircraft. By securing these components early, the Department of Defense aims to prevent production bottlenecks and keep the program on track towards achieving its operational readiness goals. The successful and timely execution of this contract is therefore directly linked to the program's ability to meet its planned fielding dates and provide the Marine Corps with the enhanced heavy-lift capabilities it requires.

How does the firm-fixed-price (FFP) contract type mitigate risks for this sole-source award?

The firm-fixed-price (FFP) contract type is a key mechanism used to mitigate some of the risks inherent in this sole-source award. Under an FFP contract, the contractor (Sikorsky Aircraft Corporation) is obligated to complete the work for a predetermined price. This means that any cost overruns incurred by the contractor are generally absorbed by them, rather than the government. This structure provides a degree of cost certainty for the Department of Defense, protecting taxpayers from unexpected increases in the cost of producing these long-lead items. While the absence of competition means the initial price might not be the lowest possible, the FFP structure does place the financial risk of cost overruns squarely on the contractor, incentivizing them to manage their costs efficiently.

What is the historical spending trend for the CH-53K program, and how does this award fit in?

The CH-53K program has historically represented a significant investment for the Department of Defense, with cumulative spending reaching billions of dollars across development and initial production phases. This $3.6 billion award for long-lead items for Lot 9 and Option Lot 10 fits into the ongoing production phase of the program. It signifies continued commitment and funding for the manufacturing of these advanced helicopters. Previous awards would have covered earlier lots and potentially development activities. This specific contract indicates that the program is progressing through its planned production cadence, with the government committing funds for future aircraft builds. Understanding the total program cost and the spending trajectory over time is essential for assessing the long-term financial commitment.

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: 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: $10,439,115,140

Exercised Options: $10,439,115,140

Current Obligation: $3,605,014,855

Subaward Activity

Number of Subawards: 338

Total Subaward Amount: $367,334,752

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline