DoD's $33.3M helicopter charter contract with Erickson Helicopters shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $33,337,333 ($33.3M)

Contractor: Erickson Helicopters, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-09-01

End Date: 2021-11-25

Contract Duration: 1,911 days

Daily Burn Rate: $17.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF PER DIEM (BASE PERIOD-MEDIUM)

Place of Performance

Location: HAGATNA, GUAM County, GUAM, 96910

Plain-Language Summary

Department of Defense obligated $33.3 million to ERICKSON HELICOPTERS, INC. for work described as: IGF::OT::IGF PER DIEM (BASE PERIOD-MEDIUM) Key points: 1. Contract value appears reasonable given the duration and service type. 2. Competition was limited to a single bid, potentially impacting price discovery. 3. Risk indicators are moderate, with a long performance period and fixed-price structure. 4. Performance context suggests a need for specialized air transport in Guam. 5. This contract falls within the broader Defense sector for aviation support services.

Value Assessment

Rating: fair

The contract's total value of $33.3 million over approximately five years suggests a significant investment in air transportation services. While specific benchmarks for nonscheduled chartered freight air transportation in Guam are scarce, the firm fixed-price nature of the contract provides cost certainty. Comparing this to similar, albeit potentially less specialized, charter services indicates that the pricing may be within an acceptable range, though the lack of competitive bids prevents a definitive assessment of optimal value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under full and open competition, but only one bid was received. This limited competition raises questions about the effectiveness of the solicitation process in attracting multiple qualified bidders. While a single bid can sometimes indicate a highly specialized service or a lack of market capacity, it also presents a risk of suboptimal pricing and reduced incentive for the contractor to offer the most competitive terms.

Taxpayer Impact: A single bid limits the government's ability to leverage market forces to secure the best possible price for taxpayers. This could result in a higher overall cost compared to a scenario with robust competition.

Public Impact

The Department of Defense benefits from essential air transportation services for logistical and operational support in Guam. Nonscheduled chartered freight air transportation services are delivered, crucial for remote or specialized deployment needs. The geographic impact is concentrated in Guam, supporting military operations in the Pacific region. Workforce implications are likely tied to the contractor's operational staff and support personnel in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher costs for taxpayers.
Lack of multiple bids could indicate potential market concentration or barriers to entry.
Long contract duration increases exposure to potential performance issues or cost overruns if not managed effectively.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Contract awarded to Erickson Helicopters, Inc., a known entity in aviation services.
The contract duration aligns with potential long-term operational needs in the region.

Sector Analysis

This contract falls within the broader aviation services sector, specifically focusing on specialized charter and freight operations. The market for such services, particularly in remote or strategically important locations like Guam, can be niche. Benchmarking against general aviation contracts is difficult, but the value suggests a significant operational requirement. The defense sector often relies on such specialized contracts to meet unique logistical demands.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless Erickson Helicopters, Inc. voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which shifts cost risk to the contractor. Transparency is generally maintained through contract databases, though specific performance metrics and oversight reports may not always be publicly accessible.

Related Government Programs

Department of Defense Aviation Support Contracts
Air Transportation Services
Chartered Freight Services
Pacific Region Military Logistics

Risk Flags

Limited Competition
Potential for Non-Competitive Pricing
Geographic Concentration Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.3 million to ERICKSON HELICOPTERS, INC.. IGF::OT::IGF PER DIEM (BASE PERIOD-MEDIUM)

Who is the contractor on this award?

The obligated recipient is ERICKSON HELICOPTERS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $33.3 million.

What is the period of performance?

Start: 2016-09-01. End: 2021-11-25.

What is Erickson Helicopters, Inc.'s track record with similar government contracts?

Erickson Helicopters, Inc. has a history of providing aviation services, including heavy-lift helicopter operations, to various government agencies. Their experience often involves specialized missions such as aerial construction, logging, and disaster relief, as well as military support. While this specific contract focuses on nonscheduled chartered freight, the company's broader experience suggests a capability to handle complex aviation requirements. However, a detailed review of past performance on similar-sized or duration contracts, including any past performance issues or awards, would be necessary for a comprehensive assessment. Publicly available data may not capture the full scope of their government contracting history or specific performance metrics on all engagements.

How does the value of this contract compare to similar nonscheduled chartered freight air transportation contracts?

Direct comparison of this $33.3 million contract for nonscheduled chartered freight air transportation in Guam is challenging due to the specificity of the service and location. General benchmarks for air cargo or charter services can vary widely based on aircraft type, duration, distance, and operational complexity. The firm fixed-price nature and the five-year duration suggest a substantial, long-term requirement. Without access to a database of comparable contracts specifically for heavy-lift or specialized freight operations in similar geographic regions, it's difficult to definitively benchmark the value. However, the single bid received warrants scrutiny to ensure the price reflects fair market value under the circumstances.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential cost overruns if the firm fixed-price structure doesn't adequately account for unforeseen operational challenges, contractor performance issues leading to service disruptions, and the risk of paying a non-competitive price due to limited competition. Mitigation strategies likely involve robust contract management by the Department of Defense, including performance monitoring, adherence to service level agreements, and potentially invoking contract clauses for non-performance. The firm fixed-price structure itself mitigates the risk of cost escalation for the government, shifting that risk to the contractor. The limited competition risk is harder to mitigate post-award but could be addressed in future solicitations by exploring ways to broaden the bidder pool.

What is the expected program effectiveness and impact of this contract?

The expected program effectiveness hinges on the reliable and timely delivery of nonscheduled chartered freight air transportation services in Guam. This contract is crucial for supporting Department of Defense operations, potentially including logistical resupply, personnel movement, or specialized equipment transport in a geographically challenging area. Its impact is significant for maintaining operational readiness and logistical capabilities in the U.S. Pacific Command's area of responsibility. Effective execution ensures that military units have the necessary resources and support, contributing directly to mission success and national security objectives in the region.

How has historical spending for nonscheduled chartered freight air transportation in Guam trended?

Analyzing historical spending trends for nonscheduled chartered freight air transportation specifically in Guam is difficult without access to detailed procurement databases that allow for granular filtering by service type and geographic location. General trends in defense spending on aviation services have fluctuated based on geopolitical conditions, operational tempo, and budget allocations. Contracts for specialized services like heavy-lift or nonscheduled freight are often project-specific or tied to long-term strategic needs, making year-over-year comparisons less indicative of overall market trends. This particular contract's value suggests a sustained requirement, but without historical data, it's hard to determine if spending has increased, decreased, or remained stable.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Freight Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6238715R8009

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Erickson Incorporated

Address: 5550 SW MACADAM AVE STE 200, PORTLAND, OR, 97239

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $38,902,827

Exercised Options: $33,337,333

Current Obligation: $33,337,333

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline