Army awards Sikorsky Aircraft $195.7M for rotary wing aircraft services, extending contract through 2014

Contract Overview

Contract Amount: $195,728,224 ($195.7M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2005-12-22

End Date: 2014-09-30

Contract Duration: 3,204 days

Daily Burn Rate: $61.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200603!001169!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ06D0045 !A!N! !N!0001 ! !20051222!20100831!835551474!835551474!001344142!N!SIKORSKY AIRCRAFT CORPORATION !6900 MAIN STREET !STRATFORD !CT!06615!74260!001!09!STRATFORD !FAIRFIELD !CONN !+000002700000!N!N!000000000000!1520!AIRCRAFT ROTARY WING !S1 !SERVICES !000 !NOT DISCERNABLE !541330!E! !5!B!S! ! ! !99990909!B! ! !A! !D!N!R!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $195.7 million to SIKORSKY AIRCRAFT CORPORATION for work described as: 200603!001169!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ06D0045 !A!N! !N!0001 ! !20051222!20100831!835551474!835551474!001344142!N!SIKORSKY AIRCRAFT CORPORATION !6900 MAIN STREET !STRATFORD !CT!06615!74260!001!09!STRATFORD !FAIR… Key points: 1. Contract awarded for essential rotary wing aircraft services, indicating a critical need for ongoing support. 2. The contract's duration of over 8 years suggests a long-term requirement and potential for sustained contractor performance. 3. Awarded as a sole-source contract, raising questions about potential cost efficiencies and market competition. 4. The significant dollar value points to a substantial investment in aviation maintenance and support capabilities. 5. Services encompass engineering and technical support, crucial for maintaining complex military aircraft. 6. Contract performance is geographically centered in Connecticut, impacting the local economy and workforce.

Value Assessment

Rating: fair

The contract's total value of $195.7 million over approximately 8 years averages to about $24.5 million annually. Without specific performance metrics or comparable sole-source contracts for similar rotary wing services, it is difficult to definitively benchmark value. However, the cost-plus award fee structure suggests an incentive for performance, but also carries inherent risk of cost overruns if not managed tightly. The lack of competition inherently limits price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Sikorsky Aircraft Corporation, was solicited. This approach is typically used when only one source is capable of meeting the requirement, often due to proprietary technology, unique capabilities, or urgent needs. The absence of a competitive bidding process means that the government did not benefit from the price reductions and innovation that typically arise from a competitive environment.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no direct price competition to drive down expenses. This necessitates robust oversight to ensure fair pricing and prevent potential overcharging.

Public Impact

The U.S. Army benefits from continued support for its rotary wing aircraft fleet, ensuring operational readiness. Services include engineering and technical support, vital for the maintenance and upgrade of critical aviation assets. The contract's impact is primarily felt within Connecticut, supporting jobs and economic activity in the aerospace sector. Workforce implications include the employment of skilled engineers, technicians, and support staff at Sikorsky Aircraft Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost-plus award fee structure requires diligent oversight to manage costs and prevent overruns.
Long contract duration could mask inefficiencies if not actively managed and reviewed.
Lack of detailed performance data makes independent value assessment challenging.

Positive Signals

Sikorsky Aircraft Corporation is a well-established manufacturer with extensive experience in rotary wing aircraft.
The contract's length suggests a stable, long-term need for these specialized services.
Cost-plus award fee structure incentivizes contractor performance.
The contract supports critical military aviation assets, contributing to national security.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aviation services and engineering support. The market for military aircraft maintenance and support is dominated by a few large, specialized contractors. Spending in this area is driven by the need to maintain aging fleets and incorporate new technologies. Comparable spending benchmarks would typically involve other large, sole-source or competitively awarded contracts for similar aircraft types and support services, often in the tens to hundreds of millions of dollars annually.

Small Business Impact

This contract does not appear to have a small business set-aside component. As a sole-source award to a large prime contractor, the primary impact on small businesses would be through potential subcontracting opportunities. The extent of small business participation would depend on Sikorsky's subcontracting plan and the availability of specialized services that can be sourced from smaller firms within the aerospace supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting officers and program managers. The cost-plus award fee structure necessitates close monitoring of costs and performance against established award criteria. Transparency is facilitated through contract reporting requirements, but the sole-source nature limits public visibility into the negotiation process. The Inspector General may conduct audits or investigations if specific concerns regarding waste, fraud, or abuse arise.

Related Government Programs

Rotary Wing Aircraft Maintenance
Aviation Engineering Services
Defense Contractor Support
Military Aircraft Sustainment
Aerospace Services Contracts

Risk Flags

Sole-source award
Potential for cost overruns (CPAF)
Lack of direct price competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $195.7 million to SIKORSKY AIRCRAFT CORPORATION. 200603!001169!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ06D0045 !A!N! !N!0001 ! !20051222!20100831!835551474!835551474!001344142!N!SIKORSKY AIRCRAFT CORPORATION !6900 MAIN STREET !STRATFORD !CT!06615!74260!001!09!STRATFORD !FAIRFIELD !CONN !+000002700000!N!N!000000000000!1520!AIRCRAFT ROTARY WING !S1 !SERVICES !000 !NOT DISCERNABLE !541330!E! !5!B!S! ! ! !999

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 $195.7 million.

What is the period of performance?

Start: 2005-12-22. End: 2014-09-30.

What is the historical spending trend for Sikorsky Aircraft Corporation with the Department of the Army for similar rotary wing services?

Analyzing historical spending requires access to detailed contract databases beyond the provided data. However, the current contract's value of over $195 million suggests a significant and ongoing relationship. Typically, large defense contractors like Sikorsky have multi-year, multi-billion dollar portfolios with various branches of the military. Understanding the trend would involve examining prior contracts for similar services, their duration, value, and any modifications or extensions. A consistent pattern of large sole-source awards could indicate a long-standing reliance on the contractor's unique capabilities or a lack of competitive alternatives over time. Conversely, a shift towards competitive bidding in more recent years would suggest evolving market dynamics or a change in procurement strategy.

How does the annual cost of this contract compare to industry benchmarks for similar rotary wing aircraft support?

Benchmarking this contract's annual cost requires detailed data on the specific types of rotary wing aircraft supported, the scope of services (e.g., depot-level maintenance, component repair, engineering support), and the operational tempo. The provided data indicates an average annual value of approximately $24.5 million ($195.7M / ~8 years). Without specific comparable contracts or industry cost models, a precise benchmark is difficult. However, for complex military helicopters, comprehensive support packages including maintenance, logistics, and engineering can range from millions to tens of millions of dollars per aircraft per year, depending on the platform and mission. The sole-source nature of this award means direct price comparison is not possible, making robust internal cost analysis by the Army critical.

What are the specific performance metrics and award fee criteria used in this Cost Plus Award Fee (CPAF) contract?

The provided data does not detail the specific performance metrics or award fee criteria for this CPAF contract. In a CPAF structure, the contractor is reimbursed for allowable costs plus a fee that is composed of a base fee (typically fixed) and an award fee. The award fee is earned based on the government's evaluation of the contractor's performance against pre-defined criteria. These criteria are usually outlined in the contract's Performance Work Statement (PWS) and can include factors such as on-time delivery, quality of work, technical performance, cost control, and responsiveness. The government's Contracting Officer's Representative (COR) typically monitors performance and provides regular input for the award fee determination. Without access to the PWS and evaluation reports, the specifics remain unknown.

What is the risk associated with relying on a single source (Sikorsky) for such a critical and long-term aviation support requirement?

The primary risk associated with a sole-source, long-term contract is reduced leverage for the government in price negotiations and potential complacency from the contractor. If Sikorsky is the only viable provider due to proprietary technology or unique capabilities, the Army lacks competitive alternatives, potentially leading to higher costs over the contract's life. There's also a risk of vendor lock-in, making it difficult and costly to transition to another provider or technology in the future. Furthermore, a single point of failure exists; any disruption in Sikorsky's operations could directly impact Army aviation readiness. Mitigating these risks requires stringent contract oversight, regular performance reviews, and proactive market research to identify potential future competition or alternative solutions.

What is the potential impact of this contract on the broader aerospace and defense market, particularly concerning competition?

This sole-source award to Sikorsky Aircraft Corporation, a major player in the aerospace industry, reinforces its position in the rotary wing support market. For taxpayers, it signifies a significant commitment of funds to a specific provider without the benefit of competitive bidding, which typically drives down prices. In the broader market, such awards can sometimes discourage potential competitors from entering or investing in specific niches if they perceive established players have insurmountable advantages or long-term sole-source arrangements. However, it also signifies a stable demand for specialized aviation services, which can support the ecosystem of suppliers and subcontractors, including small businesses, that rely on major contractors like Sikorsky.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 6900 MAIN STREET, STRATFORD, CT, 06615

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: W58RGZ06D0045

IDV Type: IDC

Timeline