Navy awards $665M for TH-73A helicopter production, with a 5-year base period and options extending to 2052

Contract Overview

Contract Amount: $664,729,968 ($664.7M)

Contractor: Agustawestland Philadelphia Corporation

Awarding Agency: Department of Defense

Start Date: 2020-01-13

End Date: 2052-12-31

Contract Duration: 12,041 days

Daily Burn Rate: $55.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TH-73A FULL RATE PRODUCTION

Place of Performance

Location: PHILADELPHIA, PHILADELPHIA County, PENNSYLVANIA, 19114

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $664.7 million to AGUSTAWESTLAND PHILADELPHIA CORPORATION for work described as: TH-73A FULL RATE PRODUCTION Key points: 1. Value for money assessed through firm-fixed-price contract structure, aiming to control costs. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include long contract duration and potential for cost overruns in production. 4. Performance context relies on successful delivery of training helicopters for naval aviators. 5. Sector positioning within aircraft manufacturing, specifically for training platforms.

Value Assessment

Rating: good

The contract's firm-fixed-price nature provides cost certainty for the Navy. Benchmarking against similar large-scale aircraft production contracts is challenging due to the specialized nature of training helicopters. However, the total value of $664.7 million over its potential lifespan suggests a significant investment. The pricing will be further evaluated as production progresses and actual costs are compared to initial estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of 5 bidders suggests a healthy level of competition for this requirement. This competitive environment is expected to contribute to favorable pricing and terms for the government.

Taxpayer Impact: A competitive bidding process generally leads to better value for taxpayers by driving down prices and encouraging innovation from contractors.

Public Impact

Naval aviators will benefit from advanced training helicopters. The contract supports the delivery of essential training aircraft for pilot readiness. Geographic impact is primarily centered in Pennsylvania, where the contractor is located. Workforce implications include job creation and sustainment within the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (through 2052) increases the risk of scope creep or evolving requirements.
Potential for cost increases over the extended period if not managed tightly.
Dependence on a single contractor for a critical training platform could pose supply chain risks.

Positive Signals

Firm-fixed-price contract structure helps to lock in costs and reduce budget uncertainty.
Full and open competition suggests a robust process that should yield competitive pricing.
The contract aims to modernize the Navy's helicopter training fleet, improving pilot proficiency.

Sector Analysis

The TH-73A program falls within the broader aerospace and defense manufacturing sector, specifically focusing on specialized aircraft for training purposes. This sector is characterized by high barriers to entry, significant R&D investment, and long production cycles. The market for military training aircraft is relatively niche, with demand driven by government procurement needs. Comparable spending benchmarks would involve other large-scale military aircraft acquisition programs.

Small Business Impact

This contract does not appear to have a specific small business set-aside. However, the prime contractor, AgustaWestland Philadelphia Corporation, may engage small businesses for subcontracting opportunities to fulfill various components and services required for aircraft manufacturing. The extent of small business participation will depend on the prime contractor's subcontracting plan and the availability of qualified small business suppliers.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Navy, likely involving program managers, contracting officers, and potentially the Naval Air Systems Command (NAVAIR). Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified aircraft. Transparency is facilitated through contract award databases and reporting requirements. The Inspector General's office may conduct audits or investigations as needed.

Related Government Programs

TH-72A Helicopter Program
Naval Aviation Training Programs
Light Utility Helicopters
Aerospace Manufacturing Contracts

Risk Flags

Long contract duration increases risk of requirement changes and obsolescence.
Potential for cost escalation over the extended period if not managed.
Dependence on a single platform for critical training needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $664.7 million to AGUSTAWESTLAND PHILADELPHIA CORPORATION. TH-73A FULL RATE PRODUCTION

Who is the contractor on this award?

The obligated recipient is AGUSTAWESTLAND PHILADELPHIA 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 $664.7 million.

What is the period of performance?

Start: 2020-01-13. End: 2052-12-31.

What is the historical performance of AgustaWestland Philadelphia Corporation on similar government contracts?

AgustaWestland Philadelphia Corporation, part of Leonardo, has a history of producing helicopters for various government entities. While specific performance data for the TH-73A program is still emerging due to its production phase, the company has experience with military aircraft production. Past contracts would need to be reviewed for on-time delivery, adherence to budget, and quality metrics. Analyzing their track record on previous large-scale helicopter manufacturing efforts, particularly training variants, would provide context for their capability to execute the TH-73A program successfully. This includes examining any past performance issues, contract modifications, or disputes to assess potential risks.

How does the per-unit cost of the TH-73A compare to previous Navy training helicopters?

Direct per-unit cost comparisons are complex due to evolving technology, inflation, and differing mission requirements. The TH-73A is intended to replace older training platforms, suggesting advancements in capability. While the total contract value is substantial, the per-unit cost needs to be evaluated against the capabilities and lifespan of the new aircraft. Benchmarking against the acquisition cost of previous training helicopters like the TH-57 Sea Ranger, adjusted for inflation and technological upgrades, would be necessary. The firm-fixed-price nature of the TH-73A contract aims to provide cost predictability, but the ultimate value proposition will depend on the total cost of ownership over the program's life.

What are the primary risks associated with the long production timeline (through 2052)?

The extended production timeline presents several risks. Firstly, technological obsolescence is a concern; by 2052, the TH-73A's systems might be outdated compared to emerging technologies. Secondly, requirements could change significantly over three decades, necessitating costly modifications or rendering the aircraft less suitable for future training needs. Thirdly, economic fluctuations and inflation over such a long period can impact the real value of the contract and potentially lead to cost pressures if not adequately managed through contract clauses. Finally, maintaining a consistent production capability and workforce over such an extended duration can be challenging for the contractor.

How effective is the firm-fixed-price contract type in managing costs for this helicopter program?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and risks can be reasonably assessed upfront, as is often the case in established aircraft manufacturing. For the TH-73A program, FFP shifts the cost risk to the contractor, incentivizing them to control expenses and deliver within the agreed-upon price. This provides the Navy with budget certainty. However, if unforeseen technical challenges or significant material cost escalations occur that were not reasonably foreseeable, the contractor might seek contract modifications, potentially increasing the overall cost. The success of FFP here depends on the accuracy of the initial cost estimates and the contractor's efficiency.

What is the anticipated impact of this contract on the overall helicopter manufacturing market?

This contract represents a significant award for AgustaWestland Philadelphia Corporation and contributes to the overall health of the military helicopter manufacturing sector. It secures production for a substantial number of training helicopters, supporting jobs and capabilities within the industry. The competition for this contract likely spurred innovation and efficiency among bidders. The successful production and delivery of the TH-73A could also influence future procurements of similar training platforms by other nations or branches of service, potentially setting new standards or benchmarks for performance and cost-effectiveness in this niche market.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6134019R0007

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA

Address: 3050 RED LION RD, PHILADELPHIA, PA, 19114

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $664,729,968

Exercised Options: $664,729,968

Current Obligation: $664,729,968

Actual Outlays: $11,577,979

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline