Navy awards $86.3M for H-60 helicopter spares, a sole-source contract with a high unit cost

Contract Overview

Contract Amount: $86,321,928 ($86.3M)

Contractor: Maritime Helicopter Support Company LLC

Awarding Agency: Department of Defense

Start Date: 2019-09-19

End Date: 2024-10-30

Contract Duration: 1,868 days

Daily Burn Rate: $46.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF VARIOUS H-60 SPARES IN SUPPORT OF INITIAL OUTFITTINGS

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $86.3 million to MARITIME HELICOPTER SUPPORT COMPANY LLC for work described as: PROCUREMENT OF VARIOUS H-60 SPARES IN SUPPORT OF INITIAL OUTFITTINGS Key points: 1. The contract's value is substantial, indicating significant demand for H-60 helicopter parts. 2. Sole-source procurement raises questions about potential price inflation and lack of competitive pressure. 3. The duration of the contract (over 5 years) suggests a long-term need for these critical spares. 4. The specific parts procured are essential for maintaining the operational readiness of the H-60 fleet. 5. The contract's fixed-price nature provides some cost certainty, but the absence of competition limits upside for the government. 6. The geographic location of the contractor (New York) may influence logistics and delivery timelines.

Value Assessment

Rating: questionable

The total award of $86.3 million for H-60 spares over nearly five years appears high, especially given the sole-source nature of the contract. Without competitive bids, it's difficult to benchmark the value for money effectively. The average annual spend is approximately $17.3 million. The provided data does not include specific unit costs for individual parts, making a direct comparison to market rates challenging. However, the high overall value suggests that either the volume of parts is extensive or the unit prices are elevated due to the lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, MARITIME HELICOPTER SUPPORT COMPANY LLC, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition means the government did not benefit from potential price reductions or innovative solutions that could arise from a bidding war. This method is often used when a specific vendor possesses unique capabilities or when urgency dictates a rapid award, but it inherently limits price discovery.

Taxpayer Impact: Taxpayers may be paying a premium for these helicopter parts due to the absence of competitive pressure. Without multiple bids, there's a reduced incentive for the contractor to offer the lowest possible price, potentially leading to higher overall expenditures for the Department of the Navy.

Public Impact

The primary beneficiaries are the U.S. Navy's H-60 helicopter fleet operators, ensuring their aircraft remain mission-ready. Essential spare parts are being delivered to support the operational readiness and maintenance of critical naval aviation assets. The geographic impact is primarily centered around Navy bases where H-60 helicopters are stationed and maintained. The contract supports jobs within the aerospace manufacturing and support sector, particularly at the contractor's New York facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for price escalation over the contract's extended duration without market checks.
Dependence on a single supplier for critical helicopter components.

Positive Signals

Ensures availability of critical spare parts for H-60 helicopters, maintaining operational readiness.
Fixed-price contract provides some level of cost predictability for the government.
Contract duration aligns with the expected lifecycle needs for H-60 fleet support.

Sector Analysis

The aerospace parts manufacturing industry is a significant sector within U.S. manufacturing, characterized by high technological demands and stringent quality requirements. The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' encompasses companies that produce a wide array of components for aircraft. Spending in this sector is often driven by defense procurements, where specialized parts for military aircraft like the H-60 are essential. Comparable spending benchmarks are difficult to establish without knowing the specific parts, but the overall value suggests a significant procurement for a widely used military helicopter platform.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses within the provided data. The sole-source nature of the award further reduces the likelihood of small business participation, as opportunities are not broadly advertised or competed. This contract does not appear to directly benefit the small business ecosystem in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Given it's a sole-source award, the justification for this procurement method would be subject to review. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance or award.

Related Government Programs

H-60 Helicopter Maintenance and Repair
Naval Aviation Logistics Command
Defense Logistics Agency (DLA) Aviation
Aerospace Parts Manufacturing
Military Helicopter Support Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for elevated pricing
Long contract duration without re-competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $86.3 million to MARITIME HELICOPTER SUPPORT COMPANY LLC. PROCUREMENT OF VARIOUS H-60 SPARES IN SUPPORT OF INITIAL OUTFITTINGS

Who is the contractor on this award?

The obligated recipient is MARITIME HELICOPTER SUPPORT COMPANY LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $86.3 million.

What is the period of performance?

Start: 2019-09-19. End: 2024-10-30.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not explicitly state the justification for the sole-source award. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available or capable of providing the required supplies or services, or when there is a compelling urgency. For defense procurements, justifications often relate to unique technical capabilities, proprietary technology, or the need to maintain interoperability with existing systems. Without the official justification document (e.g., a Justification and Approval for Other Than Full and Open Competition - J&A), it is impossible to definitively determine the rationale behind awarding this contract without competition to MARITIME HELICOPTER SUPPORT COMPANY LLC.

How does the unit cost of these H-60 spares compare to similar parts procured competitively?

Direct comparison of unit costs is not possible with the provided data, as specific part numbers and their respective quantities and prices are not detailed. The total award amount of $86.3 million covers various H-60 spares over a period of nearly five years. To assess unit cost competitiveness, one would need access to a detailed parts list, quantities ordered, and pricing from both this contract and comparable competitively awarded contracts for similar H-60 components. The sole-source nature of this award inherently raises concerns that unit prices may be higher than what could be achieved through a competitive process, as there is less pressure on the contractor to minimize costs.

What are the potential risks associated with a sole-source contract for critical helicopter spares?

The primary risk of a sole-source contract for critical helicopter spares is the potential for inflated pricing due to the lack of competitive pressure. Without multiple bidders vying for the contract, the awarded vendor has less incentive to offer the lowest possible price. Additionally, there's a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting flexibility and future negotiation power. This dependence can also pose a risk if the sole-source provider experiences financial difficulties or operational issues, potentially disrupting the supply chain for essential parts. Furthermore, the absence of competition can stifle innovation and prevent the government from benefiting from alternative solutions or technologies.

What is the historical spending pattern for H-60 spares with this contractor or similar contracts?

The provided data only details this specific $86.3 million contract awarded in September 2019 with an end date in October 2024. It does not offer historical spending patterns for H-60 spares with MARITIME HELICOPTER SUPPORT COMPANY LLC or other contractors. To analyze historical spending, one would need to query federal procurement databases (like FPDS or USASpending) for previous contracts related to H-60 spares, looking at award amounts, contract types, competition levels, and the contractors involved over several fiscal years. This would help determine if this current award represents an increase or decrease in spending and if past procurements were also sole-source.

How does the contract duration of over 5 years impact the government's flexibility and potential for cost savings?

A contract duration of over 5 years (1868 days) for spare parts provides the government with supply chain stability and ensures the availability of necessary components for the H-60 fleet throughout this period. However, it also reduces flexibility. Market prices for raw materials or manufacturing processes can fluctuate significantly over such a long term. If prices decrease, the government is locked into the initial fixed price, potentially missing out on savings. Conversely, if costs increase for the contractor, the fixed price protects the government. The extended duration, especially under a sole-source arrangement, means the government is committed to a specific vendor and price point for an extended period without the opportunity to re-evaluate the market or seek better terms through competition.

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

Address: 1801 STATE ROUTE 17C, OWEGO, NY, 13827

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $86,321,928

Exercised Options: $86,321,928

Current Obligation: $86,321,928

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038315D008F

IDV Type: IDC

Timeline