DoD's $208.6M aircraft parts contract awarded to Sikorsky Aircraft Corporation, a sole-source procurement

Contract Overview

Contract Amount: $208,565,464 ($208.6M)

Contractor: Sikorsky Aircraft Corporation

Awarding Agency: Department of Defense

Start Date: 2009-04-28

End Date: 2015-06-30

Contract Duration: 2,254 days

Daily Burn Rate: $92.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TRANSMISSION, MECH

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $208.6 million to SIKORSKY AIRCRAFT CORPORATION for work described as: TRANSMISSION, MECH Key points: 1. The contract's value of $208.6 million over its duration raises questions about cost-effectiveness given the sole-source nature. 2. Limited competition dynamics suggest potential for inflated pricing and reduced incentive for contractor efficiency. 3. The absence of competition is a significant risk indicator for value for money. 4. Performance context is limited due to the lack of competitive benchmarking. 5. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a critical component of defense logistics. 6. The firm fixed-price contract type offers some cost certainty but does not mitigate sole-source risks.

Value Assessment

Rating: questionable

Benchmarking the value of this $208.6 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if it's inflated. Comparing it to similar sole-source procurements for specialized aircraft parts might offer some insight, but the lack of competition inherently limits the ability to assess true value for money. The fixed-price structure provides some cost predictability, but the overall value proposition is weakened by the absence of competitive pressure.

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 considered. This approach bypasses the standard competitive bidding process, which typically involves soliciting proposals from multiple vendors. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium for these aircraft parts due to the absence of competitive bidding. The government missed the opportunity to leverage market competition to secure the best possible price and terms.

Public Impact

The Department of the Army is the primary beneficiary, receiving critical aircraft parts for its operations. This contract supports the maintenance and operational readiness of military aircraft. The geographic impact is primarily centered around the contractor's facilities and the military bases where the parts are utilized. The contract supports jobs within the aerospace manufacturing sector, specifically at Sikorsky Aircraft Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Lack of transparency in the justification for sole-source procurement.
Potential for contractor lock-in and reduced future competition.
Limited data available to assess performance against competitive benchmarks.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Sikorsky Aircraft Corporation is a known entity in the aerospace industry, suggesting a degree of reliability.
Contract supports critical defense logistics and operational readiness.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a vital segment of the aerospace industry. This sector is characterized by high technological demands, stringent quality control, and often, specialized production capabilities. The market size for defense-related aircraft parts is substantial, driven by the ongoing need for maintenance, repair, and upgrades of military fleets. This specific contract represents a portion of the broader defense spending allocated to sustain and modernize aircraft, fitting within the larger ecosystem of defense industrial base suppliers.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit information regarding subcontracting plans with small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate either as prime contractors or through subcontracting arrangements on this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Accountability measures would be tied to the terms of the firm fixed-price contract, focusing on delivery schedules and specifications. Transparency is limited due to the sole-source nature of the award, with justifications for such awards usually being internal to the agency. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Military Aircraft Maintenance and Repair
Aerospace Parts Manufacturing
Defense Logistics Support

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $208.6 million to SIKORSKY AIRCRAFT CORPORATION. TRANSMISSION, MECH

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 Army).

What is the total obligated amount?

The obligated amount is $208.6 million.

What is the period of performance?

Start: 2009-04-28. End: 2015-06-30.

What is the historical spending pattern for aircraft parts procured by the Department of the Army from Sikorsky Aircraft Corporation?

Analyzing historical spending patterns for aircraft parts procured by the Department of the Army from Sikorsky Aircraft Corporation requires access to detailed contract databases and financial records. Without specific data points for this contract's predecessors or similar sole-source awards, a precise historical trend is difficult to establish. However, generally, defense spending on aircraft parts is influenced by fleet age, operational tempo, and modernization programs. Sole-source contracts, like this one, often indicate a long-standing relationship or a unique capability held by the contractor. If this is a recurring need, spending would likely be consistent, potentially increasing with inflation or specific upgrade requirements. Conversely, if it's for a specific platform nearing retirement, spending might be declining. A comprehensive analysis would involve comparing this contract's value and duration against previous awards to Sikorsky for similar parts to identify any escalation or de-escalation in spending.

How does the unit cost of these aircraft parts compare to market rates for similar components?

Determining the precise unit cost and comparing it to market rates for this specific contract is challenging due to the sole-source nature of the award and the absence of detailed pricing breakdowns in the provided data. Market rates for specialized aircraft parts can vary significantly based on factors like manufacturer, specifications, volume discounts, and the competitive landscape. In a sole-source scenario, the government does not benefit from competitive bidding, which typically drives prices down. Therefore, without access to the contractor's pricing structure or data from competitive procurements of identical or comparable parts, it is difficult to definitively state whether the unit cost is aligned with market rates. It is plausible that the cost could be higher than if the contract had been competed.

What are the specific risks associated with a sole-source procurement of this magnitude?

A sole-source procurement of this magnitude ($208.6 million) carries several significant risks. Primarily, the lack of competition can lead to inflated pricing, as the contractor faces no pressure to offer the most competitive bid. This can result in the government paying more than necessary, representing a potential loss of taxpayer value. Secondly, it can foster contractor complacency, reducing the incentive for efficiency and innovation. There's also a risk of contractor lock-in, where the government becomes dependent on a single supplier, making it difficult and costly to switch providers in the future. Furthermore, the justification for sole-sourcing must be robust; if not adequately supported, it can raise concerns about fairness and adherence to procurement regulations. Finally, without competitive benchmarking, assessing the contractor's performance and the overall value for money becomes more subjective and less data-driven.

What is Sikorsky Aircraft Corporation's track record with government contracts, particularly sole-source awards?

Sikorsky Aircraft Corporation, now a subsidiary of Lockheed Martin, has a long and extensive history of contracting with the U.S. government, particularly the Department of Defense. They are a major manufacturer of helicopters and other aerospace components. Their track record includes numerous large-value contracts, many of which have been sole-source due to the specialized nature of their products and the critical defense requirements they fulfill. While specific details on all past sole-source awards and their performance metrics are not publicly itemized in this summary, Sikorsky is generally recognized as a capable and established defense contractor. However, as with any sole-source procurement, scrutiny regarding pricing and justification is warranted, regardless of the contractor's established reputation.

How does this contract contribute to the overall readiness and operational capability of the Department of the Army's aviation assets?

This contract, valued at $208.6 million for 'TRANSMISSION, MECH' and related parts, directly contributes to the operational readiness and capability of the Department of the Army's aviation assets. Transmissions are critical components in helicopters and other aircraft, essential for flight operations. By ensuring a supply of these parts, the contract supports the maintenance, repair, and sustainment of the Army's aircraft fleet. This sustained operational capability is vital for mission accomplishment, whether for troop transport, combat support, or logistical operations. The duration of the contract (over 6 years) suggests a long-term need for these parts, underscoring their importance in maintaining the serviceability and availability of aircraft throughout their operational life cycles.

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: W58RGZ08R0609

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 6900 MAIN ST, STRATFORD, CT, 03

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

Financial Breakdown

Contract Ceiling: $260,520,630

Exercised Options: $208,565,464

Current Obligation: $208,565,464

Contract Characteristics

Cost or Pricing Data: YES

Timeline