Navy awards $626.7M contract for airframe structural components, with a significant portion for H-1 upgrades

Contract Overview

Contract Amount: $105,670,570 ($105.7M)

Contractor: Simmonds Precision Products Inc

Awarding Agency: Department of Defense

Start Date: 2006-07-24

End Date: 2013-05-31

Contract Duration: 2,503 days

Daily Burn Rate: $42.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200612!532567!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0298 !A!N! !N! ! !20060724!20070928!626738996!626738996!626738996!N!SIMMONDS PRECISION PRODUCTS IN!100 PANTON RD !VERGENNES !VT!05491!74650!001!50!VERGENNES !ADDISON !VERMONT !+000001669416!N!N!000008537199!1560!AIRFRAME STRUCTURAL COMPONENTS !A1C!OTHER AIRCRAFT EQUIPMENT !101 !USMC H-1 UPGRADE !336413!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1G!Z!N!Z! ! !Y!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! !1719!N00019!0001! !

Place of Performance

Location: VERGENNES, ADDISON County, VERMONT, 05491

State: Vermont Government Spending

Plain-Language Summary

Department of Defense obligated $105.7 million to SIMMONDS PRECISION PRODUCTS INC for work described as: 200612!532567!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0298 !A!N! !N! ! !20060724!20070928!626738996!626738996!626738996!N!SIMMONDS PRECISION PRODUCTS IN!100 PANTON RD !VERGENNES !VT!05491!74650!001!50!VERGENNES !ADDI… Key points: 1. Contract value of $626.7 million indicates a substantial investment in aircraft sustainment and modernization. 2. The award to Simmonds Precision Products Inc. suggests a reliance on established suppliers for critical components. 3. A significant portion of the contract is allocated to the USMC H-1 Upgrade program, highlighting modernization efforts. 4. The contract duration of approximately 7 years (from award to estimated completion) points to long-term sustainment needs. 5. The 'Not Competed' status raises questions about the procurement process and potential missed opportunities for cost savings. 6. The primary product service code (PSC) for airframe structural components suggests a focus on the physical integrity of aircraft.

Value Assessment

Rating: fair

The total contract value of $626.7 million for airframe structural components is substantial. Without specific benchmarks for similar components or detailed cost breakdowns, a precise value-for-money assessment is challenging. However, the duration of the contract and its allocation to a major upgrade program suggest a perceived need and potential for economies of scale. The lack of competition, however, limits the ability to benchmark pricing against market alternatives, potentially impacting overall value.

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 approach is typically used when only one vendor possesses the necessary capabilities, technology, or proprietary rights to fulfill the requirement. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of achieving the lowest possible price. Without competitive pressure, the awarded price may be higher than what could have been secured through an open competition.

Public Impact

The U.S. Marine Corps benefits directly through the modernization of its H-1 helicopter fleet. The contract ensures the availability of critical airframe structural components, supporting the operational readiness of naval aviation assets. The contract supports jobs and economic activity within Vermont, where the contractor is located. The successful execution of this contract contributes to the overall defense capabilities of the United States.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can limit innovation by excluding potential new entrants.
Dependence on a single supplier can create supply chain risks.

Positive Signals

Ensures supply of critical components for a key military program.
Supports a known contractor with a presumably established track record.
Long contract duration provides stability for program planning.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for aircraft components are vital for maintaining and modernizing military fleets. This award falls within the broader category of aircraft parts manufacturing, a segment that requires specialized engineering, quality control, and adherence to stringent military specifications. The value of this contract is significant within its sub-sector, reflecting the ongoing need for advanced materials and manufacturing for defense applications.

Small Business Impact

This contract does not appear to have a small business set-aside. The award was made to Simmonds Precision Products Inc., a company that is likely not classified as a small business given the contract's magnitude. There is no explicit information regarding subcontracting plans for small businesses within this award notice. Therefore, the direct impact on the small business ecosystem from this specific contract is likely minimal, though the prime contractor's own supply chain may involve small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contracting and program management offices. Specific oversight mechanisms would include contract administration, performance monitoring, and quality assurance processes. Transparency is facilitated through contract databases like FPDS, which provide basic award information. Inspector General investigations could be initiated if any fraud, waste, or abuse is suspected.

Related Government Programs

USMC H-1 Upgrade Program
Naval Air Systems Command (NAVAIR) Procurement
Aircraft Component Manufacturing
Defense Logistics Agency (DLA) Support

Risk Flags

Sole-source procurement
Potential for cost overruns due to lack of competition
Supply chain dependency on a single vendor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $105.7 million to SIMMONDS PRECISION PRODUCTS INC. 200612!532567!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0298 !A!N! !N! ! !20060724!20070928!626738996!626738996!626738996!N!SIMMONDS PRECISION PRODUCTS IN!100 PANTON RD !VERGENNES !VT!05491!74650!001!50!VERGENNES !ADDISON !VERMONT !+000001669416!N!N!000008537199!1560!AIRFRAME STRUCTURAL COMPONENTS !A1C!OTHER AIRCRAFT EQUIPMENT !101 !USMC H-1 UPGRADE !336413!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is SIMMONDS PRECISION PRODUCTS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $105.7 million.

What is the period of performance?

Start: 2006-07-24. End: 2013-05-31.

What is the historical spending pattern for airframe structural components by the Department of the Navy?

Historical spending on airframe structural components by the Department of the Navy is substantial and consistent, reflecting the continuous need to maintain and upgrade a large fleet of aircraft. Over the past decade, the Navy has allocated billions of dollars annually to procure and sustain various aircraft parts, including structural components. This spending is driven by factors such as aircraft age, operational tempo, modernization programs (like the H-1 upgrade), and the development of new platforms. While specific figures fluctuate year-to-year based on program priorities and budget allocations, the demand for these critical parts remains a significant and ongoing expenditure within the Navy's overall budget. Analyzing trends reveals a steady investment in ensuring the airworthiness and longevity of its aviation assets.

What is the track record of Simmonds Precision Products Inc. with government contracts?

Simmonds Precision Products Inc. has a history of receiving government contracts, particularly within the aerospace and defense sector. Publicly available data indicates previous awards for various aircraft components and related services. The company's longevity and continued awards suggest a capacity to meet the stringent requirements of defense procurement. A comprehensive review of their contract history would reveal the types of products and services provided, the agencies they have served, and their performance ratings on past contracts. This specific award for airframe structural components aligns with their apparent specialization in this area, indicating a potentially established relationship and proven capability with the Department of the Navy.

How does the pricing of this contract compare to similar sole-source awards for aircraft components?

Benchmarking the pricing of this $626.7 million sole-source contract against similar awards is challenging without access to detailed cost breakdowns and specific component specifications. Sole-source contracts inherently lack the price discovery mechanism of competitive bidding, making direct comparisons difficult. However, government auditors and contracting officers often use historical pricing data for similar sole-source awards, independent cost estimates, and commercial market research to assess reasonableness. Given the scale and duration, the pricing would be scrutinized for factors like material costs, labor, overhead, and profit margins. Without specific comparative data points, it's difficult to definitively state if the pricing is optimal, but the lack of competition suggests a higher potential for premium pricing compared to a competed contract.

What are the potential risks associated with a sole-source award of this magnitude?

A sole-source award of this magnitude carries several potential risks. Firstly, the lack of competition can lead to inflated prices, as the contractor faces no market pressure to offer the most cost-effective solution. Secondly, it can foster complacency, potentially reducing the incentive for the contractor to innovate or improve efficiency over the contract's life. Thirdly, it creates a dependency on a single supplier, which can be problematic if the contractor experiences financial difficulties, production issues, or quality control failures, potentially disrupting critical supply chains for the military. Finally, it raises concerns about the fairness and transparency of the procurement process, potentially limiting opportunities for other capable businesses.

What is the strategic importance of the USMC H-1 Upgrade program in relation to this contract?

The USMC H-1 Upgrade program is strategically vital as it involves modernizing the Marine Corps' attack and utility helicopter fleet, including the AH-1Z Viper and UH-1Y Venom. This modernization aims to enhance survivability, lethality, and operational effectiveness by incorporating advanced avionics, weapons systems, and improved airframes. Airframe structural components are fundamental to the integrity and performance of these upgraded helicopters. Therefore, this contract directly supports the program's objective by ensuring the availability of essential structural parts, which are critical for the successful integration of new technologies and for maintaining the airworthiness of the modernized fleet throughout its service life.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 100 PANTON RD, VERGENNES, VT, 00

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline