Sierra Nevada alleges USAF violated competition rules for $1B HH-60W contract

April 28, 2021

By Sara Sirota

Sierra Nevada Corp. has filed a lawsuit against the Air Force in the U.S. Court of Federal Claims, alleging the service violated competition rules when deciding to award Sikorsky a nearly $1 billion sole-source contract to upgrade the HH-60W Combat Rescue Helicopter.

The April 12 complaint calls on the court to direct the Air Force to accept multiple bids, warning a denial of the protest could embolden the largest defense contractors to exploit their data rights over major weapon systems -- an issue at the heart of the lawsuit -- to coerce the government into awarding them lucrative deals without competition. The court released a redacted version of Sierra Nevada's complaint April 19.

The Air Force indicated in February its intention to sole-source the upgrades contract to Sikorsky, a subsidiary of Lockheed Martin, citing "unacceptable delays" if the service partners with another company. Sikorsky is developing the HH-60W, which is currently undergoing tests and will eventually replace the Air Force's legacy HH-60G Pave Hawk, which performs personnel recovery missions.

But SNC develops the technology the Air Force wants to upgrade the new helicopters with, and the February announcement prompted the company to initially file a protest with the Government Accountability Office. SNC withdrew the protest earlier this month after the Air Force submitted an agency report acknowledging it ignored a submission by the company detailing its ability to meet the program's requirements, the complaint in federal claims court states.

According to the new protest, a sources-sought synopsis the Air Force issued in October 2019 requesting information on prospective vendors' production experience was "superficial" and did not offer respondents the opportunity to adequately describe their capabilities. The company nevertheless submitted two responses that month and again in May 2020.

However, SNC learned the justification and approval document that authorized the sole-source contract to Sikorsky was signed before the Air Force received its May 2020 submission -- which the company argues contradicts guidelines the government must follow under the Federal Acquisition Regulations to exempt certain contracts from competition.

SNC also insists the Air Force's concerns about "unacceptable delays" are unwarranted.

The service's J&A explained companies other than Sikorsky would not be able to meet Air Combat Command's mandated schedule for the program because the government had not yet received a full technical data package from the CRH prime contractor, revealing the service and Sikorsky are "in dispute" regarding intellectual property rights to the technical data package.

According to SNC's complaint, the company informed the Air Force in its May 2020 submission that it can perform the necessary upgrades in a timely manner with or without the technical data package. However, the service told GAO that it did not take this response into consideration, the protest states.

SNC also cites the long timeframe since the Air Force first began market research into potential contractors to poke holes in the service's apparent concerns about schedule delays, further noting a lack of funding for the HH-60W upgrades program in the FY-21 Defense Appropriations Act "underscores the faux urgency" described in the J&A.

Asked to provide a statement on the lawsuit, Air Force spokeswoman Ann Stefanek told Inside Defense in an email today the service would not comment on ongoing litigation. SNC spokesman Greg McCarthy also did not provide a comment to Inside Defense.

Meanwhile, SNC argues the dispute between the Air Force and Sikorsky over the technical data package indicates a broader problem in the defense industrial base regarding the power that major contractors hold over the government.

The company states the case begs the question of whether a prime contractor like Sikorsky, owned by the largest U.S. defense contractor, can force the Air Force into awarding it a nearly $1 billion contract without competition by failing to provide a complete technical data package.

"Indeed, if this protest is denied and Sikorsky's stall tactics are endorsed, it would set a dangerous precedent whereby any [original equipment manufacturer] could simply manufacture a dispute over the TDP -- whether legitimate or not -- and force its way into a lucrative sole source contract," the complaint warns.

Asked if Sikorsky has transferred the technical data package to the government yet, Air Force spokesman Capt. Josh Benedetti told Inside Defense in an email Tuesday that the government is "actively working" with the company on details of the delivery and cannot comment further.