Nearly $172M contract for exclusive large fire support helicopter services awarded to Erickson Inc

Contract Overview

Contract Amount: $171,959,003 ($172.0M)

Contractor: Erickson Incorporated

Awarding Agency: Department of Agriculture

Start Date: 2012-03-26

End Date: 2016-04-30

Contract Duration: 1,496 days

Daily Burn Rate: $114.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 18

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: CRITICAL FUNCTIONS - NATIONAL EXCLUSIVE USE LARGE FIRE SUPPORT HELICOPTER SERVICES FOR WILDLAND FIREFIGHTING.

Place of Performance

Location: CENTRAL POINT, JACKSON County, OREGON, 97502

State: Oregon Government Spending

Plain-Language Summary

Department of Agriculture obligated $172.0 million to ERICKSON INCORPORATED for work described as: CRITICAL FUNCTIONS - NATIONAL EXCLUSIVE USE LARGE FIRE SUPPORT HELICOPTER SERVICES FOR WILDLAND FIREFIGHTING. Key points: 1. Contract awarded for critical national exclusive use of large fire support helicopters. 2. Erickson Inc. secured the contract through full and open competition after exclusion of sources. 3. The contract duration spans 1496 days, indicating a long-term need for these services. 4. The fixed-price contract with economic price adjustment aims to manage cost fluctuations. 5. This service is vital for national wildland firefighting efforts. 6. The contract value is substantial, reflecting the specialized nature of the services.

Value Assessment

Rating: good

The contract value of approximately $172 million over its period of performance appears reasonable given the specialized and critical nature of exclusive-use large fire support helicopters. While direct comparisons are difficult due to the unique 'national exclusive use' designation, the pricing structure (fixed price with economic price adjustment) is standard for long-term aviation contracts to account for fuel and operational cost changes. The number of bids (18) suggests a competitive process that likely contributed to a fair market price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was open, certain sources were initially excluded, possibly due to specific capabilities or national security considerations. With 18 bidders, the competition level was robust, suggesting that multiple qualified vendors were available and participated. This level of competition is generally favorable for price discovery and achieving competitive pricing.

Taxpayer Impact: The robust competition for this critical national service suggests that taxpayer funds were likely used efficiently, as multiple companies vied for the contract, driving down potential costs.

Public Impact

The primary beneficiaries are federal agencies responsible for wildland firefighting, particularly the Forest Service. The service delivered is critical air support for combating large-scale wildfires, including personnel and equipment transport, and potentially aerial firefighting capabilities. The geographic impact is national, focusing on areas prone to wildland fires. This contract supports a specialized aviation workforce and related maintenance personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause if fuel or operational costs rise significantly.
Reliance on a single contractor for 'national exclusive use' could pose a risk if the contractor faces operational issues or financial instability.
The 'exclusion of sources' aspect of the competition warrants understanding the rationale to ensure no viable alternatives were overlooked.

Positive Signals

Awarded through full and open competition, indicating a broad search for qualified vendors.
A significant number of bidders (18) suggests a healthy market for these specialized services.
The contract's long duration (1496 days) provides stability and ensures continuous support for critical firefighting operations.
The fixed-price with economic price adjustment structure is a common and generally accepted method for managing costs in long-term aviation contracts.

Sector Analysis

This contract falls within the Air Transportation sector, specifically focusing on specialized charter services for government operations. The market for large, specialized firefighting helicopters is niche, with a limited number of operators possessing the required aircraft and certifications. Spending in this area is driven by the critical need for wildfire suppression and national security. Comparable spending benchmarks would likely involve other large government aviation contracts for specialized support, though direct comparisons are challenging due to the 'national exclusive use' nature.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the specialized nature and high value of large fire support helicopters, it is unlikely that small businesses would typically be primary bidders or awardees for such a contract. Subcontracting opportunities for small businesses might exist in areas such as maintenance, logistics, or support services, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting agency, the Department of Agriculture's Forest Service. Mechanisms likely include regular performance reviews, adherence to contract terms, and financial audits. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected within the contract's execution.

Related Government Programs

Wildland Fire Management
Aviation Support Services
Emergency Response Contracts
Department of Agriculture Procurement
Forest Service Operations

Risk Flags

Potential over-reliance on a single provider for critical national assets.
Justification for 'exclusion of sources' requires scrutiny to ensure full market potential was explored.
Economic price adjustment clause introduces cost uncertainty over the contract's lifespan.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $172.0 million to ERICKSON INCORPORATED. CRITICAL FUNCTIONS - NATIONAL EXCLUSIVE USE LARGE FIRE SUPPORT HELICOPTER SERVICES FOR WILDLAND FIREFIGHTING.

Who is the contractor on this award?

The obligated recipient is ERICKSON INCORPORATED.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Forest Service).

What is the total obligated amount?

The obligated amount is $172.0 million.

What is the period of performance?

Start: 2012-03-26. End: 2016-04-30.

What specific capabilities do Erickson Incorporated's helicopters offer for wildland firefighting that justify 'national exclusive use'?

Erickson Incorporated is known for its fleet of heavy-lift helicopters, particularly the Erickson S-64 Aircrane. These aircraft are uniquely suited for wildland firefighting due to their large capacity for water or retardant drops (often thousands of gallons), their ability to hover precisely, and their suitability for carrying large payloads like external tanks, crews, or equipment. The 'national exclusive use' designation implies that these specific, highly capable assets are reserved for the U.S. government's wildfire suppression efforts, ensuring their immediate availability during critical periods and preventing their use by other entities. This exclusivity is crucial for managing large, complex fires where rapid and substantial aerial intervention is paramount.

How does the 'fixed price with economic price adjustment' (FPEPA) clause typically function in long-term aviation contracts, and what are its implications for cost certainty?

A Fixed Price with Economic Price Adjustment (FPEPA) contract is a type of fixed-price contract where the price may be adjusted upward or downward based on specified economic factors. In aviation contracts, these factors commonly include fluctuations in fuel costs, labor rates, and material prices. The 'economic price adjustment' clause allows the contractor to seek compensation for unforeseen increases in operating expenses beyond their control, while also potentially passing on savings if costs decrease. For the government, this provides some cost certainty upfront but introduces variability over the contract's life. It aims to balance the contractor's risk of rising costs with the government's desire for a stable price, ensuring the contractor can maintain operations without incurring unsustainable losses.

What does 'Full and Open Competition After Exclusion of Sources' mean in the context of this contract, and were there any significant alternatives missed?

'Full and Open Competition After Exclusion of Sources' signifies that while the solicitation was broadly advertised, certain potential sources were initially excluded from consideration. This exclusion must be justified by the agency, often based on factors like national security, unique capabilities, or specific performance requirements that only a limited number of entities can meet. In this case, with 18 bidders participating, it suggests that despite the exclusion, a competitive field emerged. However, the justification for excluding specific sources is critical. Without knowing which sources were excluded and why, it's difficult to definitively assess if potentially more cost-effective or capable alternatives were overlooked. A thorough review of the agency's justification for exclusion would be necessary for a complete risk assessment.

What is the historical spending pattern for similar large fire support helicopter services by the Forest Service or other federal agencies?

Historical spending on large fire support helicopter services, particularly for exclusive-use contracts, tends to be substantial and cyclical, heavily influenced by wildfire activity levels and severity. Agencies like the Forest Service and CAL FIRE (California Department of Forestry and Fire Protection) regularly procure such services. Contracts for large helicopters like the S-64 Aircrane or similar heavy-lift platforms often run into tens of millions of dollars annually, depending on the duration of the fire season and the number of aircraft required. Exclusive-use contracts, like this one, represent a significant portion of the budget allocated to aerial firefighting assets due to the guaranteed availability they provide. Spending can fluctuate year-to-year based on fire seasons and budget appropriations.

What are the potential risks associated with relying on a single contractor for 'national exclusive use' of critical firefighting assets?

Relying on a single contractor for 'national exclusive use' of critical assets like large fire support helicopters presents several risks. Firstly, operational disruptions at the contractor's end—such as mechanical failures, pilot shortages, or financial instability—could leave the government without essential support during peak demand. Secondly, the lack of ongoing competition for these specific exclusive-use assets could potentially lead to less incentive for the contractor to innovate or offer the most competitive pricing over time, despite the initial competitive award. Thirdly, if the contractor's performance falters or they face regulatory issues, finding and onboarding a replacement quickly for such specialized assets would be extremely challenging and time-consuming, potentially jeopardizing wildfire response capabilities.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Freight Air Transportation

Product/Service Code: NATURAL RESOURCES MANAGEMENT › NATURAL RESOURCE CONSERVERVAT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: AG-024B-S-11-9001

Offers Received: 18

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 3100 WILLOW SPRINGS RD, CENTRAL POINT, OR, 97502

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

Financial Breakdown

Contract Ceiling: $171,959,003

Exercised Options: $171,959,003

Current Obligation: $171,959,003

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline