The Navy recently sent a request to Congress that it be granted the authority to enter into a block buy contract for 37 more Lockheed Martin [LMT] Sikorsky CH-53K King Stallion helicopters over the next two years.
According to a legislative proposal the Defense Department submitted on April 12, the department said this block buy covering FY ’25 and ’26 would lead to cost savings of 3.75 percent compared to single year pricing. This equates to $135.1 million in then-year dollars versus using annual contracts.
“This significant cost savings is attributed primarily to the reduction of labor, material, and overhead rates that result from a stable long-term procurement, as well as favorable inflation and fee impacts,” an analysis accompanying the proposal reads.
The proposal also seeks authority for the Navy Secretary to enter into multiyear procurement contracts for up to 350 T408 engines.
The analysis argued this authority would result in cost savings of 10 percent for the same reasons from stable long-term procurement, equating to $125.7 million then-year dollar savings versus individual contracts. GE Aerospace [GE] produces the engines and provided data used in the calculations.
The Defense Department argued these strategies “will provide industrial base stability, incentivize prime and supplier investment, improve production efficiency, reduce administrative burden of annual contracts, and take advantage of procurement volume, resulting in significant cost savings when compared to annual procurement cost estimates.”
DoD projects labor and overhead costs to be lowered “significantly” under these awards thanks to enhanced workforce stability and avoiding breaks in production as well as using economic order quantity acquisition for the engines.
The Navy Department’s FY ‘25 budget request already seeks 19 CH-53Ks for $2.5 billion as full rate production Lot 9 aircraft
This proposal is in line with details from the FY ‘25 budget documents that noted the Lots 9-10, FY ’25-’26, airframe cost element “is planned and budget as a Block Buy contract and the Lots 9-13 (FY ’25-’29) engine cost element is planned and budgeted as a multi-year procurement contract.”
The FY ’25 budget request documents also said the Navy plans to buy another 18 CH-53Ks in FY ’26 for $2.3 billion, the rest of this 37-airframe block buy portion.
The Navy plans for the total program fleet to consist of 200 aircraft, with four as system demonstration test articles. That works out to 196 production-level aircraft projected to cost about $27 billion total, according to the latest budget documents.