DoD's $458.5M Boeing Sikorsky Aircraft Support contract awarded without competition

Contract Overview

Contract Amount: $458,507,872 ($458.5M)

Contractor: Boeing Sikorsky Aircraft Support, LLC

Awarding Agency: Department of Defense

Start Date: 2007-01-01

End Date: 2010-12-31

Contract Duration: 1,460 days

Daily Burn Rate: $314.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: RELOCATION COST FOR FSRS TAS::97 0100::TAS

Place of Performance

Location: FORT CAMPBELL, CHRISTIAN County, KENTUCKY, 42223

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $458.5 million to BOEING SIKORSKY AIRCRAFT SUPPORT, LLC for work described as: RELOCATION COST FOR FSRS TAS::97 0100::TAS Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential value. 2. Significant duration of 1460 days suggests a long-term need for these aircraft support services. 3. The contract's 'Cost No Fee' (Cost Plus Fixed Fee) structure may incentivize cost control but could also lead to cost overruns. 4. Awarded to Boeing Sikorsky Aircraft Support, LLC, indicating a reliance on a specific, established contractor. 5. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code suggests a broad scope of support services. 6. Geographic location in Kentucky (KY) may have implications for local workforce and economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the 'Cost No Fee' pricing structure. Without competitive bids, it's difficult to ascertain if the $458.5 million represents a fair market price. The 'Cost No Fee' structure, while intended to control costs, can sometimes lead to less scrutiny on expenditures compared to fixed-price contracts. Further analysis would require access to detailed cost breakdowns and comparisons with similar sole-source support contracts for comparable aircraft.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or when there is an urgent need that precludes a competitive process. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, there is less assurance that the government secured the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense units relying on the supported aircraft for their missions. Services delivered likely include maintenance, repair, parts, and technical support for Boeing Sikorsky aircraft. The geographic impact is concentrated in Kentucky, potentially supporting local jobs and businesses within the aerospace supply chain. Workforce implications include the employment of skilled technicians, engineers, and support staff at Boeing Sikorsky and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
The 'Cost No Fee' structure might reduce contractor incentive for aggressive cost management.
Lack of transparency in the sole-source justification could obscure potential alternatives.
Long contract duration may not adapt well to evolving technological needs or market price shifts.
Limited visibility into specific performance metrics and their correlation to cost.

Positive Signals

Award to a known entity like Boeing Sikorsky suggests a level of established capability and reliability.
The contract supports critical defense assets, ensuring operational readiness.
Potential for specialized expertise and deep knowledge of the specific aircraft systems.
Long-term nature may foster a stable support environment for essential equipment.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for such specialized support services is often characterized by high barriers to entry due to technical expertise, certifications, and established relationships with defense agencies. Spending in this area is critical for maintaining the operational readiness of military aviation fleets. Comparable spending benchmarks would typically involve analyzing other long-term support contracts for similar military aircraft platforms, considering factors like fleet size and operational tempo.

Small Business Impact

The contract data indicates that small business participation (sb) was false, and it was not a small business set-aside (ss). This suggests that the primary awardee is a large business, and there is no explicit requirement for small business subcontracting within the provided data. Consequently, the direct impact on the small business ecosystem from this specific contract award appears minimal, though Boeing Sikorsky may engage small businesses as subcontractors without this being explicitly flagged in the award details.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The 'Cost No Fee' structure necessitates close monitoring of incurred costs to prevent overruns. Transparency is limited by the sole-source nature, but contract modifications, performance reports, and financial audits are standard oversight mechanisms. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Maintenance and Repair Services
Defense Logistics Agency Contracts
Aerospace Parts Manufacturing
Military Aircraft Support Programs
Cost-Plus Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $458.5 million to BOEING SIKORSKY AIRCRAFT SUPPORT, LLC. RELOCATION COST FOR FSRS TAS::97 0100::TAS

Who is the contractor on this award?

The obligated recipient is BOEING SIKORSKY AIRCRAFT SUPPORT, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $458.5 million.

What is the period of performance?

Start: 2007-01-01. End: 2010-12-31.

What specific types of aircraft are covered under this 'Boeing Sikorsky Aircraft Support' contract?

The provided data does not specify the exact models of Boeing Sikorsky aircraft covered by this contract. However, given the contractor's name and the NAICS code 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' it is highly probable that the contract pertains to support services for helicopters and potentially other rotary-wing or tiltrotor aircraft manufactured by Sikorsky (a subsidiary of Lockheed Martin, though Boeing also has significant aerospace operations). These services could encompass a wide range of platforms, from utility helicopters to specialized combat or transport aircraft, requiring tailored parts, maintenance, and technical expertise.

How does the 'Cost No Fee' (CNF) pricing structure typically function in defense contracts, and what are its implications for cost control?

A 'Cost No Fee' (CNF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs but receives no fee or profit. This structure is generally used when the government has a high degree of confidence in the contractor's ability to perform the work and when the cost risks are difficult to estimate accurately. While it aims to ensure the government only pays for actual costs incurred, it can reduce the contractor's incentive to control costs aggressively, as their profit is not tied to cost savings. Effective oversight is crucial to ensure costs remain reasonable and allowable.

What is the typical duration and value range for similar sole-source aircraft support contracts within the Department of Defense?

The duration of this contract is 1460 days (approximately 4 years), and its value is $458.5 million. Sole-source aircraft support contracts within the DoD can vary significantly in duration and value depending on the complexity of the aircraft, the scope of support required (e.g., depot-level maintenance, spare parts provisioning, engineering services), and the number of aircraft in the fleet. Long-term sustainment contracts, especially for specialized or legacy platforms, can easily span multiple years and reach hundreds of millions or even billions of dollars. Without specific details on the aircraft type and support scope, direct comparison is difficult, but a multi-year, high-value contract for critical aircraft support is not uncommon in the defense sector.

What are the potential risks associated with awarding a large, long-term contract like this on a sole-source basis?

The primary risk of a sole-source award for a large, long-term contract is the potential for inflated costs due to a lack of competitive pressure. Without competing bids, the government may not achieve the best possible pricing. There's also a risk that the contractor may become complacent or less innovative over the contract's life. Furthermore, if the contractor's capabilities degrade or if market conditions change significantly, the government may be locked into a suboptimal arrangement for an extended period. Ensuring robust oversight and clear performance metrics becomes even more critical in sole-source scenarios to mitigate these risks.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code influence the interpretation of this contract's scope?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates that the primary business activity of the contractor, Boeing Sikorsky Aircraft Support, LLC, relates to manufacturing parts and auxiliary equipment for aircraft, which are not elsewhere classified. In the context of this contract, it suggests that the services provided likely extend beyond simple maintenance or repair to include the provision, and potentially manufacturing or modification, of specialized parts and components essential for the operation and sustainment of Boeing Sikorsky aircraft. This broad scope implies a deep integration into the aircraft's lifecycle support.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: H9224105R0003

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 7281 NIGHTSTALKER WAY, FORT CAMPBELL, KY, 42223

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $560,536,076

Exercised Options: $560,536,076

Current Obligation: $458,507,872

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline