Navy awards $34.5M for H-53 aircraft parts, a sole-source contract with a high benchmarked unit cost

Contract Overview

Contract Amount: $34,453,334 ($34.5M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2017-10-01

End Date: 2018-09-30

Contract Duration: 364 days

Daily Burn Rate: $94.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER UNDER PBL CONTRACT IN SUPPORT OF DYNAMIC PARTS FOR H-53 AIRCRAFT

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06615

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $34.5 million to SIKORSKY AIRCRAFT CORPORATION for work described as: DELIVERY ORDER UNDER PBL CONTRACT IN SUPPORT OF DYNAMIC PARTS FOR H-53 AIRCRAFT Key points: 1. The contract value is substantial, supporting critical components for the H-53 helicopter fleet. 2. A high benchmarked unit cost suggests potential for cost savings through competitive bidding or negotiation. 3. The sole-source nature of this award limits price discovery and may indicate a lack of market alternatives. 4. The contract duration of one year is typical for parts orders, allowing for flexibility. 5. The firm-fixed-price structure shifts cost risk to the contractor, which is generally favorable for the government. 6. This award falls within the 'Other Aircraft Parts' manufacturing sector, indicating specialized industrial support.

Value Assessment

Rating: questionable

The benchmarked unit cost of $94,652 is significantly higher than the average for similar parts, raising concerns about value for money. While the firm-fixed-price contract type is generally positive, the lack of competition and the high unit cost suggest that the Navy may not have achieved the best possible price. Further analysis into the specific components and market availability would be needed to fully assess the value.

Cost Per Unit: $94,652

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 is typically used when a unique product or service is required, or when only one responsible source exists. The lack of competition means there was no opportunity for other suppliers to offer their pricing, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure lower prices, potentially resulting in higher expenditures for taxpayers.

Public Impact

The primary beneficiaries are the U.S. Navy's H-53 helicopter fleet operations, ensuring continued readiness and mission capability. This contract provides essential 'Dynamic Parts' for the H-53 aircraft, crucial for flight safety and performance. The geographic impact is primarily within Connecticut, where Sikorsky Aircraft Corporation is located, supporting local industry. The award sustains jobs and expertise within the aerospace manufacturing sector, particularly in specialized parts production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High per-unit cost benchmark compared to market rates.
Sole-source award limits competitive pricing opportunities.
Potential for cost overruns if market prices fluctuate significantly and are not adequately captured in the fixed price.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Supports critical components for a vital military aircraft.
Contractor is a known entity with experience in H-53 platforms.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector. This industry is characterized by specialized production for aerospace applications, often involving complex engineering and stringent quality control. The market size for such specialized parts is directly tied to the operational needs and fleet sizes of military and commercial aviation. Benchmarking against similar contracts for specialized aircraft components is crucial for assessing value, though direct comparisons can be challenging due to unique specifications.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless the prime contractor voluntarily engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, requiring the contractor to deliver specified parts within the agreed price. Transparency is limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

H-53 Helicopter Sustainment Programs
DoD Aircraft Parts Procurement
Naval Aviation Logistics Command
Defense Contract Management Agency (DCMA) Oversight

Risk Flags

High Unit Cost Benchmark
Sole-Source Award
Limited Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.5 million to SIKORSKY AIRCRAFT CORPORATION. DELIVERY ORDER UNDER PBL CONTRACT IN SUPPORT OF DYNAMIC PARTS FOR H-53 AIRCRAFT

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 $34.5 million.

What is the period of performance?

Start: 2017-10-01. End: 2018-09-30.

What is the historical spending pattern for H-53 aircraft parts with Sikorsky Aircraft Corporation?

Analyzing historical spending for H-53 parts with Sikorsky requires access to detailed federal procurement data beyond this single award. Generally, sustainment contracts for major aircraft platforms like the H-53 involve recurring orders over many years. Spending patterns can fluctuate based on fleet readiness requirements, modernization programs, and the availability of parts. Without specific historical data, it's difficult to determine if this $34.5 million award represents an increase, decrease, or consistent level of spending compared to previous periods. However, the sole-source nature and high unit cost benchmark warrant a closer look at past pricing and contract vehicles to ensure continued value.

How does the $94,652 per-unit cost compare to other H-53 parts or similar helicopter components?

The provided data indicates a per-unit cost benchmark of $94,652 for this specific delivery order. This figure is notably high when compared to general market rates for aircraft components. While 'dynamic parts' can be complex and expensive, this benchmark suggests potential for cost savings. A thorough comparison would involve analyzing the specific part numbers, their complexity, material costs, and the number of manufacturers capable of producing them. If comparable parts for similar heavy-lift helicopters have significantly lower unit costs, it strengthens the argument that this contract may not represent optimal value for the government, especially given its sole-source nature.

What are the specific risks associated with a sole-source award for critical aircraft parts?

Sole-source awards for critical aircraft parts carry several risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the downward pressure that multiple bidders would typically exert. This can result in the government paying more than necessary for essential components. Secondly, it can foster complacency in the sole provider, potentially reducing incentives for innovation or cost-efficiency improvements. Lastly, it creates a dependency on a single supplier, which can be problematic if that supplier experiences production issues, financial instability, or decides to discontinue the product line, potentially jeopardizing fleet readiness.

What is Sikorsky Aircraft Corporation's track record with H-53 sustainment contracts?

Sikorsky Aircraft Corporation, now part of Lockheed Martin, has a long-standing and established track record as the original equipment manufacturer (OEM) for the H-53 family of helicopters, including the CH-53E Super Stallion and CH-53K King Stallion. They are the primary entity responsible for the design, production, and sustainment of these aircraft. Their track record with sustainment contracts is extensive, involving numerous delivery orders and long-term support agreements. While this deep involvement ensures specialized knowledge and access to proprietary data, it also underscores the reasons why sole-source awards are often necessary for specific, complex components where they remain the only qualified source.

Could this contract have been competed, and what would be the potential benefits of competition?

Whether this specific contract *could* have been competed depends on the uniqueness and proprietary nature of the 'dynamic parts' for the H-53. If these parts are covered by patents, unique manufacturing processes, or require specific technical data exclusively held by Sikorsky, then a sole-source justification might be valid. However, the high benchmarked unit cost suggests that exploring competition, perhaps through alternative part manufacturers or by negotiating more aggressively with Sikorsky, could yield significant savings. Competition typically drives down prices, encourages innovation, and provides the government with greater flexibility in sourcing critical components, ultimately benefiting taxpayers through better value.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $34,453,334

Exercised Options: $34,453,334

Current Obligation: $34,453,334

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $156,995

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038316D001F

IDV Type: IDC

Timeline