DoD awards $116.6M contract for Black Hawk helicopter conversions, raising value-for-money questions

Contract Overview

Contract Amount: $116,591,222 ($116.6M)

Contractor: Science and Engineering Services, LLC

Awarding Agency: Department of Defense

Start Date: 2012-10-18

End Date: 2020-09-30

Contract Duration: 2,904 days

Daily Burn Rate: $40.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CONVERSION OF ARMY UH-60L BLACK HAWK HELICOPTERS TO AIR FORCE HH-60G HELICOPTERS

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35824

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $116.6 million to SCIENCE AND ENGINEERING SERVICES, LLC for work described as: CONVERSION OF ARMY UH-60L BLACK HAWK HELICOPTERS TO AIR FORCE HH-60G HELICOPTERS Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 2. Limited competition after exclusion of sources suggests potential for higher pricing. 3. The long performance period (2012-2020) warrants scrutiny of cost escalation. 4. Conversion of existing airframes presents a potentially cost-effective alternative to new procurement. 5. The contract's value is significant within the aircraft manufacturing sector. 6. Performance context is crucial to understand if the conversions met operational needs.

Value Assessment

Rating: fair

The contract's value of $116.6 million for helicopter conversions is substantial. Without specific benchmarks for this type of conversion, it's difficult to definitively assess value for money. The cost-plus-fixed-fee (CPFF) pricing structure, while common, can lead to higher costs if not managed tightly, as the contractor is reimbursed for all allowable costs plus a fixed fee. Comparing this to similar conversion programs or the cost of new aircraft would provide better insight into whether taxpayers received a good deal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the initial solicitation may have been open, specific sources were later excluded, leading to a limited competition. The exact number of bidders after exclusions is not provided, but a limited competition generally suggests fewer than ideal market participants, which can impact price discovery and potentially lead to less competitive pricing compared to full and open competition with multiple bidders.

Taxpayer Impact: Limited competition can mean that taxpayers may not have benefited from the lowest possible prices that could have been achieved through a broader bidding process.

Public Impact

The primary beneficiaries are the U.S. Air Force, which receives upgraded HH-60G Pave Hawk helicopters for combat search and rescue missions. The services delivered include the conversion of existing Army UH-60L Black Hawk helicopters into the Air Force's HH-60G configuration. The geographic impact is primarily within the United States, where the conversions likely took place, and globally where the HH-60G aircraft will be deployed. Workforce implications include skilled labor in aircraft manufacturing, maintenance, and engineering within the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not closely monitored.
Limited competition may result in higher prices than a fully open bidding process.
The long duration of the contract (2012-2020) increases the risk of cost escalation and scope creep.
Lack of specific performance metrics makes it difficult to assess the efficiency of the conversion process.

Positive Signals

Conversion of existing airframes is generally more cost-effective than procuring new aircraft.
The contract supports the modernization and operational readiness of critical Air Force assets.
The use of a fixed fee component in the CPFF contract provides some level of cost predictability for the contractor's profit.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft modification and conversion. The North American Industry Classification System (NAICS) code 336411 (Aircraft Manufacturing) is relevant. The market for aircraft conversions and upgrades is driven by the need to extend the service life of existing platforms and adapt them to new mission requirements, often proving more economical than purchasing entirely new fleets. Benchmarking would involve comparing the per-helicopter conversion cost to similar programs or the cost of new aircraft acquisition.

Small Business Impact

The data indicates that small business participation was not a primary focus for this contract, as the 'small business' flag is false. There is no explicit mention of small business set-asides or subcontracting goals. This suggests that the prime contractor, Science and Engineering Services, LLC, likely handled the majority of the work, potentially limiting opportunities for small businesses within the supply chain for this specific award. Further investigation into subcontracting reports would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army and the Department of the Air Force, given the nature of the asset conversion. The cost-plus-fixed-fee structure necessitates robust financial oversight to ensure that all reimbursed costs are allowable and reasonable. Transparency would be enhanced by public reporting of performance metrics and cost breakdowns. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance period.

Related Government Programs

Air Force HH-60 Pave Hawk Helicopter Program
Army UH-60 Black Hawk Helicopter Fleet Modernization
DoD Aircraft Maintenance and Overhaul Contracts
Aerospace Manufacturing and Modification Services

Risk Flags

Limited competition may lead to higher costs.
Cost-plus-fixed-fee contract type carries inherent cost overrun risks.
Lack of detailed performance metrics hinders value assessment.
Exclusion of sources requires justification to ensure fair pricing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $116.6 million to SCIENCE AND ENGINEERING SERVICES, LLC. CONVERSION OF ARMY UH-60L BLACK HAWK HELICOPTERS TO AIR FORCE HH-60G HELICOPTERS

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 $116.6 million.

What is the period of performance?

Start: 2012-10-18. End: 2020-09-30.

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

The specific rationale for excluding other sources in this 'Full and Open Competition After Exclusion of Sources' award is not detailed in the provided data. Typically, such exclusions occur when only a limited number of contractors possess the unique capabilities, technology, or facilities required for a specialized task, or when there's a compelling reason for urgency that restricts the pool of eligible bidders. Without further documentation, it's presumed that Science and Engineering Services, LLC demonstrated a unique ability to perform the complex conversion of UH-60L to HH-60G configurations, or that specific circumstances justified limiting the competition. This procurement method warrants scrutiny to ensure that the exclusion was indeed necessary and did not unduly restrict competition, potentially leading to suboptimal pricing for the government.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for aircraft modification programs in terms of cost efficiency?

The Cost-Plus-Fixed-Fee (CPFF) structure, used in this $116.6 million contract, reimburses the contractor for all allowable costs incurred plus a predetermined fixed fee representing profit. While CPFF provides flexibility for complex projects with uncertain cost elements, like aircraft modifications, it carries a higher risk of cost overruns compared to fixed-price contracts. If costs escalate, the government bears the burden, while the contractor's profit remains fixed. For cost efficiency, fixed-price incentive fee (FPIF) or firm-fixed-price (FFP) contracts are often preferred when the scope and costs are well-defined, as they incentivize the contractor to control expenses to maximize profit. However, for unique or evolving conversion requirements, CPFF might be deemed necessary, necessitating stringent government oversight to manage costs effectively.

What were the key performance indicators (KPIs) for this contract, and how did the contractor perform against them?

The provided data does not include specific Key Performance Indicators (KPIs) or performance evaluation details for this contract. For aircraft conversion projects, typical KPIs might include on-time delivery of converted aircraft, adherence to technical specifications and airworthiness standards, quality of workmanship (e.g., defect rates), and potentially cost control within estimates. Without this information, it is impossible to assess whether Science and Engineering Services, LLC met the government's expectations regarding the quality, timeliness, and efficiency of the UH-60L to HH-60G conversions. A thorough review would require access to contract performance reports and quality assurance records.

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

Historical spending on similar helicopter conversion programs within the Department of Defense can vary significantly based on the aircraft type, complexity of the conversion, and the number of units involved. Programs like the conversion of Army UH-60Ls to Air Force HH-60Gs are undertaken to meet specific operational needs and extend the life of valuable assets, often as a more economical alternative to new procurement. While this specific $116.6 million contract represents a substantial investment, DoD frequently engages in such modifications across various helicopter platforms (e.g., Chinook, Black Hawk variants, Pave Hawk upgrades). Analyzing past budgets for similar conversion efforts would provide context on whether this contract's value is within the expected range for such specialized military aviation projects.

What is the estimated cost savings achieved by converting UH-60L helicopters versus procuring new HH-60G aircraft?

The provided data does not explicitly state the estimated cost savings achieved by converting UH-60L helicopters versus procuring new HH-60G aircraft. However, the general principle behind such conversion programs is that modifying existing, serviceable airframes is typically less expensive than manufacturing entirely new aircraft. This cost-effectiveness stems from leveraging the existing airframe structure, major components, and potentially reducing research and development costs associated with a completely new design. The $116.6 million contract value for converting multiple helicopters suggests a significant investment, but it is reasonable to assume that this approach was chosen over new procurement due to projected long-term savings, which would need to be substantiated by detailed cost-benefit analyses conducted by the DoD prior to contract award.

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: NEGOTIATED PROPOSAL/QUOTE

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, Corporate Entity Not Tax Exempt, Minority Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $116,591,222

Exercised Options: $116,591,222

Current Obligation: $116,591,222

Subaward Activity

Number of Subawards: 165

Total Subaward Amount: $41,981,573

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W58RGZ09D0130

IDV Type: IDC

Timeline