Coast Guard awards $249M for new H-60 helicopter hulls, with Sikorsky Aircraft Corporation as the sole provider

Contract Overview

Contract Amount: $249,199,453 ($249.2M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2021-02-15

End Date: 2028-09-30

Contract Duration: 2,784 days

Daily Burn Rate: $89.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: H-60 NEW HULLS - NON-RECURRING ENGINEERING, TRAVEL, AND FIRST 25 HULLS

Place of Performance

Location: ELIZABETH CITY, PASQUOTANK County, NORTH CAROLINA, 27909

State: North Carolina Government Spending

Plain-Language Summary

Department of Homeland Security obligated $249.2 million to SIKORSKY AIRCRAFT CORPORATION for work described as: H-60 NEW HULLS - NON-RECURRING ENGINEERING, TRAVEL, AND FIRST 25 HULLS Key points: 1. This contract represents a significant investment in the Coast Guard's rotary-wing aviation capabilities. 2. The non-recurring engineering and initial hull production indicate a long-term commitment to this platform. 3. Sole-source procurement raises questions about potential price inflation and limited market alternatives. 4. The fixed-price contract type aims to control costs, but the absence of competition may hinder optimal value. 5. Performance will be closely monitored given the critical nature of H-60 helicopters for Coast Guard missions. 6. The contract duration suggests a phased approach to delivery and integration of new airframes.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The total value of $249 million for non-recurring engineering and the first 25 hulls suggests a substantial per-unit cost. Without comparable contract data or market analysis for similar H-60 hull production, it's difficult to definitively assess if this represents excellent value for money. The firm fixed-price nature provides some cost certainty, but the absence of competition limits the government's ability to negotiate the best possible price.

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 solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple firms had vied for the contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. The government's negotiating leverage is reduced, potentially impacting the overall efficiency of federal spending on this critical asset.

Public Impact

The U.S. Coast Guard will benefit from enhanced capabilities with the delivery of new H-60 helicopter hulls. These new airframes are crucial for a range of Coast Guard missions, including search and rescue, maritime law enforcement, and national security operations. The production of these hulls supports specialized manufacturing jobs within the aerospace sector. The geographic impact is primarily centered around the contractor's facilities, but the operational impact will be nationwide for Coast Guard deployments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement limits price competition and may result in higher costs for taxpayers.
Lack of transparency in the bidding process makes it difficult to benchmark value for money.
Dependence on a single supplier for critical helicopter components can create supply chain risks.
The significant contract value warrants robust oversight to ensure efficient use of funds.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
The H-60 platform is a proven and reliable helicopter, ensuring operational effectiveness.
Investment in new airframes signifies a commitment to modernizing the Coast Guard's fleet.
The contract addresses a critical need for enhanced aviation assets.

Sector Analysis

The H-60 helicopter platform, often referred to as the 'Black Hawk' in its military variants, is a cornerstone of rotary-wing aviation for various government agencies. Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, is the original equipment manufacturer and a primary producer of these aircraft. The market for new military-grade helicopter production is highly specialized, with significant barriers to entry due to complex engineering, manufacturing processes, and stringent regulatory requirements. This contract fits within the broader defense and public safety aerospace manufacturing sector, where large, complex platforms are often procured through long-term agreements, sometimes involving sole-source arrangements due to unique capabilities or existing fleet commonality.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, as indicated by 'sb': false. The primary contractor, Sikorsky Aircraft Corporation, is a large aerospace manufacturer. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific details of such subcontracting plans are not provided in this data. The absence of a direct small business set-aside suggests that the focus of this procurement was on the prime contractor's capabilities rather than fostering direct opportunities for small businesses in this specific award.

Oversight & Accountability

Oversight for this contract will likely be managed by the U.S. Coast Guard's contracting and program management offices. As a sole-source award, scrutiny may be heightened to ensure fair pricing and adherence to contract terms. Transparency regarding the justification for the sole-source award and ongoing performance monitoring will be key accountability measures. While specific Inspector General (IG) involvement isn't detailed, the Department of Homeland Security's IG office typically has jurisdiction over significant contracts within the agency, and could investigate if concerns arise regarding waste, fraud, or abuse.

Related Government Programs

H-60 Helicopter Procurement
Coast Guard Aviation Modernization
Aerospace Manufacturing Contracts
Sole-Source Defense Procurements
Rotary-Wing Aircraft Acquisition

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $249.2 million to SIKORSKY AIRCRAFT CORPORATION. H-60 NEW HULLS - NON-RECURRING ENGINEERING, TRAVEL, AND FIRST 25 HULLS

Who is the contractor on this award?

The obligated recipient is SIKORSKY AIRCRAFT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $249.2 million.

What is the period of performance?

Start: 2021-02-15. End: 2028-09-30.

What is the historical spending pattern for H-60 helicopter hulls or similar aircraft manufacturing by the U.S. Coast Guard or Department of Homeland Security?

Analyzing historical spending for H-60 hulls specifically by the Coast Guard is challenging without more granular data, as the H-60 platform has various configurations and operators. However, the Coast Guard has historically operated and procured rotary-wing aircraft, including models that share lineage or components with the H-60. For instance, the MH-60T Jayhawk, a variant used by the Coast Guard, is based on the H-60 airframe. Previous procurements for these aircraft, including upgrades, modifications, and new airframes, would represent relevant historical spending. The total investment in rotary-wing aviation by the Coast Guard over the past decade likely runs into billions of dollars, encompassing acquisition, sustainment, and modernization efforts. This $249 million contract for new hulls and associated engineering represents a significant, albeit specific, component of that broader spending trend, focusing on the foundational airframe production for a critical asset.

How does the non-recurring engineering (NRE) cost component of this contract compare to industry benchmarks for similar aerospace development programs?

Determining precise industry benchmarks for non-recurring engineering (NRE) costs on a sole-source contract like this is difficult without access to proprietary data from Sikorsky Aircraft Corporation or detailed cost breakdowns. NRE typically includes the costs associated with design, development, testing, and certification of a new product or significant modification. For complex platforms like the H-60, NRE can be substantial, often representing a significant portion of the initial program investment before mass production begins. Industry averages for NRE can vary widely based on program complexity, technological innovation, and the maturity of the base platform. However, for established platforms like the H-60, the NRE component might be expected to be lower than for a completely new aircraft design, focusing more on specific hull modifications or production process refinements. The $249 million total contract value, which includes NRE and the first 25 hulls, means the NRE portion is a critical factor in the overall cost-effectiveness. Without competitive bids or detailed cost proposals, a direct comparison to external benchmarks remains speculative.

What are the specific risks associated with relying on a sole-source provider for critical helicopter components like airframes?

Relying on a sole-source provider like Sikorsky Aircraft Corporation for H-60 helicopter airframes presents several key risks. Firstly, there is a significant risk of price escalation over the life of the contract, as the government lacks the leverage of competitive bidding to negotiate favorable terms. Sikorsky may have less incentive to offer competitive pricing or cost reductions. Secondly, there's a potential for reduced innovation and responsiveness; without competitive pressure, the supplier might be less motivated to invest in process improvements or offer cutting-edge solutions. Thirdly, supply chain vulnerability increases. If Sikorsky faces production issues, labor disputes, or financial difficulties, the Coast Guard's ability to procure essential airframes could be severely disrupted, impacting operational readiness. Finally, long-term dependence on a single supplier can limit future strategic options for the government, such as transitioning to alternative platforms or suppliers.

What performance metrics or key performance indicators (KPIs) are likely being used to evaluate Sikorsky Aircraft Corporation's performance under this contract?

Under this firm fixed-price contract for H-60 helicopter hulls, key performance indicators (KPIs) would likely focus on delivery schedule adherence, quality of manufactured hulls, and compliance with technical specifications. Specific metrics could include: On-Time Delivery Rate (OTD) for each hull or batch of hulls, ensuring they are produced and delivered by the contractually agreed-upon dates. Quality Acceptance Rate, measuring the percentage of delivered hulls that pass inspection without defects or requiring rework. Conformance to Technical Specifications, verifying that the manufactured hulls meet all design, material, and dimensional requirements outlined in the contract. Additionally, metrics related to production efficiency and cost control within the contractor's operations might be indirectly monitored, even though the price is fixed. Reporting requirements would likely mandate regular updates on production status, any identified issues, and corrective actions being taken.

What is the expected operational impact of receiving these new H-60 hulls on the U.S. Coast Guard's mission capabilities?

The delivery of new H-60 helicopter hulls is expected to significantly enhance the U.S. Coast Guard's operational capabilities across its diverse mission set. The H-60 platform, particularly variants like the MH-60T Jayhawk, is a multi-mission aircraft crucial for search and rescue (SAR) operations in challenging environments, maritime law enforcement, counter-narcotics interdictions, and homeland security patrols. New airframes provide increased reliability, reduced maintenance downtime, and potentially improved performance characteristics compared to older, aging aircraft. This modernization ensures the Coast Guard can maintain and expand its presence in critical operational areas, respond more effectively to emergencies, and project greater operational reach. Ultimately, these new hulls contribute to enhanced safety for Coast Guard crews and the public they serve, bolstering the service's ability to fulfill its statutory responsibilities.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 70Z02320RAMH00400

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 6900 MAIN ST, STRATFORD, CT, 06614

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

Financial Breakdown

Contract Ceiling: $249,199,453

Exercised Options: $249,199,453

Current Obligation: $249,199,453

Subaward Activity

Number of Subawards: 508

Total Subaward Amount: $19,360,985

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: 70Z02321DAMH00400

IDV Type: IDC

Timeline