Air Force spends $43M to convert Black Hawks to Pave Hawks, raising questions on value and competition

Contract Overview

Contract Amount: $43,037,526 ($43.0M)

Contractor: Science and Engineering Services, LLC

Awarding Agency: Department of Defense

Start Date: 2016-09-16

End Date: 2022-09-15

Contract Duration: 2,190 days

Daily Burn Rate: $19.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: UNITED STATES AIR FORCE REQUIREMENT FOR THE CONVERSION OF 7 UH-60L BLACK HAWKS TO HH-60G PAVE HAWKS.

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35824

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $43.0 million to SCIENCE AND ENGINEERING SERVICES, LLC for work described as: UNITED STATES AIR FORCE REQUIREMENT FOR THE CONVERSION OF 7 UH-60L BLACK HAWKS TO HH-60G PAVE HAWKS. Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending. 2. Limited competition after exclusion of sources could impact price discovery. 3. The long performance period (6 years) warrants scrutiny of cost escalation. 4. Conversion of existing airframes suggests a potentially cost-effective approach compared to new procurement. 5. The specific nature of the conversion may limit the pool of qualified bidders. 6. The contract's value is moderate within the broader aerospace manufacturing sector.

Value Assessment

Rating: fair

The total contract value of $43 million for converting seven UH-60L Black Hawks to HH-60G Pave Hawks appears to be within a reasonable range for complex aircraft modifications. However, without specific details on the scope of work for each conversion, a precise value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D and complex services, can lead to cost overruns if not closely managed. Benchmarking against similar conversion programs would provide a clearer picture of whether this represents a competitive price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while initially intended for broad competition, certain sources were excluded. This suggests a limited competitive environment. The number of bidders is not specified, but the exclusion of sources inherently restricts the competitive landscape, potentially leading to higher prices than if all qualified sources were allowed to bid. The rationale for excluding sources would be critical to understanding the impact on price discovery.

Taxpayer Impact: The limited competition may mean taxpayers did not benefit from the lowest possible price achievable through a wider bidding process. This could result in a higher overall expenditure for the conversion of these seven aircraft.

Public Impact

The primary beneficiaries are the United States Air Force, which receives upgraded HH-60G Pave Hawk helicopters. The services delivered include the complex modification and conversion of existing UH-60L airframes. The geographic impact is primarily within the United States, likely at the contractor's facilities and potentially impacting Air Force operational bases. Workforce implications include skilled labor in aircraft manufacturing, engineering, and modification, potentially supporting specialized jobs in Alabama where the contract was awarded.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not managed tightly.
Limited competition after exclusion of sources may result in suboptimal pricing.
The long duration of the contract (6 years) increases the risk of cost escalation and scope creep.
Lack of detailed public information on the specific conversion tasks makes value assessment difficult.

Positive Signals

Conversion of existing airframes is generally more cost-effective than procuring new aircraft.
The contract supports the modernization of critical Air Force assets.
The contract was awarded to a single entity, potentially streamlining project management.
The contract is associated with a specific, well-defined need for aircraft modification.

Sector Analysis

This contract falls within the aerospace manufacturing and defense services sector, specifically focusing on aircraft modification and upgrade. The market for such specialized services is characterized by high barriers to entry due to technical expertise, certifications, and capital investment. Comparable spending benchmarks would involve looking at other military aircraft modification programs, which can vary significantly based on the complexity of the upgrade and the type of aircraft. The total value of $43 million is moderate for a multi-year aircraft modification effort.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside requirement. The prime contractor, Science and Engineering Services, LLC, would determine any subcontracting opportunities based on their own business needs and capabilities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force and the Department of Defense. Accountability measures are typically embedded within the contract's terms and conditions, including performance metrics, delivery schedules, and quality standards. Transparency is often limited for specific defense contracts due to security and proprietary concerns, but contract awards and basic details are usually publicly available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

UH-60 Black Hawk Helicopter Programs
HH-60 Pave Hawk Helicopter Programs
Aircraft Modification and Conversion Services
Department of Defense Aviation Procurement
Aerospace Manufacturing Contracts

Risk Flags

Cost-Plus-Fixed-Fee contract type
Limited competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.0 million to SCIENCE AND ENGINEERING SERVICES, LLC. UNITED STATES AIR FORCE REQUIREMENT FOR THE CONVERSION OF 7 UH-60L BLACK HAWKS TO HH-60G PAVE HAWKS.

Who is the contractor on this award?

The obligated recipient is SCIENCE AND ENGINEERING SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $43.0 million.

What is the period of performance?

Start: 2016-09-16. End: 2022-09-15.

What is the specific scope of work involved in converting a UH-60L to an HH-60G, and how does this justify the $43 million cost?

The conversion of a UH-60L Black Hawk to an HH-60G Pave Hawk typically involves significant modifications to enhance its capabilities for combat search and rescue (CSAR) missions. This includes the integration of advanced avionics, electronic warfare suites, improved navigation systems, a more powerful radar, a rescue hoist, and potentially structural reinforcements. The $43 million cost covers the labor, materials, engineering, testing, and overhead associated with these complex modifications across seven airframes. Without a detailed breakdown of the specific modifications and the hours/materials allocated per aircraft, it is difficult to definitively justify the cost. However, the integration of sophisticated military-grade systems and the specialized labor required for such modifications are inherently expensive. Benchmarking against similar complex aircraft upgrade programs would be necessary for a more precise value assessment.

What was the rationale for excluding certain sources in this 'Full and Open Competition After Exclusion of Sources' award?

The 'Full and Open Competition After Exclusion of Sources' designation implies that the initial solicitation was intended for broad competition, but specific sources were subsequently excluded from consideration. The rationale for such exclusions typically stems from factors like national security concerns, proprietary technology protection, or the inability of certain potential bidders to meet highly specialized technical requirements or security clearances necessary for the program. In the context of military aircraft modification, a potential reason could be that only a limited number of contractors possess the specific certifications, tooling, or expertise required by the Air Force for this particular conversion. Understanding the exact reasons for exclusion is crucial, as it directly impacts the level of competition and potentially the final price paid by the government.

How does the cost-plus-fixed-fee (CPFF) contract structure potentially impact the final cost compared to other contract types?

The Cost-Plus-Fixed-Fee (CPFF) contract structure means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or is expected to evolve, as is common in complex engineering and modification projects. While it allows for flexibility, it shifts much of the cost risk to the government. If costs escalate beyond initial estimates, the government pays more. The fixed fee, however, provides a ceiling on the contractor's profit. Compared to a firm-fixed-price contract, CPFF offers less incentive for the contractor to control costs rigorously, as their profit is fixed regardless of the final cost. Effective government oversight and cost monitoring are critical to managing expenditures under a CPFF arrangement.

What is the historical spending trend for similar aircraft conversion programs within the Department of Defense?

Historical spending on similar aircraft conversion programs within the Department of Defense (DoD) shows significant variability, heavily dependent on the complexity of the modifications, the type of aircraft, and the number of units involved. Programs involving upgrades to advanced avionics, weapons systems, or mission-specific enhancements (like search and rescue capabilities) tend to be more costly. For instance, converting older airframes to modern standards can range from tens of millions to hundreds of millions of dollars. The DoD frequently engages in such modifications to extend the service life of existing fleets and adapt them to evolving threats and mission requirements. Benchmarking this $43 million contract requires comparing it to programs with similar scope and scale, such as modifications to helicopters or transport aircraft, while accounting for inflation and technological advancements over time.

What are the potential risks associated with the long performance period of this contract (2190 days)?

A long performance period, such as the 2190 days (approximately 6 years) for this contract, introduces several potential risks. Firstly, there is an increased risk of cost escalation due to inflation, changes in labor rates, and potential increases in the cost of raw materials or components over the contract's duration. Secondly, the scope of work might need adjustments due to evolving technological requirements or changes in military doctrine, potentially leading to change orders that could increase the overall cost. Thirdly, maintaining consistent quality and performance standards over such an extended period requires robust contractor management and government oversight. Finally, the longer the contract duration, the greater the chance of unforeseen events, such as supply chain disruptions or shifts in program priorities, impacting timely completion and final cost.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Science and Engineering Services LLC

Address: 248 DUNLOP BLVD, HUNTSVILLE, AL, 35824

Business Categories: Asian Pacific American Owned Business, Category Business, Limited Liability Corporation, Minority Owned Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $43,037,526

Exercised Options: $43,037,526

Current Obligation: $43,037,526

Subaward Activity

Number of Subawards: 24

Total Subaward Amount: $5,137,884

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W58RGZ13D0048

IDV Type: IDC

Timeline