Navy awards $41.3M for gearbox assemblies, raising questions about competition and value

Contract Overview

Contract Amount: $41,287,500 ($41.3M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-19

End Date: 2027-06-15

Contract Duration: 999 days

Daily Burn Rate: $41.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GEARBOX ASSEMBLY,AI

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06615

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $41.3 million to SIKORSKY AIRCRAFT CORPORATION for work described as: GEARBOX ASSEMBLY,AI Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The award price is slightly above the estimated value, warranting scrutiny of cost drivers. 3. Lack of competition is a significant risk indicator for potential overspending. 4. This contract supports critical aircraft maintenance for the Department of the Navy. 5. The duration of the contract extends over three years, indicating a long-term need. 6. The sole-source nature suggests potential reliance on a specific manufacturer's proprietary technology or expertise.

Value Assessment

Rating: questionable

The Navy awarded $41.3 million for gearbox assemblies, exceeding the estimated value of $41.3 million by a small margin. Without competitive bidding, it is difficult to benchmark the true value for money. Similar contracts for aircraft parts often see significant price variations based on competition levels. The firm-fixed-price structure aims to control costs, but the lack of a competitive process makes a definitive value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This approach is typically used when only one responsible source can satisfy agency requirements. The lack of competition means there were no other companies vying for this contract, which can limit price negotiation and potentially lead to higher costs for the government.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from potential cost savings that could arise from a bidding process. This could translate to a higher overall expenditure for this procurement.

Public Impact

The Department of the Navy benefits from the acquisition of essential gearbox assemblies for its aircraft. This contract ensures the continued operational readiness of naval aviation assets. The primary beneficiaries are the military personnel who rely on well-maintained aircraft. The contract supports the manufacturing and supply chain related to specialized aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value assessment.
Award price slightly exceeds the estimated value, indicating potential cost inefficiencies.
Lack of transparency in the justification for sole-source award.
Long contract duration without competitive re-evaluation could lead to sustained higher costs.

Positive Signals

Firm-fixed-price contract type provides cost certainty once negotiated.
Contract supports critical defense needs for aircraft maintenance.
Awarding to a known entity (Sikorsky Aircraft Corporation) may leverage existing expertise and established supply chains.

Sector Analysis

The aerospace manufacturing sector, specifically the production of aircraft parts, is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and significant capital investment. This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry code (NAICS 336413). The market for such components can be concentrated, often leading to sole-source or limited competition awards when specific part numbers or proprietary designs are involved. Spending in this sector is heavily influenced by defense budgets and the operational tempo of military branches.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. Therefore, it is unlikely to directly benefit small businesses through set-aside awards. However, the prime contractor, Sikorsky Aircraft Corporation, may engage small businesses as subcontractors for various components or services, though this is not explicitly detailed in the provided data. The impact on the broader small business ecosystem is likely indirect, depending on subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Defense Contract Management Agency (DCMA) may also provide oversight for contract performance and compliance. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Procurement
Naval Aviation Maintenance
Sole-Source Contracts
Firm Fixed Price Contracts

Risk Flags

Sole-source award
Potential for overpricing due to lack of competition
Award price slightly exceeds estimate

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.3 million to SIKORSKY AIRCRAFT CORPORATION. GEARBOX ASSEMBLY,AI

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 $41.3 million.

What is the period of performance?

Start: 2024-09-19. End: 2027-06-15.

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

The provided data indicates the contract was awarded as 'NOT COMPETED' (CT). Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. Without further documentation or a Justification and Approval (J&A) document, the precise reason for this sole-source designation remains unclear. It could be due to proprietary technology, unique manufacturing capabilities, or a lack of available alternatives for this specific gearbox assembly. Further investigation into the contract file would be necessary to ascertain the official justification.

How does the award price of $41,287,500 compare to historical spending on similar gearbox assemblies by the Department of the Navy?

The provided data includes a 'br' (base price or benchmark) of $41,329, which appears to be a unit price or a very small portion of the total contract value, and is not directly comparable to the total award amount of $41,287,500. To assess historical spending, one would need to analyze past contracts for identical or highly similar gearbox assemblies procured by the Department of the Navy. This would involve searching contract databases for previous awards, noting quantities, unit prices, and total values over time. Without access to this historical data, a direct comparison of the current award price against past expenditures for similar items cannot be made. The current award price is very close to the stated 'a' (award amount) of $41,287,500.

What are the potential risks associated with a sole-source contract for critical aircraft components like gearbox assemblies?

Sole-source contracts carry several inherent risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures that multiple bidders would typically exert. This can result in a lower value for taxpayer money. Secondly, it can reduce innovation, as there is less incentive for the sole provider to improve efficiency or develop new solutions when they face no competitive threat. Thirdly, it creates a dependency on a single supplier, which can be problematic if that supplier experiences financial difficulties, production issues, or decides to discontinue the product. This dependency can also make it difficult to switch suppliers in the future, even if better alternatives emerge. Finally, the lack of transparency in the procurement process can raise concerns about fairness and potential impropriety.

What is the significance of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) in the context of this contract?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' categorizes businesses primarily engaged in manufacturing aircraft parts and auxiliary equipment, except engines, engine parts, propellers, and landing gear. This classification indicates that the gearbox assembly being procured falls under a broad category of specialized components essential for aircraft operation and maintenance, but not typically considered the core propulsion or structural elements. Companies operating under this code often possess specialized manufacturing capabilities and adhere to rigorous quality standards demanded by the aerospace industry. The 'other' designation suggests a diverse range of products within this category, highlighting the specificity required for components like gearbox assemblies.

What is the expected impact of this contract on the operational readiness of naval aviation assets?

This contract is expected to have a positive impact on the operational readiness of naval aviation assets by ensuring the availability of critical gearbox assemblies. Gearboxes are vital components in the transmission systems of many aircraft, responsible for transferring power from the engine to other parts of the aircraft, such as rotors or propellers. Having a reliable supply of these assemblies, procured through this contract, means that the Navy can maintain and repair its aircraft effectively. This reduces downtime for aircraft undergoing maintenance and ensures that the fleet has the necessary parts to remain mission-capable. Ultimately, this contributes to the Navy's ability to deploy and operate its aircraft for training, surveillance, and combat missions.

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

Offers Received: 1

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

Financial Breakdown

Contract Ceiling: $84,260,200

Exercised Options: $84,260,200

Current Obligation: $41,287,500

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $1,066,204

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0038320GX901

IDV Type: BOA

Timeline