DoD awards $4.7B for 120 Black Hawk helicopters, with options for 135 more

Contract Overview

Contract Amount: $4,699,642,384 ($4.7B)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2022-06-26

End Date: 2027-12-31

Contract Duration: 2,014 days

Daily Burn Rate: $2.3M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MULTI-YEAR TEN (MY X) BLACK HAWK PRODUCTION AWARD FOR PROCUREMENT OF 120 H-60M BLACK HAWK HELICOPTERS FOR FISCAL YEARS 2022 - 2026 REQUIREMENTS WITH RELATED SUPPORT AND INCLUDING OPTIONS FOR AN ADDITIONAL 135 AIRCRAFT.

Place of Performance

Location: STRATFORD, GREATER BRIDGEPORT County, CONNECTICUT, 06615

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $4.70 billion to SIKORSKY AIRCRAFT CORPORATION for work described as: MULTI-YEAR TEN (MY X) BLACK HAWK PRODUCTION AWARD FOR PROCUREMENT OF 120 H-60M BLACK HAWK HELICOPTERS FOR FISCAL YEARS 2022 - 2026 REQUIREMENTS WITH RELATED SUPPORT AND INCLUDING OPTIONS FOR AN ADDITIONAL 135 AIRCRAFT. Key points: 1. This multi-year contract secures a significant portion of the Army's future helicopter fleet needs. 2. The firm-fixed-price structure aims to provide cost certainty for the government. 3. A sole-source award raises questions about potential price overruns and lack of competitive pressure. 4. The long duration of the contract (2022-2027) suggests a strategic, long-term procurement approach. 5. This award represents a substantial investment in domestic aerospace manufacturing capabilities. 6. The inclusion of options for additional aircraft provides flexibility but also potential for increased total spending.

Value Assessment

Rating: fair

The total award value of $4.7 billion for 120 H-60M Black Hawk helicopters, with options for an additional 135, indicates a significant investment. While the firm-fixed-price contract aims for cost control, the lack of competition for this sole-source award makes direct value-for-money assessment challenging. Benchmarking against similar sole-source aircraft procurements or historical Black Hawk pricing would be necessary for a more definitive value assessment. The per-unit cost, based on the initial 120 aircraft, is approximately $39.16 million, which needs to be compared against market rates for similar military-grade helicopters.

Cost Per Unit: Approximately $39.16 million per aircraft (based on 120 aircraft).

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential suppliers. Sikorsky Aircraft Corporation is the sole manufacturer of the H-60M Black Hawk. While this ensures access to a proven platform, it eliminates the potential for price reductions and innovation that competitive bidding can foster. The government likely justified this approach due to the specialized nature of the aircraft and the existing production line.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the lowest possible price for these critical aircraft, as there was no market pressure to drive down costs.

Public Impact

The U.S. Army will receive 120 new H-60M Black Hawk helicopters, enhancing its rotary-wing aviation capabilities. These helicopters are crucial for troop transport, medical evacuation, and combat support missions. The production of these aircraft supports jobs within the aerospace manufacturing sector, primarily in Connecticut. The long-term nature of the contract provides stability for the supply chain and associated industries. The delivery of these advanced helicopters will bolster national defense readiness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially leading to higher costs for taxpayers.
Long-term contract duration (over 5 years) may not fully account for technological advancements or evolving mission needs.
Reliance on a single supplier for a critical defense asset poses a supply chain risk.

Positive Signals

Secures a large quantity of a proven and reliable helicopter platform (H-60M Black Hawk).
Firm-fixed-price contract provides budget predictability for the specified quantity.
Multi-year procurement strategy can lead to economies of scale and more stable production planning.
Includes support and options for additional aircraft, offering flexibility for future requirements.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, long product development cycles, and significant government procurement. The H-60M Black Hawk is a well-established utility helicopter, and Sikorsky Aircraft Corporation (a subsidiary of Lockheed Martin) is a major player in this market. This contract fits within the broader category of military aircraft manufacturing, a segment that often involves sole-source or limited competition due to specialized requirements and existing platforms. Comparable spending benchmarks would involve other large military aircraft procurement contracts, which can run into billions of dollars.

Small Business Impact

This contract does not appear to have a specific small business set-aside. While Sikorsky Aircraft Corporation is the prime contractor, there is an expectation that large defense contractors will utilize small businesses for subcontracting opportunities. The extent to which small businesses will benefit from this contract will depend on Sikorsky's subcontracting plan and the specific components and services required for Black Hawk production.

Oversight & Accountability

The Department of Defense employs various oversight mechanisms for major procurement contracts, including program management reviews, audits by the Defense Contract Audit Agency (DCAA), and oversight from the Government Accountability Office (GAO). The Inspector General's office within the DoD also conducts investigations into contract fraud and waste. Transparency is typically maintained through contract awards databases and reporting requirements, though detailed cost breakdowns for sole-source contracts may be less public.

Related Government Programs

H-60 Black Hawk Helicopter Program
Department of the Army Aviation Modernization
Rotary-Wing Aircraft Procurement
Defense Production Act Investments

Risk Flags

Sole-source award
High total contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $4.70 billion to SIKORSKY AIRCRAFT CORPORATION. MULTI-YEAR TEN (MY X) BLACK HAWK PRODUCTION AWARD FOR PROCUREMENT OF 120 H-60M BLACK HAWK HELICOPTERS FOR FISCAL YEARS 2022 - 2026 REQUIREMENTS WITH RELATED SUPPORT AND INCLUDING OPTIONS FOR AN ADDITIONAL 135 AIRCRAFT.

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 $4.70 billion.

What is the period of performance?

Start: 2022-06-26. End: 2027-12-31.

What is Sikorsky Aircraft Corporation's track record with the H-60 Black Hawk program?

Sikorsky Aircraft Corporation has a long and established history with the H-60 Black Hawk program, having been the original manufacturer. The H-60 series has been in continuous production and operation for decades, serving various branches of the U.S. military and international allies. Sikorsky has consistently delivered upgraded variants, such as the H-60M, which incorporates modern avionics, improved engines, and enhanced survivability features. Their extensive experience with this platform suggests a high degree of reliability and technical expertise in its production and support. Past performance reviews and delivery records for previous Black Hawk contracts would provide further insight into their operational execution and adherence to schedule and quality standards.

How does the per-unit cost of these Black Hawks compare to previous procurements or similar aircraft?

The calculated per-unit cost of approximately $39.16 million for the H-60M Black Hawks in this award needs careful comparison. Historical data for Black Hawk procurements can vary significantly based on the specific variant, quantity ordered, contract type, and economic conditions at the time of award. For instance, earlier multi-year contracts or smaller batch orders might show different per-unit costs. Furthermore, comparing this to other utility or light-attack military helicopters from different manufacturers is complex due to differing capabilities, mission sets, and technological sophistication. A thorough analysis would involve benchmarking against recent DoD awards for similar rotary-wing aircraft and examining the inflation-adjusted costs of previous Black Hawk acquisitions to determine if this price represents good value or a potential increase.

What are the primary risks associated with a sole-source award for such a large quantity of aircraft?

The primary risk associated with a sole-source award for 120+ H-60M Black Hawk helicopters is the potential for inflated pricing due to the absence of competitive pressure. Without competing bids, the government has less leverage to negotiate the lowest possible price. This can lead to higher costs for taxpayers over the life of the contract. Another risk is reduced incentive for the sole contractor to innovate or improve efficiency, as they are guaranteed the business. Furthermore, reliance on a single supplier creates a vulnerability in the supply chain; any production issues, labor disputes, or financial instability at Sikorsky could significantly disrupt the delivery schedule, impacting the Army's operational readiness. The government must therefore rely heavily on robust contract oversight and negotiation to mitigate these risks.

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

The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for long-term programs like helicopter production because it shifts the majority of the cost risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides the government with significant budget certainty and predictability. For the DoD, this means they know the exact cost for the 120 aircraft specified in the base contract. However, the effectiveness of FFP in this sole-source context is diminished. While the price is fixed, the initial negotiation of that price is critical. If the initial price was not aggressively negotiated due to lack of competition, the 'fixed' price might still be higher than a competitively derived price. Additionally, while cost overruns are the contractor's responsibility, significant issues could lead to contract disputes or performance problems.

What are the historical spending patterns for the H-60 Black Hawk program within the Department of Defense?

Historical spending on the H-60 Black Hawk program within the Department of Defense has been substantial and consistent over several decades, reflecting its status as a workhorse utility helicopter. The Army, as the primary user, has consistently procured Black Hawks through various contract types, including multi-year agreements, to ensure a steady supply and leverage economies of scale. Annual spending has fluctuated based on specific modernization efforts, fleet replacement needs, and budget allocations. Major awards, like this $4.7 billion multi-year contract, represent significant single-year obligations or commitments spread over multiple fiscal years. Examining past DoD spending reports and contract databases reveals billions of dollars invested in the Black Hawk platform since its inception, highlighting its enduring importance and the continuous government commitment to its acquisition and sustainment.

What are the implications of including options for an additional 135 aircraft in this contract?

Including options for an additional 135 aircraft in this contract provides the Department of the Army with significant flexibility and potential cost savings for future procurements. By securing the option prices upfront, the Army can lock in rates for these future aircraft, potentially shielding them from inflation and market fluctuations that could occur if they were to procure them under separate, future contracts. This also streamlines the acquisition process for these additional airframes. However, it also represents a potential increase in the total contract value, which could exceed $9 billion if all options are exercised. The government is not obligated to purchase these additional aircraft; the decision to exercise these options will depend on future budget availability, evolving mission requirements, and strategic priorities. This flexibility is a key benefit, but it also means the total potential expenditure remains high.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ18R0145

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: $4,699,642,384

Exercised Options: $4,699,642,384

Current Obligation: $4,699,642,384

Subaward Activity

Number of Subawards: 865

Total Subaward Amount: $391,144,234

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline