Navy awards $156M+ for H-53 helicopter logistics, with Sikorsky Aircraft Corporation as the sole provider

Contract Overview

Contract Amount: $156,179,204 ($156.2M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2018-11-01

End Date: 2019-09-30

Contract Duration: 333 days

Daily Burn Rate: $469.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FIRST DELIVERY ORDER UNDER PERFORMANCE BASED LOGISTICS CONTRACT IN SUPPORT OF H-53 PHASE II

Place of Performance

Location: CEDAR RAPIDS, LINN County, IOWA, 52498

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $156.2 million to SIKORSKY AIRCRAFT CORPORATION for work described as: FIRST DELIVERY ORDER UNDER PERFORMANCE BASED LOGISTICS CONTRACT IN SUPPORT OF H-53 PHASE II Key points: 1. This contract represents a significant investment in maintaining the operational readiness of the H-53 helicopter fleet. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 3. Performance-based logistics aims to ensure efficient and effective support, but requires robust oversight to validate value. 4. The duration of the contract suggests a long-term commitment to supporting this critical aviation platform. 5. Understanding the historical spending on H-53 sustainment is crucial for benchmarking this award's value. 6. The absence of competition may limit opportunities for innovation and cost savings through alternative providers.

Value Assessment

Rating: questionable

The total award amount of over $156 million for a single delivery order under a performance-based logistics contract is substantial. Without comparable contract data for similar helicopter sustainment programs or specific performance metrics, it is difficult to definitively benchmark the value for money. The sole-source nature raises concerns about whether the pricing reflects competitive market rates or if there is an opportunity for cost efficiencies through a more open competition. Further analysis of the contractor's historical pricing and performance on similar contracts would be necessary for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one bidder, Sikorsky Aircraft Corporation, was considered. This approach is typically used when a specific contractor possesses unique capabilities or when there is insufficient time or justification for a competitive process. The lack of competition means that the Navy did not benefit from the price discovery mechanisms inherent in a multi-bidder scenario, potentially leading to higher costs than if multiple firms had competed for the work.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing bids, there is less assurance that the price reflects the lowest possible cost for the required services.

Public Impact

The primary beneficiaries are the U.S. Navy's aviation units that operate the H-53 heavy-lift helicopters, ensuring their continued operational readiness. The services delivered include performance-based logistics, which encompasses maintenance, repair, and supply chain management for the H-53 fleet. The geographic impact is likely widespread, supporting naval aviation bases and operations globally where H-53 aircraft are deployed. This contract supports a specialized segment of the aerospace and defense workforce, including engineers, technicians, and supply chain professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation.
Performance-based contracts can be complex to manage and require robust oversight to ensure value.
Reliance on a single provider for critical logistics support could pose supply chain risks.
The substantial value of this single delivery order warrants detailed cost analysis.

Positive Signals

Performance-based logistics aims to improve efficiency and reduce total ownership costs over the contract lifecycle.
Sikorsky Aircraft Corporation is the original equipment manufacturer, likely possessing unique technical expertise for the H-53.
The contract supports a critical military asset, ensuring national security readiness.
The focus on logistics ensures aircraft availability and mission capability.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and support services. The market for specialized helicopter logistics and sustainment is often dominated by original equipment manufacturers (OEMs) due to proprietary knowledge and technical requirements. While the broader aircraft manufacturing industry is large, contracts for specific legacy platforms like the H-53 are typically niche. Benchmarking would involve comparing this contract's value and structure to other performance-based logistics contracts for similar heavy-lift or specialized military aircraft.

Small Business Impact

The provided data indicates that small business participation (sb) is false and subcontracting implications (st) are 'IA' (Information Assurance, likely not directly related to SMB set-asides). This suggests that small businesses were not specifically targeted for this contract, nor is there an explicit indication of significant subcontracting opportunities flowing down to them. The focus appears to be on the prime contractor's capabilities. Further investigation into subcontracting plans would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. As a performance-based contract, success metrics and key performance indicators (KPIs) would be established to monitor contractor performance and ensure value delivery. Transparency would be facilitated through contract award databases and reporting requirements. While specific Inspector General (IG) jurisdiction is not detailed, the Department of Defense IG typically has oversight over major defense contracts to investigate fraud, waste, and abuse.

Related Government Programs

H-53 Helicopter Sustainment Programs
Naval Aviation Logistics Support
Performance-Based Logistics Contracts
Aircraft Component Maintenance and Repair
Defense Logistics Agency (DLA) Support Contracts

Risk Flags

Sole-source award
Potential for cost overruns
Reliance on single provider
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $156.2 million to SIKORSKY AIRCRAFT CORPORATION. FIRST DELIVERY ORDER UNDER PERFORMANCE BASED LOGISTICS CONTRACT IN SUPPORT OF H-53 PHASE II

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 $156.2 million.

What is the period of performance?

Start: 2018-11-01. End: 2019-09-30.

What is Sikorsky Aircraft Corporation's track record with performance-based logistics contracts, particularly for heavy-lift helicopters?

Sikorsky Aircraft Corporation, as the original equipment manufacturer (OEM) for the H-53 series helicopters, has extensive experience supporting these aircraft throughout their lifecycle. Their track record with performance-based logistics (PBL) contracts is generally strong, as OEMs are often best positioned to provide comprehensive sustainment solutions due to their intimate knowledge of the platform, access to proprietary data, and established supply chains. However, the effectiveness and value derived from PBL contracts are highly dependent on the specific contract structure, defined performance metrics, and the government's ability to actively manage and oversee the contractor's performance. While Sikorsky has the inherent capability, the success of this particular contract hinges on the detailed execution and oversight mechanisms in place to ensure cost efficiency and operational availability targets are met.

How does the $156 million award compare to historical spending on H-53 helicopter sustainment?

The $156 million figure represents a single delivery order under a larger performance-based logistics contract. To compare this to historical spending, one would need to examine the total contract value and duration, as well as aggregate spending on previous H-53 sustainment efforts, which may have been structured differently (e.g., individual service contracts, parts orders). Without access to the total contract ceiling and the historical spending data for the H-53 program over its operational life, a direct comparison is challenging. However, given the complexity and age of the H-53 fleet, annual sustainment costs can easily run into tens or hundreds of millions of dollars, making this award amount plausible within that context, especially if it covers a significant period or scope of support.

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

The primary risks associated with a sole-source award for critical helicopter logistics, such as this one for the H-53, include potential for inflated pricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency beyond contractually mandated levels, and a heightened risk of supply chain disruptions if the sole provider faces financial or operational difficulties. Furthermore, the government may become overly reliant on a single entity, limiting its flexibility in seeking alternative solutions or negotiating more favorable terms in the future. This dependence can also extend to technical expertise and data, making it harder for the government to bring sustainment in-house or transition to another provider if necessary.

How effective are performance-based logistics (PBL) contracts in ensuring program effectiveness for aging aircraft fleets like the H-53?

Performance-based logistics (PBL) contracts can be highly effective in ensuring program effectiveness for aging aircraft fleets like the H-53, provided they are well-structured and diligently managed. The core principle of PBL is to incentivize the contractor to achieve specific performance outcomes (e.g., aircraft availability, response times, system reliability) rather than simply delivering goods or services. For aging fleets, this can translate into improved readiness rates, reduced downtime, and potentially lower total ownership costs by focusing on proactive maintenance and optimized supply chains. However, the success hinges on clearly defined, measurable, achievable, relevant, and time-bound (SMART) performance metrics, robust data collection and analysis capabilities by the government, and a collaborative relationship between the government and the contractor to address challenges and adapt to evolving needs.

What is the typical market size and competitive landscape for heavy-lift helicopter sustainment services?

The market for heavy-lift helicopter sustainment services, particularly for specific military platforms like the H-53, is generally characterized by a limited number of players and often dominated by the Original Equipment Manufacturers (OEMs). This is due to the specialized technical knowledge, proprietary data, unique tooling, and established infrastructure required. The competitive landscape is therefore often narrow, with few, if any, third-party providers capable of offering comprehensive support comparable to the OEM. Market size can be substantial in aggregate for a fleet, but individual contract opportunities are often sole-sourced or limited-competition due to these barriers to entry. This concentration means that OEMs often hold significant market power.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

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 (UEI: 834951691)

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: $156,179,204

Exercised Options: $156,179,204

Current Obligation: $156,179,204

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $161,282,903

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0038319DU001

IDV Type: IDC

Timeline