DoD's $15.7M Sikorsky Aircraft contract for Egyptian Air Force helicopter refurbishment shows limited competition

Contract Overview

Contract Amount: $15,674,884 ($15.7M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2008-06-05

End Date: 2012-09-28

Contract Duration: 1,576 days

Daily Burn Rate: $9.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: EGYPTIAN AIR FORCE OVERHAUL/REFURBISHMENT

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $15.7 million to SIKORSKY AIRCRAFT CORPORATION for work described as: EGYPTIAN AIR FORCE OVERHAUL/REFURBISHMENT Key points: 1. The contract was awarded on a sole-source basis, raising questions about potential overpayment and lack of competitive pressure. 2. Limited competition suggests taxpayers may not have received the best possible pricing for aircraft manufacturing services. 3. The duration of the contract (over 4 years) indicates a significant, long-term commitment for a specialized service. 4. The contract falls under the Aircraft Manufacturing sector, highlighting the specialized nature of the services provided. 5. The award to Sikorsky Aircraft Corporation, a known entity in the aerospace industry, provides some assurance of capability but not necessarily value. 6. The absence of small business set-aside flags indicates this was not structured to benefit smaller enterprises.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific application to foreign military sales. Without competitive bids, it's difficult to ascertain if the $15.7 million price reflects fair market value or if a more competitive process could have yielded savings. The fixed-price contract type shifts risk to the contractor, but the lack of competition prevents a robust comparison against similar domestic or international refurbishment contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential bidders. This approach is typically used when only one contractor possesses the necessary unique capabilities, technology, or security clearances. The lack of competition means there was no opportunity to solicit multiple proposals and compare pricing, potentially leading to a higher cost for the government and taxpayers.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to drive down prices, potentially resulting in higher costs for taxpayers compared to competitively awarded contracts.

Public Impact

The primary beneficiary of this contract is the Egyptian Air Force, receiving refurbished aircraft to enhance its operational capabilities. The services delivered involve the overhaul and refurbishment of aircraft, ensuring their airworthiness and extending their service life. The geographic impact is primarily focused on the contractor's facilities where the refurbishment work is performed. The contract supports specialized jobs within the aircraft manufacturing and maintenance sector, specifically at Sikorsky Aircraft Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings for taxpayers.
Lack of competition may indicate a lack of market availability or a strategic decision that bypasses competitive benefits.
Contract duration of over 4 years requires sustained oversight to ensure performance and adherence to terms.

Positive Signals

Award to an established contractor like Sikorsky Aircraft Corporation suggests a high likelihood of technical capability and successful execution.
Firm Fixed Price contract type provides cost certainty for the government, assuming the scope is well-defined.
The contract is for refurbishment, which extends the life of existing assets, potentially offering better value than procuring new ones.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on aircraft manufacturing and maintenance. The market for specialized aircraft refurbishment is often concentrated among a few key players due to the technical expertise and certifications required. While the total market size for aircraft manufacturing is substantial, contracts for specific foreign military refurbishment are niche. Benchmarking against similar contracts is difficult due to the unique nature of foreign military sales and sole-source awards.

Small Business Impact

The contract details indicate that small business participation was not a specific consideration, as the 'sb' (small business) flag is false and there is no mention of small business set-asides. This suggests the contract was not structured to prioritize or encourage subcontracting opportunities for small businesses. Consequently, the direct impact on the small business ecosystem is likely minimal, with the primary focus being on the capabilities of the large prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA). As a foreign military sale, there may be additional oversight layers involving the State Department and specific international cooperation agreements. Transparency is limited due to the sole-source nature, but contract performance would be monitored against the firm fixed-price agreement. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales Program
Aircraft Maintenance and Repair Services
Defense Industrial Base
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for unverified pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.7 million to SIKORSKY AIRCRAFT CORPORATION. EGYPTIAN AIR FORCE OVERHAUL/REFURBISHMENT

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 Army).

What is the total obligated amount?

The obligated amount is $15.7 million.

What is the period of performance?

Start: 2008-06-05. End: 2012-09-28.

What is the track record of Sikorsky Aircraft Corporation in fulfilling similar foreign military refurbishment contracts?

Sikorsky Aircraft Corporation, now a subsidiary of Lockheed Martin, has a long and established history in military aircraft manufacturing and support, including extensive experience with helicopters like the Black Hawk and Sea Hawk families. Their track record includes numerous contracts for refurbishment, upgrade, and maintenance services for both U.S. and allied military forces. While specific details on past Egyptian Air Force refurbishment contracts with Sikorsky are not readily available in this dataset, the company's overall reputation and extensive experience in the defense sector suggest a high probability of technical competence. However, the absence of competition for this particular contract means that performance metrics from prior, potentially competitively won, contracts cannot be directly used to assess the value-for-money achieved here.

How does the $15.7 million cost compare to similar aircraft refurbishment contracts, considering it was sole-sourced?

Directly comparing the $15.7 million cost to similar contracts is difficult due to the sole-source nature of this award and its specific application to the Egyptian Air Force. Sole-source contracts inherently lack the price discovery mechanism inherent in competitive bidding, often leading to higher costs. Without a competitive bidding process, it's impossible to determine if $15.7 million represents the best achievable price. To conduct a meaningful comparison, one would need access to data on other sole-source refurbishment contracts for comparable aircraft types and ages, or ideally, data from competitively bid contracts for similar services, which are not provided here. The firm fixed-price nature offers cost certainty but doesn't guarantee optimal value without competition.

What are the primary risks associated with a sole-source contract for aircraft refurbishment?

The primary risk associated with a sole-source contract for aircraft refurbishment is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the contractor may not feel compelled to offer the most cost-effective solution. Another risk is the potential for scope creep or less rigorous performance standards, as there is no benchmark from other bidders. Furthermore, a sole-source award might indicate a lack of available qualified competitors, which could pose a long-term risk to the supply chain or future availability of specialized services. Ensuring robust oversight and clear contract terms becomes even more critical in sole-source situations to mitigate these risks.

How effective is a firm fixed-price contract in managing costs for long-duration aircraft refurbishment projects?

A firm fixed-price (FFP) contract is generally effective in managing costs for long-duration projects like aircraft refurbishment by providing cost certainty to the buyer. Under an FFP agreement, the contractor assumes the risk of cost overruns, meaning the government pays the agreed-upon price regardless of the contractor's actual expenses. This incentivizes the contractor to manage their costs efficiently and complete the work within budget. However, the effectiveness of FFP is highly dependent on the accuracy of the initial cost estimates and the clarity of the contract's scope of work. If the scope is poorly defined or unforeseen issues arise, the contractor might seek change orders, potentially increasing the total cost, or deliver lower quality work to stay within budget. For this specific contract, the sole-source nature means the initial price wasn't validated by competition.

What are the implications of this contract being awarded to a single, established manufacturer like Sikorsky?

Awarding this contract to Sikorsky Aircraft Corporation, an established manufacturer, implies a high degree of confidence in their technical capabilities and ability to perform the complex refurbishment work. It leverages their existing expertise, specialized tooling, and potentially proprietary knowledge related to the aircraft. This can lead to a smoother execution and higher quality outcome. However, it also means that the government is reliant on a single source, potentially limiting negotiation leverage and missing out on innovations or cost efficiencies that might be offered by a more competitive field. The long-term implications include strengthening the position of the incumbent contractor in the market for these specific services.

How does the duration of the contract (over 4 years) impact its oversight and value assessment?

A contract duration of over four years for aircraft refurbishment necessitates a sustained and robust oversight framework. This extended period increases the potential for performance issues, changes in requirements, or contractor performance degradation. Effective oversight requires continuous monitoring of milestones, quality control, and adherence to the contract terms. From a value assessment perspective, the long duration means that the initial price must be evaluated not just for its immediate fairness but also for its sustainability over the project's life. It also implies a significant commitment of resources, making it crucial to ensure the project remains aligned with strategic objectives and that the long-term benefits justify the ongoing investment. Regular performance reviews and potential contract modifications (if necessary and justified) are key.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 6900 MAIN ST, STRATFORD, CT, 03

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

Financial Breakdown

Contract Ceiling: $15,674,884

Exercised Options: $15,674,884

Current Obligation: $15,674,884

Contract Characteristics

Cost or Pricing Data: YES

Timeline