Navy awards $159M contract for H-53 helicopter logistics support to Sikorsky Aircraft Corporation

Contract Overview

Contract Amount: $159,032,603 ($159.0M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-02

End Date: 2020-09-30

Contract Duration: 364 days

Daily Burn Rate: $436.9K/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 $159.0 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. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. Performance-based logistics approach aims to ensure readiness and reduce lifecycle costs. 3. Sole-source award raises questions about potential price competition and value. 4. Contract duration of 364 days for this delivery order. 5. Focus on H-53 Phase II program highlights critical aviation sustainment needs. 6. The award represents a significant investment in maintaining heavy-lift helicopter capabilities.

Value Assessment

Rating: fair

The awarded amount of $159 million for a single delivery order under a larger contract requires careful benchmarking. Without access to the full contract details or historical performance data for this specific logistics support, a precise value-for-money assessment is challenging. However, given the sole-source nature, there's a risk that the pricing may not reflect the most competitive market rates. Further analysis would involve comparing this unit cost to similar performance-based logistics contracts for comparable aircraft types and assessing the contractor's historical performance and cost efficiency.

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 a specific contractor possesses unique capabilities or proprietary knowledge essential for the requirement. While it ensures access to specialized expertise, it bypasses the competitive process, potentially leading to higher costs for the government and taxpayers. The lack of competition limits the government's ability to explore alternative solutions or negotiate more favorable pricing.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This can result in a higher overall expenditure for the required services.

Public Impact

The U.S. Navy's H-53 helicopter fleet, crucial for heavy-lift, troop transport, and special operations, will receive essential logistics support. This contract ensures the operational readiness and sustainment of critical aviation assets, supporting national defense objectives. Personnel involved in the operation and maintenance of H-53 helicopters will benefit from improved parts availability and technical support. The contract supports jobs within the aerospace and defense industry, particularly those related to aircraft manufacturing and sustainment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of competitive bidding may reduce opportunities for innovative solutions.
Dependence on a single contractor for critical logistics support could pose a risk if performance falters.

Positive Signals

Performance-based logistics contract structure incentivizes contractor to meet specific outcomes.
Sikorsky Aircraft Corporation is the original equipment manufacturer, likely possessing deep technical knowledge of the H-53.
Focus on H-53 Phase II program indicates a commitment to sustaining a vital military asset.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and long product lifecycles. Helicopter manufacturing and sustainment, particularly for military platforms like the H-53, represent a specialized niche within this sector. Contracts for logistics support are crucial for ensuring the operational readiness of aging fleets. Spending in this area is often driven by defense modernization programs and the need to maintain existing capabilities. Comparable spending benchmarks would involve analyzing other performance-based logistics contracts for similar heavy-lift or specialized military aircraft.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements in the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Sikorsky Aircraft Corporation voluntarily includes them in its supply chain. Further investigation into subcontracting plans would be necessary to assess any potential benefits or opportunities for the small business ecosystem.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. As a delivery order under a larger contract, it inherits the oversight framework of the parent agreement. Transparency is facilitated through contract awards databases, but detailed performance metrics and financial reporting are typically internal. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

H-53 Helicopter Sustainment Programs
Naval Aviation Logistics Command Management Information System (NALCOMIS)
Defense Contract Management Agency (DCMA) oversight
Performance-Based Logistics (PBL) Contracts
Aircraft Manufacturing and Repair Services

Risk Flags

Sole-source award
Potential for cost overruns due to lack of competition
Contractor performance risk
Dependence on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $159.0 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 $159.0 million.

What is the period of performance?

Start: 2019-10-02. End: 2020-09-30.

What is Sikorsky Aircraft Corporation's track record with the H-53 program and similar logistics contracts?

Sikorsky Aircraft Corporation, as the original equipment manufacturer (OEM) for the H-53 family of helicopters, possesses extensive historical knowledge and technical expertise regarding these aircraft. Their track record with the H-53 program likely includes initial production, upgrades, and previous sustainment efforts. Performance-based logistics (PBL) contracts are a common strategy for OEMs to ensure long-term readiness and manage lifecycle costs. Sikorsky has experience with PBL contracts across various military aviation platforms. Evaluating their specific performance on past H-53 logistics contracts, including on-time delivery of parts, maintenance effectiveness, and cost control, would be crucial for assessing the value of this current award. Historical data from contract performance reports and user feedback from the Navy would provide deeper insights into their reliability and efficiency in fulfilling such critical support roles.

How does the pricing of this delivery order compare to market rates for similar helicopter logistics support?

Benchmarking the pricing of this $159 million delivery order against market rates for similar helicopter logistics support is challenging without detailed cost breakdowns and access to competitive bids. As a sole-source award, direct price comparisons are inherently limited. However, general market intelligence for performance-based logistics (PBL) contracts in the defense aerospace sector suggests that while PBL aims for long-term cost reduction, initial pricing can be substantial due to the comprehensive nature of the support. Factors such as the number of aircraft supported, the scope of services (e.g., spare parts, maintenance, technical support, training), and the specific helicopter model's complexity influence costs. Comparing the implied per-aircraft or per-flight-hour support costs to publicly available data for other military helicopter PBL contracts, adjusted for platform type and age, would be a starting point. The absence of competition, however, raises a flag that the negotiated price might be higher than what could be achieved in a fully competitive environment.

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

The primary risks associated with a sole-source award for critical aviation logistics, such as this H-53 support contract, revolve around cost, innovation, and contractor performance. Firstly, the lack of competition can lead to inflated pricing, as the government does not benefit from the downward pressure that multiple bidders would typically exert. Taxpayers may end up paying more than necessary for the services. Secondly, sole-source contracts can stifle innovation. Without the incentive to compete, the incumbent contractor may have less motivation to develop more efficient processes or introduce cost-saving technologies. Thirdly, there is an increased reliance on the single awarded contractor. If Sikorsky Aircraft Corporation experiences performance issues, financial instability, or decides to deprioritize this contract, the Navy could face significant disruptions in H-53 operational readiness, with limited alternative options available in the short term. This dependence necessitates robust contract management and oversight.

How effective is the performance-based logistics (PBL) contracting approach in ensuring H-53 helicopter readiness?

The performance-based logistics (PBL) contracting approach is designed to enhance the readiness and reduce the total ownership costs of military assets like the H-53 helicopters. Instead of purchasing specific parts or services, the government pays for achieved outcomes, such as system availability, reliability, or response times. This shifts the focus from transactional exchanges to long-term partnership and incentivizes the contractor (Sikorsky) to proactively manage the supply chain, maintenance, and engineering support to meet predefined performance metrics. When implemented effectively, PBL can lead to improved aircraft availability, reduced maintenance downtime, and better inventory management. However, the success of PBL hinges on the clear definition of performance metrics, robust measurement systems, and effective contract administration. If the metrics are poorly defined or the contractor fails to meet them, the intended benefits may not materialize, and the government could still face readiness challenges or unexpected costs.

What is the historical spending trend for H-53 helicopter sustainment and logistics support by the Department of the Navy?

Analyzing the historical spending trend for H-53 helicopter sustainment and logistics support by the Department of the Navy is crucial for contextualizing the current $159 million delivery order. While specific historical figures for H-53 sustainment are not provided in the data, it's understood that heavy-lift helicopters like the H-53 series, often operating in demanding environments, incur significant lifecycle costs. These costs typically include spare parts, depot-level maintenance, modifications, technical data, and contractor support services. Spending in this area tends to be relatively stable but can fluctuate based on operational tempo, fleet age, modernization programs, and the specific contracting strategies employed (e.g., moving towards PBL). A review of past Navy budgets and contract awards related to H-53 sustainment would reveal whether this $159 million award represents an increase, decrease, or continuation of previous spending levels, and whether it aligns with broader trends in naval aviation readiness and modernization investments.

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: $159,032,603

Exercised Options: $159,032,603

Current Obligation: $159,032,603

Subaward Activity

Number of Subawards: 46

Total Subaward Amount: $3,910,004

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