DoD's $20.5M contract for intermediate gearboxes awarded to Sikorsky Aircraft Corporation, raising questions about competition and value

Contract Overview

Contract Amount: $20,472,096 ($20.5M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-26

End Date: 2028-02-28

Contract Duration: 1,250 days

Daily Burn Rate: $16.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NOUN:INTERMEDIATE GEARBOX/GEARBOX,ACCESSORY NSN:1680-01-492-1441/1615-01-527-8175 PN:70357-06300-044/70351-08001-050

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $20.5 million to SIKORSKY AIRCRAFT CORPORATION for work described as: NOUN:INTERMEDIATE GEARBOX/GEARBOX,ACCESSORY NSN:1680-01-492-1441/1615-01-527-8175 PN:70357-06300-044/70351-08001-050 Key points: 1. The contract's value of $20.5 million for aircraft parts warrants scrutiny regarding cost-effectiveness. 2. Awarded on a non-competitive basis, the lack of bidding limits price discovery and potentially inflates costs. 3. The duration of the contract (over 3 years) suggests a long-term need for these critical components. 4. Sikorsky Aircraft Corporation's established presence in defense contracting indicates a known entity, but not necessarily the best value. 5. The absence of small business participation raises concerns about broader economic impact. 6. The contract's classification as 'Other Aircraft Parts' suggests a specialized but potentially replaceable component.

Value Assessment

Rating: questionable

Benchmarking the value of this $20.5 million contract for intermediate gearboxes is challenging without more detailed cost breakdowns or comparisons to similar sole-source awards. The fixed-price nature provides some cost certainty, but the lack of competition means there's no direct market comparison to assess if the price reflects optimal value for money. Without competitive bids, it's difficult to determine if Sikorsky Aircraft Corporation's pricing is aligned with industry standards or if it represents a premium due to the sole-source nature of the award.

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 standard competitive bidding process, which typically involves multiple companies vying for the contract. The lack of competition means taxpayers do not benefit from the price reductions and innovation that often arise from a competitive environment.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the lowest possible price, potentially leading to higher expenditures for taxpayers. It also reduces transparency in pricing and may signal a lack of readily available alternatives in the market.

Public Impact

The primary beneficiaries are the U.S. Army or Air Force units relying on aircraft equipped with these intermediate gearboxes. The contract ensures the continued availability of critical aircraft components, supporting ongoing military operations and readiness. The geographic impact is primarily centered around Sikorsky Aircraft Corporation's facilities in Connecticut, where the parts are likely manufactured or assembled. The contract supports jobs within Sikorsky Aircraft Corporation and its supply chain, contributing to the aerospace manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competitive award.
Sole-source awards can reduce transparency in government spending.
Dependence on a single supplier for critical components poses a supply chain risk.
No small business set-aside indicates limited opportunities for smaller firms in this specific award.

Positive Signals

Award to an established contractor (Sikorsky Aircraft Corporation) suggests reliability and existing expertise.
Firm Fixed Price contract type provides cost certainty for the government.
Contract duration of over 3 years indicates a stable supply chain for essential parts.
The contract supports critical defense logistics and readiness.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a niche within the broader aerospace industry. This sector is characterized by specialized components crucial for aircraft functionality and safety. Spending in this area is often driven by defense procurement needs, with established players like Sikorsky Aircraft Corporation dominating significant portions of the market due to their technical expertise and existing relationships with military branches. Benchmarks for comparable spending are difficult to establish precisely due to the specialized nature of 'intermediate gearboxes' and the sole-source award.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large, established corporation like Sikorsky Aircraft Corporation suggests that opportunities for small businesses within this specific procurement are limited. This could mean that smaller firms are not primary manufacturers of such specialized components or that subcontracting opportunities were not prioritized in this sole-source award, potentially impacting the broader small business ecosystem in this defense sub-sector.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring compliance with contract terms and auditing costs. Transparency is limited due to the sole-source nature of the award. Accountability measures would be tied to Sikorsky Aircraft Corporation's adherence to the firm fixed-price terms and delivery schedules. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Component Procurement
Defense Logistics Agency Contracts
Sikorsky Aircraft Corporation Contracts
Sole-Source Defense Acquisitions
Military Aircraft Maintenance and Repair

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.5 million to SIKORSKY AIRCRAFT CORPORATION. NOUN:INTERMEDIATE GEARBOX/GEARBOX,ACCESSORY NSN:1680-01-492-1441/1615-01-527-8175 PN:70357-06300-044/70351-08001-050

Who is the contractor on this award?

The obligated recipient is SIKORSKY AIRCRAFT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $20.5 million.

What is the period of performance?

Start: 2024-09-26. End: 2028-02-28.

What is Sikorsky Aircraft Corporation's track record with similar sole-source contracts for aircraft components?

Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, has a long history of supplying complex aircraft systems and components to the U.S. military. While specific data on their sole-source contracts for 'intermediate gearboxes' is not publicly detailed, their extensive experience suggests a pattern of being a primary or sole provider for specialized parts on platforms they manufacture or support, such as the Black Hawk helicopter. Analyzing past sole-source awards to Sikorsky for similar high-value, critical components could reveal trends in pricing, delivery performance, and the justification for non-competitive awards. However, without access to detailed contract histories and justifications for each sole-source award, a comprehensive assessment remains challenging. The company's established position often leads to sole-source opportunities when unique technical expertise or proprietary designs are involved.

How does the $20.5 million price compare to market rates for similar intermediate gearboxes, considering it's a sole-source award?

Directly comparing the $20.5 million price to market rates for similar intermediate gearboxes is difficult due to the sole-source nature of this award and the specialized requirements of military aircraft components. Typically, sole-source contracts do not benefit from the price reductions achieved through competitive bidding. Without competitive proposals, it's hard to ascertain if Sikorsky Aircraft Corporation's pricing reflects optimal value or includes a premium due to the lack of alternatives. To benchmark effectively, one would need access to data on previous competitive awards for comparable gearboxes, or internal cost analyses conducted by the Defense Contract Audit Agency (DCAA). The absence of such comparative data makes it challenging to definitively state whether this price is fair and reasonable in a broader market context, though it is likely higher than it would be if multiple suppliers were competing.

What are the primary risks associated with this sole-source contract for intermediate gearboxes?

The primary risks associated with this sole-source contract include potential cost overruns if the fixed price is not truly reflective of fair market value due to the lack of competition. There's also a risk of supply chain disruption if Sikorsky Aircraft Corporation faces production issues, as there are no immediate alternative suppliers identified. Furthermore, the lack of competition can stifle innovation and reduce the incentive for the contractor to seek cost efficiencies over the contract's duration. Another risk is the potential for the government to become overly reliant on a single supplier for critical components, which can weaken its negotiating position in future procurements. Finally, without competitive pressure, there's a reduced assurance that the government is receiving the best possible technology or value.

What is the historical spending pattern for intermediate gearboxes by the Department of Defense, and how does this contract fit?

Historical spending on intermediate gearboxes by the Department of Defense (DoD) is likely substantial, given the critical role these components play in various aircraft platforms. While specific aggregate spending figures for 'intermediate gearboxes' across the DoD are not readily available in public databases, it can be inferred that such spending occurs regularly through various contract vehicles, including both competitive and sole-source awards. This particular $20.5 million contract represents a significant, albeit specific, investment within the broader category of aircraft parts procurement. Its sole-source nature suggests it might be for a unique or legacy platform where competition is limited, or it could be a follow-on order where Sikorsky is the incumbent provider. Understanding the historical frequency and value of similar sole-source awards for specialized aircraft parts would provide better context for this contract's place within the DoD's overall spending patterns.

What are the performance expectations and metrics for Sikorsky Aircraft Corporation under this contract?

Under this Firm Fixed Price (FFP) contract, Sikorsky Aircraft Corporation is expected to deliver intermediate gearboxes that meet all specified technical requirements, quality standards, and performance criteria outlined in the contract. Key performance expectations would include on-time delivery according to the schedule (ending February 28, 2028), adherence to stringent quality control measures to ensure reliability and safety, and compliance with all contractual terms and conditions. While specific metrics are not detailed in the provided summary, performance would likely be monitored through delivery schedules, quality acceptance testing, and potentially through contractor performance assessment reporting (CPARS). Failure to meet these expectations could result in contractually defined remedies, though the FFP structure places the primary cost risk on the contractor.

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: $20,472,096

Exercised Options: $20,472,096

Current Obligation: $20,472,096

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: SPE4A122G0005

IDV Type: BOA

Timeline