Department of Defense awards $2.79M contract for rotary wing parts, raising questions about competition and value

Contract Overview

Contract Amount: $27,940,860 ($27.9M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2018-06-27

End Date: 2020-11-17

Contract Duration: 874 days

Daily Burn Rate: $32.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BLADE,ROTARY WING NSN: 1615-01-546-1148 MFR PART NUMBER: 70150-09200-041

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $27.9 million to SIKORSKY AIRCRAFT CORPORATION for work described as: BLADE,ROTARY WING NSN: 1615-01-546-1148 MFR PART NUMBER: 70150-09200-041 Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure and potentially impacting price. 2. The value of this contract appears high relative to the duration, warranting further cost analysis. 3. Lack of competition is a significant risk indicator for potential overspending. 4. The contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector. 5. This award is part of broader Department of Defense logistics and maintenance efforts. 6. The firm fixed-price contract type shifts some risk to the contractor.

Value Assessment

Rating: questionable

The total award amount of $2,794,086 for a period of 874 days (approximately 2.4 years) suggests a significant per-diem cost. Without specific unit details or comparison data for 'BLADE,ROTARY WING NSN: 1615-01-546-1148', it is difficult to definitively benchmark the value. However, the lack of competition and the nature of specialized aircraft parts often lead to higher-than-market prices. Further analysis comparing this to similar sole-source awards for comparable parts is recommended to assess true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' method, indicating a sole-source procurement. This means that only one vendor, Sikorsky Aircraft Corporation, was solicited for this requirement. The absence of a competitive bidding process means that the government did not benefit from potential price reductions or innovative solutions that multiple bidders might have offered. This approach is typically justified when only one source can fulfill the requirement, but it necessitates careful scrutiny of the awarded price.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not achieve the best possible price due to the lack of competitive pressure.

Public Impact

The primary beneficiaries are likely military aviation units relying on Sikorsky rotary wing aircraft. The contract ensures the availability of critical replacement parts for maintaining operational readiness. The geographic impact is primarily within the Department of Defense's supply chain and maintenance operations. Workforce implications are indirect, supporting the manufacturing and logistics jobs at Sikorsky Aircraft Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Potential for above-market pricing due to lack of bidders.
Limited transparency on the justification for sole-sourcing.
High contract value for a specific part without clear unit cost benchmarks.

Positive Signals

Firm fixed-price contract shifts some cost risk to the contractor.
Award ensures availability of critical aircraft components.
Sikorsky Aircraft Corporation is a known manufacturer in this specialized field.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry (NAICS 336413). This sector is characterized by specialized production, often involving proprietary designs and high technical expertise. The market can be concentrated, with a few key manufacturers dominating specific aircraft part categories. Federal spending in this area is crucial for maintaining military readiness, and contracts often involve long lead times and significant research and development investments. Benchmarking is challenging due to the specialized nature of parts and the limited number of qualified suppliers.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb: false'. Sikorsky Aircraft Corporation is a large aerospace manufacturer. There is no explicit information regarding subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem from this specific contract is likely minimal, unless Sikorsky engages in voluntary subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Defense Contract Management Agency (DCMA) likely provides oversight for contract performance and delivery. Transparency regarding the justification for the sole-source award and the pricing negotiation process would be key areas for assessment. Inspector General reports related to DoD procurement could potentially offer insights into broader issues affecting such contracts.

Related Government Programs

Department of Defense Aircraft Maintenance Contracts
Defense Logistics Agency Supply Chain Management
Rotary Wing Aircraft Component Procurement
Aerospace Manufacturing Support Contracts

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.9 million to SIKORSKY AIRCRAFT CORPORATION. BLADE,ROTARY WING NSN: 1615-01-546-1148 MFR PART NUMBER: 70150-09200-041

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 $27.9 million.

What is the period of performance?

Start: 2018-06-27. End: 2020-11-17.

What is the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis to Sikorsky Aircraft Corporation?

The provided data indicates the contract was 'NOT COMPETED'. While the specific justification document is not included, sole-source awards are typically justified under circumstances such as: only one responsible source exists capable of making the supply; urgent and compelling need where delaying award would cause serious injury to the government; or when it's in the government's best interest due to unique capabilities or proprietary data. For specialized aircraft parts like those for rotary wing aircraft, it's common for a specific manufacturer like Sikorsky to hold the sole rights or possess the unique technical expertise and tooling required for production, especially if the part is proprietary or critical to a specific aircraft model's airworthiness.

How does the awarded price of $2,794,086 compare to market rates for similar rotary wing parts, considering the lack of competition?

Benchmarking this specific award against market rates is challenging without more granular data on the exact part (beyond the NSN and manufacturer part number) and its specifications. However, the absence of competition inherently raises concerns about price reasonableness. Sole-source contracts often result in prices higher than those achieved through competitive bidding. To assess value, one would need to compare this award to historical sole-source awards for comparable Sikorsky parts, or to prices paid by other entities (e.g., international allies) for similar components, if such data is publicly available. The firm fixed-price nature provides some cost certainty, but the initial price negotiation is critical.

What are the potential risks associated with awarding a contract of this value ($2.79M) on a sole-source basis for aircraft parts?

The primary risk is financial: the government may be paying a premium due to the lack of competitive pressure, leading to inefficient use of taxpayer funds. There's also a risk of reduced innovation, as a sole provider may have less incentive to improve processes or offer cost-saving alternatives. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if Sikorsky faces production issues, the availability of critical parts could be jeopardized, impacting military readiness. The lack of transparency inherent in sole-source justifications can also mask potential issues or inefficiencies.

What is the historical spending pattern for this specific part (NSN: 1615-01-546-1148) or similar components by the Department of Defense?

The provided data only includes details for this single award. To understand historical spending patterns, one would need to query federal procurement databases (like FPDS or USASpending) for all contracts associated with NSN: 1615-01-546-1148 and potentially related NSNs for Sikorsky rotary wing parts. This would reveal if this is a recurring purchase, the volume of previous awards, the contracting methods used (competed vs. sole-source), and the price trends over time. Without this broader context, it's difficult to determine if this $2.79M award represents a significant increase or is consistent with past procurement.

What is Sikorsky Aircraft Corporation's track record as a government contractor, particularly concerning sole-source awards and pricing?

Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, is a major defense contractor with a long history of supplying helicopters and related parts to the U.S. military. As a primary manufacturer for many rotary-wing platforms, it is expected that they would be the recipient of sole-source contracts for proprietary parts or specialized maintenance. Assessing their track record would involve reviewing their contract history for instances of sole-source awards, the value and duration of those contracts, any reported overpricing issues, and their overall performance ratings. Publicly available data often shows large contractors like Sikorsky receiving numerous sole-source awards due to the specialized nature of their products.

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

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: $27,940,860

Exercised Options: $27,940,860

Current Obligation: $27,940,860

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $979,800

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPE4AX15D9423

IDV Type: IDC

Timeline