DoD's $213M Sikorsky Aircraft delivery order for helicopter parts faces scrutiny over competition and value

Contract Overview

Contract Amount: $213,497,223 ($213.5M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2023-11-01

End Date: 2024-09-30

Contract Duration: 334 days

Daily Burn Rate: $639.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: H53 PHASE III POP 1 DELIVERY ORDER

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06615

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $213.5 million to SIKORSKY AIRCRAFT CORPORATION for work described as: H53 PHASE III POP 1 DELIVERY ORDER Key points: 1. The contract's value, exceeding $213 million, warrants a close examination of the necessity and efficiency of the awarded services. 2. Lack of competition raises concerns about potential overpricing and reduced incentive for cost-effectiveness. 3. The fixed-price contract type offers some cost certainty but does not mitigate risks associated with a non-competitive award. 4. Performance is scheduled over approximately 11 months, indicating a need for timely delivery of critical aircraft components. 5. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a specialized area of defense procurement. 6. The absence of small business set-aside provisions suggests a focus on large prime contractors for this specific requirement.

Value Assessment

Rating: questionable

Benchmarking the value of this $213 million delivery order is challenging due to the lack of competitive bids. Without comparable contract data from a competitive process, it's difficult to definitively assess if the pricing reflects fair market value. The fixed-price nature provides some cost control, but the absence of competition means there's less pressure on the contractor to offer the most economical solution. Further analysis would require access to internal cost data or historical pricing for similar, competitively awarded contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order, meaning it was not competed. This approach is typically used when only one source can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition limits the government's ability to explore alternative solutions or leverage market forces to drive down costs. It also raises questions about whether a competitive process was adequately considered or if circumstances truly precluded it.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive pressure. Without multiple bids, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense branches relying on Sikorsky aircraft for critical missions. The contract delivers essential parts and auxiliary equipment for helicopters, ensuring operational readiness and maintenance capabilities. The geographic impact is primarily centered around Connecticut, where Sikorsky Aircraft Corporation is based, suggesting a concentration of economic activity and potential job support in that region. Workforce implications include the direct employment of skilled labor at Sikorsky and its supply chain partners involved in manufacturing and delivering these specialized aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency and accountability in procurement.
Dependence on a single supplier could create supply chain vulnerabilities.
Limited visibility into the contractor's cost structure due to non-competitive nature.

Positive Signals

Fixed-price contract type offers cost certainty once awarded.
Sikorsky Aircraft Corporation is a known entity with established expertise in helicopter manufacturing.
Delivery order implies a specific, defined need within a larger framework.
Contract duration suggests a focused period of supply, potentially for a specific program phase.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector (NAICS 336413) is a critical component of the aerospace and defense industry. This sector involves the production of specialized parts, components, and auxiliary equipment for aircraft, often requiring advanced manufacturing techniques and stringent quality control. The market size is substantial, driven by military and commercial aviation demands. This contract fits within the broader defense procurement landscape, specifically supporting the sustainment and operational readiness of rotary-wing aircraft fleets. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft parts from major manufacturers.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by the 'sb' field being false. The award to a large prime contractor like Sikorsky Aircraft Corporation suggests that the requirement was deemed beyond the scope or capability of small businesses, or that a competitive process (if one had occurred) would likely have favored larger entities. There is no explicit information provided regarding subcontracting plans to small businesses, which is a missed opportunity for fostering small business participation in the defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the fixed-price contract type, which obligates the contractor to deliver specified goods. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance. The lack of competition, however, reduces the inherent oversight provided by a competitive bidding process.

Related Government Programs

Department of Defense Aircraft Procurement
Naval Aviation Sustainment Programs
Helicopter Manufacturing and Maintenance
Aerospace Parts and Components Supply Chain
Defense Contractor Performance Monitoring

Risk Flags

Sole-source award lacks competitive justification.
High contract value without competition raises cost concerns.
Potential for price inflation due to lack of market pressure.
Limited transparency in pricing and cost structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $213.5 million to SIKORSKY AIRCRAFT CORPORATION. H53 PHASE III POP 1 DELIVERY ORDER

Who is the contractor on this award?

The obligated recipient is SIKORSKY AIRCRAFT CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $213.5 million.

What is the period of performance?

Start: 2023-11-01. End: 2024-09-30.

What is Sikorsky Aircraft Corporation's track record with the Department of Defense, particularly for similar parts or services?

Sikorsky Aircraft Corporation, a subsidiary of Lockheed Martin, has a long and extensive history of contracting with the Department of Defense, particularly for rotary-wing aircraft. They are the original equipment manufacturer for numerous helicopter platforms used by the Navy, Army, and Marine Corps, including the UH-60 Black Hawk, CH-53 Sea Stallion/Super Stallion, and the MH-60 Seahawk. Their track record typically involves large, complex contracts for aircraft production, upgrades, and sustainment. For similar parts and auxiliary equipment, Sikorsky often holds sole-source positions due to proprietary designs and manufacturing processes. While generally considered a reliable supplier, past performance reviews and contract closeouts would provide a more granular assessment of their specific delivery, quality, and cost performance on prior DoD engagements.

How does the $213 million value of this delivery order compare to historical spending on similar helicopter parts by the Navy?

Directly comparing the $213 million value of this specific delivery order to historical spending on 'similar' helicopter parts by the Navy is challenging without more granular data on the exact components being procured. However, given that this is a sole-source award to Sikorsky, it is likely for specialized, proprietary parts essential for their helicopter platforms. Historical spending on sustainment and parts for major Navy helicopter programs (like the MH-60R/S or CH-53K) can run into hundreds of millions or even billions of dollars annually. A single delivery order of this magnitude suggests it covers a significant quantity or a high-value set of components, potentially for a specific fleet readiness initiative or a critical maintenance cycle. Without competitive benchmarks, it's difficult to ascertain if this represents a fair market price compared to what could have been achieved through competition.

What are the primary risks associated with a sole-source award of this magnitude for aircraft parts?

The primary risks associated with a sole-source award of this magnitude for aircraft parts are multifaceted. Firstly, there is a significant risk of 'price creep' or paying a premium, as the lack of competition removes the incentive for the contractor to offer the most cost-effective solution. Secondly, there's a potential for reduced innovation and efficiency, as the government is reliant on a single provider's capabilities and processes. Thirdly, supply chain risks can be amplified; if Sikorsky faces production issues, the Navy has limited alternative sources for these critical parts, potentially impacting fleet readiness. Finally, there's a transparency risk, as the justification for the sole-source award and the pricing structure may be less scrutinized than in a competitive environment, potentially masking inefficiencies or non-optimal resource allocation.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' classification impact the analysis of this contract?

The classification 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) indicates that this contract is for components and accessories that are not necessarily the primary airframe or engine, but are crucial for the overall function and operation of aircraft, specifically helicopters in this case. This category often includes items like landing gear components, avionics parts, specialized wiring harnesses, environmental control systems, or other support equipment. The 'other' designation suggests a broad scope within parts manufacturing. For analysis, it implies a need to understand the specific nature of these parts – are they standard, easily sourced items, or highly specialized, proprietary components? The latter would lend more credence to a sole-source justification, while the former would raise more questions about the lack of competition and potential for broader sourcing.

What does the contract type 'FIRM FIXED PRICE' imply for cost control and risk allocation in this sole-source scenario?

The 'FIRM FIXED PRICE' (FFP) contract type implies that the contractor, Sikorsky Aircraft Corporation, bears the primary responsibility for all costs incurred to perform the work, and the government pays a set price regardless of the contractor's actual costs. In a sole-source scenario like this, FFP offers the government cost certainty at the outset – the total expenditure is known. However, it does not guarantee value for money. The risk is shifted to the contractor to manage their costs efficiently to maintain profitability. If Sikorsky's costs are higher than anticipated, they absorb the loss; if lower, they retain the profit. The key concern in this sole-source context is whether the initial fixed price was established based on competitive market data or internal estimates, as the absence of competition limits the government's leverage in negotiating that price to ensure it reflects true value.

What is the significance of the contract duration (334 days) in relation to the total award value?

The contract duration of 334 days, approximately 11 months, for a $213 million delivery order indicates a substantial rate of expenditure. This translates to an average monthly burn rate of roughly $25 million ($213M / 11 months). Such a high monthly expenditure suggests that the contract is likely for the procurement of a large volume of high-value, specialized aircraft parts, or potentially includes associated services like logistics, testing, or integration. The relatively short duration for such a large sum implies a focused effort, possibly to meet an urgent operational need, replenish critical inventory levels, or support a specific program milestone within a defined timeframe. It also means that the government will need to re-evaluate its requirements and potentially re-compete or re-negotiate for parts beyond this period.

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

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: $252,478,581

Exercised Options: $252,478,581

Current Obligation: $213,497,223

Subaward Activity

Number of Subawards: 29

Total Subaward Amount: $987,385

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038323DSU01

IDV Type: IDC

Timeline