DoD awards $190M for H-53 helicopter logistics support to Sikorsky Aircraft Corporation

Contract Overview

Contract Amount: $189,603,004 ($189.6M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2020-10-01

End Date: 2021-09-30

Contract Duration: 364 days

Daily Burn Rate: $520.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIRD DELIVERY ORDER UNDER PERFORMANCE BASED LOGISTICS CONTRACT IN SUPPORT OF H-53 PHASE II (POP 3)

Place of Performance

Location: CEDAR RAPIDS, LINN County, IOWA, 52498

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $189.6 million to SIKORSKY AIRCRAFT CORPORATION for work described as: THIRD DELIVERY ORDER UNDER PERFORMANCE BASED LOGISTICS CONTRACT IN SUPPORT OF H-53 PHASE II (POP 3) Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Performance-based logistics aims for efficiency and reduced downtime. 3. Long-term support for a critical military aircraft platform. 4. Potential for cost savings through optimized maintenance and supply chain. 5. Risk of vendor lock-in due to specialized nature of support. 6. Focus on readiness and operational availability of H-53 helicopters.

Value Assessment

Rating: fair

This contract's value is difficult to benchmark without comparable sole-source awards for similar aircraft support. The firm-fixed-price structure provides some cost certainty, but the lack of competition raises concerns about whether the government achieved the best possible price. The total award amount of $189.6 million over one year suggests a significant investment in maintaining these heavy-lift helicopters.

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 bypasses the competitive bidding process, which typically leads to lower prices and greater innovation. The justification for a sole-source award would need to demonstrate unique capabilities or circumstances that preclude competition.

Taxpayer Impact: Sole-source awards generally mean taxpayers may not benefit from the cost savings and efficiencies that robust competition can provide.

Public Impact

Benefits the U.S. Navy's aviation readiness and operational capabilities. Ensures continued availability of H-53 heavy-lift helicopters for critical missions. Supports specialized maintenance, repair, and overhaul services. Impacts military personnel relying on these aircraft for transport and operations. Geographic impact is primarily on naval air stations where H-53s are operated and maintained.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source nature raises concerns about potential vendor lock-in and limited negotiation leverage.
Dependence on a single contractor for critical logistics support could pose supply chain risks.

Positive Signals

Performance-based structure incentivizes contractor efficiency and outcomes.
Focus on logistics support aims to improve aircraft availability and reduce downtime.
Long-term support contract provides stability for critical military assets.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for aircraft sustainment and logistics support are crucial for maintaining military readiness. This award falls within the aircraft manufacturing and support sub-sector, where specialized knowledge and certifications are paramount. Benchmarking against similar performance-based logistics contracts for other heavy-lift aircraft could provide further insight into value.

Small Business Impact

This contract does not appear to have a small business set-aside component. Given the sole-source nature and the specialized requirements for supporting H-53 helicopters, it is unlikely that small businesses would be primary contractors. However, Sikorsky Aircraft Corporation may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the performance-based aspects of the contract, linking payment to achieved outcomes. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports are usually subject to review by relevant oversight bodies and potentially the Government Accountability Office (GAO) if challenges arise.

Related Government Programs

H-53 Helicopter Program
Naval Aviation Sustainment
Performance-Based Logistics Contracts
Aircraft Maintenance and Repair

Risk Flags

Sole-source award
High contract value for a single delivery order
Potential lack of competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $189.6 million to SIKORSKY AIRCRAFT CORPORATION. THIRD DELIVERY ORDER UNDER PERFORMANCE BASED LOGISTICS CONTRACT IN SUPPORT OF H-53 PHASE II (POP 3)

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 $189.6 million.

What is the period of performance?

Start: 2020-10-01. End: 2021-09-30.

What is Sikorsky Aircraft Corporation's track record with performance-based logistics contracts for military aircraft?

Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, has a long history of supporting military aircraft, including the H-53 family. They have experience with various sustainment and logistics contracts, often incorporating performance-based elements to enhance readiness and reduce costs. Their track record generally indicates a strong capability in maintaining complex rotorcraft. However, the specific performance metrics and outcomes achieved under this particular contract (POP 3) would require detailed review of performance reports and any associated incentive or penalty clauses. Past performance on similar contracts suggests a capacity to meet demanding operational requirements, but the effectiveness of the performance-based aspects in driving cost savings or efficiency gains can vary significantly based on contract structure and execution.

How does the $189.6 million award compare to previous spending on H-53 logistics support?

To accurately compare this $189.6 million award to previous spending, one would need historical data on prior delivery orders or contracts for H-53 Phase II logistics support. This specific award represents the third delivery order under the contract. Without access to the total contract value, previous delivery order amounts, or the duration of prior support efforts, a direct year-over-year or program-to-program spending comparison is not feasible. However, the magnitude of the award suggests a substantial and ongoing commitment to sustaining the H-53 fleet, reflecting the operational tempo and maintenance needs of these heavy-lift helicopters.

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

The primary risks associated with a sole-source award for critical aircraft logistics include a lack of price competition, potentially leading to higher costs for the government and taxpayers. There is also a risk of vendor lock-in, where the government becomes overly dependent on a single supplier, limiting future flexibility and negotiation leverage. Furthermore, without competitive pressure, the contractor may have less incentive to innovate or aggressively pursue cost efficiencies. Supply chain disruptions or performance issues from the sole provider can have a more significant impact on aircraft availability due to the absence of alternative support options. Ensuring robust oversight and clear performance metrics becomes even more critical in sole-source situations.

How does the performance-based nature of this contract aim to improve program effectiveness?

The performance-based nature of this contract is designed to shift the focus from simply providing services to achieving specific, measurable outcomes related to the H-53 helicopter fleet's readiness and availability. Instead of paying for hours worked or parts supplied, the Department of the Navy incentivizes Sikorsky Aircraft Corporation to meet defined performance standards, such as aircraft uptime, turnaround time for repairs, and supply chain responsiveness. This structure aims to improve program effectiveness by aligning the contractor's financial incentives with the government's operational goals. By rewarding desired results, the contract encourages the contractor to proactively manage maintenance, optimize logistics, and potentially identify cost-saving efficiencies that benefit both parties.

What is the typical market structure for military helicopter logistics support, and how does this contract fit?

The market for military helicopter logistics support is often concentrated, with original equipment manufacturers (OEMs) like Sikorsky Aircraft Corporation playing a dominant role due to their proprietary knowledge, technical data, and established relationships. This concentration can lead to situations where sole-source or limited-competition contracts are necessary, especially for specialized or aging platforms like the H-53. The market is characterized by high barriers to entry, including significant capital investment, specialized tooling, and security clearances. This contract fits within that structure by leveraging the OEM's unique capabilities for sustainment, aiming to ensure the continued operational readiness of a critical military asset through a performance-driven approach.

Are there any specific concerns regarding the duration and value of this contract delivery order?

This specific delivery order has a duration of 364 days and a value of $189.6 million. While the duration is standard for a one-year period, the value is substantial. Concerns might arise if this value represents a significant increase compared to previous, similar one-year periods, suggesting potential cost escalation without a clear justification. Additionally, as a sole-source award, the high value raises questions about whether the government secured the best possible price. The total contract value and the cumulative spending across all delivery orders would provide a more comprehensive picture of the long-term financial commitment and potential value for money.

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 Corporation

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: $189,603,004

Exercised Options: $189,603,004

Current Obligation: $189,603,004

Subaward Activity

Number of Subawards: 309

Total Subaward Amount: $77,284,210

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0038319DU001

IDV Type: IDC

Timeline