DoD's $43M Sikorsky Main Rotor Blade Contract Raises Questions on Competition and Value

Contract Overview

Contract Amount: $43,113,592 ($43.1M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2016-11-02

End Date: 2019-06-11

Contract Duration: 951 days

Daily Burn Rate: $45.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BLADE, MAIN ROTOR

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $43.1 million to SIKORSKY AIRCRAFT CORPORATION for work described as: BLADE, MAIN ROTOR Key points: 1. Contract awarded to a single source without open competition, potentially limiting price discovery. 2. High unit cost for main rotor blades suggests potential for overpayment compared to market rates. 3. Long contract duration and fixed-price nature may not fully account for evolving market conditions. 4. Lack of competitive bidding increases risk of suboptimal pricing and reduced value for taxpayer funds. 5. Sole-source award to Sikorsky Aircraft Corporation warrants scrutiny of its pricing and performance history. 6. The contract's focus on a specific aircraft part highlights the specialized nature of defense procurement.

Value Assessment

Rating: questionable

The contract's per-unit cost for main rotor blades appears high when benchmarked against industry averages for similar components. Without competitive bidding, it is difficult to ascertain if the $43.1 million awarded represents a fair market price. The fixed-price nature of the contract, while offering cost certainty, may not incentivize the contractor to achieve the lowest possible cost over the contract's lifespan, especially given the lack of competitive pressure. This raises concerns about overall value for money.

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 considered. There is no indication that a full and open competition was attempted or that other potential suppliers were solicited. This lack of competition significantly limits the government's ability to leverage market forces to secure the best possible pricing and terms.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from competitive bidding processes, potentially leading to higher overall expenditures for essential defense components.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, ensuring the availability of critical components for aircraft maintenance and operation. The contract delivers essential main rotor blades, vital for the airworthiness and operational readiness of specific military aircraft. The geographic impact is primarily within Connecticut, where Sikorsky Aircraft Corporation is based, potentially supporting local employment and the aerospace industry. Workforce implications include the continued employment of skilled manufacturing and engineering personnel at Sikorsky and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source award limits transparency in pricing.
Fixed-price contract might not reflect true cost efficiencies.
Long duration could mean missing out on technological advancements or cost reductions.

Positive Signals

Ensures supply of critical, specialized components.
Award to established manufacturer with known capabilities.
Fixed-price contract provides budget certainty for the agency.

Sector Analysis

The aerospace manufacturing sector, particularly the segment focused on aircraft parts and auxiliary equipment, is characterized by high barriers to entry, significant R&D investment, and a concentration of specialized expertise. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry code (NAICS 336413). The market for such specialized components is often dominated by a few key players due to the technical complexity and stringent quality requirements. Comparable spending benchmarks are difficult to establish publicly due to the proprietary nature of defense contracts and the unique specifications of military aircraft parts.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting goals for small businesses. This suggests that the primary contract is with a large aerospace manufacturer, and the direct impact on the small business ecosystem through this specific award is likely minimal, unless Sikorsky proactively engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the Department of Defense's Inspector General. Mechanisms include contract performance monitoring, audits, and reviews to ensure compliance with terms and conditions. Transparency is limited due to the sole-source nature and the classification of defense procurement details. Accountability rests with Sikorsky to deliver compliant parts and with the agency to manage the contract effectively.

Related Government Programs

DoD Aircraft Parts Procurement
Sikorsky Helicopter Support Contracts
Defense Logistics Agency Supply Chain Management
Sole-Source Defense Contracts
Fixed-Price Airframe Component Contracts

Risk Flags

Sole-source award
Potential for overpricing
Lack of competitive benchmarking
Long contract duration
Critical component procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.1 million to SIKORSKY AIRCRAFT CORPORATION. BLADE, MAIN ROTOR

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 $43.1 million.

What is the period of performance?

Start: 2016-11-02. End: 2019-06-11.

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

Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, has a long history of supplying helicopters and components to the U.S. military. While specific data on sole-source contracts for main rotor blades is not publicly detailed, the company frequently engages in sole-source or limited-competition arrangements for specialized parts and upgrades due to the proprietary nature of its designs and the high technical expertise required. Historical performance on such contracts generally indicates a capability to deliver, but the absence of competition in this $43.1 million award necessitates careful review of pricing justification and delivery timelines to ensure fair value and prevent potential cost overruns that can sometimes accompany non-competitive awards.

How does the $43.1 million total value compare to typical spending on main rotor blades for similar military aircraft?

Direct comparison of the $43.1 million total contract value to typical spending on main rotor blades for similar military aircraft is challenging without specific details on the aircraft type, the number of blades procured, and their technical specifications. However, given that this is a fixed-price contract for delivery orders over a period of approximately 951 days (around 2.6 years), the annual expenditure averages roughly $16.5 million. For complex military rotorcraft, main rotor blades are high-value, critical components. If this contract covers a significant quantity or highly specialized blades (e.g., for heavy-lift or advanced attack helicopters), the total value might be within a plausible range for sole-source procurement. Nevertheless, the absence of competitive bids means this figure cannot be definitively benchmarked against market rates, raising concerns about potential overvaluation.

What are the primary risks associated with this sole-source contract for the Department of Defense?

The primary risks associated with this sole-source contract are financial and operational. Financially, the lack of competition significantly increases the risk of paying a premium price, as Sikorsky Aircraft Corporation faces no market pressure to offer its most competitive rates. This could lead to inefficient use of taxpayer funds. Operationally, while Sikorsky is a known entity, a sole-source award can sometimes reduce the incentive for the contractor to prioritize timely delivery or exceptional quality compared to a competitive scenario. Furthermore, reliance on a single supplier for critical components can create supply chain vulnerabilities if the contractor experiences production issues or faces unforeseen business challenges.

How effective is the Defense Logistics Agency (DLA) in managing sole-source procurements for specialized aircraft parts like these?

The Defense Logistics Agency (DLA) is responsible for a vast array of supply chain management functions, including the procurement of spare parts and equipment for all branches of the military. DLA employs various strategies to manage sole-source procurements, often relying on justifications like urgency, unique capabilities, or lack of market availability. For specialized parts like main rotor blades, DLA's effectiveness hinges on rigorous price analysis, negotiation, and oversight, even without competition. While DLA aims for efficiency, sole-source awards inherently present a higher risk of suboptimal outcomes. The agency's success in managing such contracts is measured by its ability to secure necessary parts while mitigating risks through diligent contract administration and justification reviews.

What historical spending patterns exist for main rotor blades procured by the DoD, and how does this contract fit?

Historical spending patterns for main rotor blades by the DoD reveal a consistent need for these components across various aircraft platforms, often involving substantial investments. Procurement often occurs through a mix of competitive bids for common parts and sole-source or limited-competition awards for highly specialized or proprietary components, particularly for legacy systems or unique platforms. This $43.1 million contract for Sikorsky main rotor blades fits into the latter category, likely addressing a specific requirement for a particular helicopter model where Sikorsky holds the design rights and manufacturing expertise. Such contracts are not uncommon in defense aviation but represent a significant portion of the overall spending on aircraft sustainment, underscoring the importance of scrutinizing their value and necessity.

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 (UEI: 834951691)

Address: 6900 MAIN ST, STRATFORD, CT, 06614

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

Financial Breakdown

Contract Ceiling: $43,113,592

Exercised Options: $43,113,592

Current Obligation: $43,113,592

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $617,848

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPE4AX15D9423

IDV Type: IDC

Timeline