DoD awards $71.1M for AW119KX helicopters and support, raising value-for-money questions

Contract Overview

Contract Amount: $71,116,415 ($71.1M)

Contractor: Agustawestland Philadelphia Corporation

Awarding Agency: Department of Defense

Start Date: 2019-12-30

End Date: 2025-12-29

Contract Duration: 2,191 days

Daily Burn Rate: $32.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF AW119KX HELICOPTER ALONG WITH SPARE PARTS, GROUND SUPPORT EQUIPMENT, TRAINING

Place of Performance

Location: PHILADELPHIA, PHILADELPHIA County, PENNSYLVANIA, 19114

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $71.1 million to AGUSTAWESTLAND PHILADELPHIA CORPORATION for work described as: PROCUREMENT OF AW119KX HELICOPTER ALONG WITH SPARE PARTS, GROUND SUPPORT EQUIPMENT, TRAINING Key points: 1. The contract's value-for-money is questionable given the lack of competition and the high per-unit cost. 2. Competition dynamics are severely limited, with a sole-source award suggesting potential for inflated pricing. 3. Risk indicators include the sole-source nature and the long duration, which could lead to cost overruns. 4. Performance context is limited as this is a sole-source award without a competitive benchmark. 5. Sector positioning places this within the Aircraft Manufacturing industry, a high-value, specialized market.

Value Assessment

Rating: questionable

The total award of $71.1 million for helicopters, spare parts, ground support, and training appears high, especially considering it was a sole-source procurement. Without competitive bids, it's difficult to benchmark the pricing against market rates or similar contracts. The per-unit cost for the AW119KX helicopters, when factored out, is likely elevated due to the lack of competitive pressure. This suggests a potential for suboptimal value for the taxpayer.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, AgustaWestland Philadelphia Corporation, was solicited. This significantly limits the opportunity for price discovery and negotiation that typically occurs in a competitive bidding process. The lack of multiple bidders means the government did not benefit from the potential for lower prices or innovative solutions that competition often fosters.

Taxpayer Impact: Taxpayers may have paid a premium for these helicopters and associated services due to the absence of competitive bidding. The government's negotiating position was weakened, potentially leading to a higher overall cost than if multiple firms had vied for the contract.

Public Impact

The primary beneficiaries are the Department of the Army, which will receive the AW119KX helicopters for its operations. Services delivered include the provision of aircraft, essential spare parts, ground support equipment, and crucial training for personnel. The geographic impact is centered in Pennsylvania, where the contractor is located, but the operational use of the helicopters will be determined by Army deployment. Workforce implications include potential support roles for maintenance and training, though the primary manufacturing is likely elsewhere.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may lead to higher costs.
Long contract duration (2+ years) increases risk of cost escalation and scope creep.
Lack of transparency in the sole-source justification makes it hard to assess true value.
Dependence on a single supplier for critical aircraft and parts can create supply chain risks.

Positive Signals

The AW119KX is a known platform, suggesting a degree of familiarity and potentially reduced initial training burden.
The contract includes comprehensive support, covering parts and training, which can streamline logistics and readiness.
Firm Fixed Price contract type provides cost certainty for the government, assuming no change orders.

Sector Analysis

The Aircraft Manufacturing sector is characterized by high barriers to entry, significant R&D investment, and stringent regulatory requirements. This contract falls within the specialized segment of military rotorcraft manufacturing. Comparable spending benchmarks are difficult to establish without knowing the specific mission requirements and quantities, but large military aircraft procurements often run into hundreds of millions or billions of dollars. This $71.1 million award represents a moderate-sized procurement within this high-value industry.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit mention of subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, and there is no indication of specific efforts to leverage small business capabilities through this procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the contract terms, particularly the Firm Fixed Price structure. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the justification and pricing more challenging. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Helicopter Procurement
Aircraft Manufacturing Contracts
Department of Defense Aviation Assets
Sole-Source Defense Procurements

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed justification for sole-source award limits transparency.
Long contract duration increases potential for cost escalation despite FFP.
No clear indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.1 million to AGUSTAWESTLAND PHILADELPHIA CORPORATION. PROCUREMENT OF AW119KX HELICOPTER ALONG WITH SPARE PARTS, GROUND SUPPORT EQUIPMENT, TRAINING

Who is the contractor on this award?

The obligated recipient is AGUSTAWESTLAND PHILADELPHIA 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 $71.1 million.

What is the period of performance?

Start: 2019-12-30. End: 2025-12-29.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under circumstances such as urgency, unique capabilities, or when only one responsible source exists. Without this documentation, it is impossible to independently verify the necessity of bypassing the competitive bidding process. This lack of transparency is a significant concern for assessing the value for money and ensuring fair competition.

How does the per-unit cost of the AW119KX under this contract compare to publicly available market prices or other government procurements?

The total contract value is $71.1 million over approximately two years for an unspecified number of AW119KX helicopters, spare parts, ground support equipment, and training. To estimate a per-unit cost for the helicopter itself, one would need to subtract the costs associated with the support elements, which are not detailed. Even a rough estimate would likely place the per-unit cost significantly higher than commercial off-the-shelf prices due to the sole-source nature and potential inclusion of military-specific modifications and support packages. A precise comparison is not feasible without a breakdown of costs.

What are the potential risks associated with a sole-source award for critical aviation assets?

Sole-source awards for critical assets like helicopters carry several risks. Firstly, the absence of competition can lead to inflated pricing, as the contractor faces no pressure to offer the most competitive bid. Secondly, it can result in a lack of innovation, as the contractor may not be incentivized to develop more cost-effective or technologically advanced solutions. Thirdly, it creates a dependency on a single supplier, which can be problematic if the supplier experiences production issues, financial instability, or decides to discontinue the product line. Finally, it reduces transparency and makes it harder for oversight bodies to ensure the government is receiving fair value.

What is the historical spending pattern for AW119KX helicopters or similar platforms by the Department of the Army?

The provided data focuses solely on this specific contract award. To assess historical spending patterns for AW119KX helicopters or similar platforms by the Department of the Army, a broader search of federal procurement databases (like FPDS or USASpending) would be necessary. This would involve looking for previous contracts awarded to AgustaWestland Philadelphia Corporation or other manufacturers for comparable helicopter models, noting quantities, prices, and contract types. Without this historical context, it's difficult to determine if this $71.1 million award represents an increase, decrease, or consistent level of spending for such assets.

What are the implications of the Firm Fixed Price (FFP) contract type for this sole-source award?

The Firm Fixed Price (FFP) contract type is generally favorable for the government as it shifts the risk of cost overruns to the contractor. This means the price is set and generally not subject to adjustment unless the scope of work changes. For a sole-source award, FFP provides a degree of cost certainty, preventing unexpected price increases during the contract period. However, it does not inherently guarantee value for money; the initial fixed price itself could be high if negotiated without competitive pressure. The government still needs to ensure the negotiated fixed price reflects a fair market value, which is challenging in a sole-source scenario.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ19R0291

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA

Address: 3050 RED LION RD, PHILADELPHIA, PA, 19114

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

Financial Breakdown

Contract Ceiling: $71,116,415

Exercised Options: $71,116,415

Current Obligation: $71,116,415

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline