Army awards $30.1M for helicopter parts, with McDonnell Douglas Helicopter Company as sole source

Contract Overview

Contract Amount: $30,126,169 ($30.1M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2003-03-17

End Date: 2007-02-28

Contract Duration: 1,444 days

Daily Burn Rate: $20.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Defense

Official Description: 200306!002434!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303D0162 !A!N! !N!0001 !20030317!20071231!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000031800737!N!N!000000000000!1615!HELICOPTER ROTOR BLADES, DRIVE MECHANISMS & COMPON!A1A!AIRFRAMES AND SPARES !1AIC!APACHE (AH-64) ADV ATTACK !336413!E! !5!B!M! !C! !99990909!B! ! !A! !D!N!A!1!001!N!1A!A!Y!A! ! !N!C!N! ! ! !B!B!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $30.1 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: 200306!002434!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303D0162 !A!N! !N!0001 !20030317!20071231!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARIC… Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Significant duration of over 4 years suggests a long-term need for these critical helicopter components. 3. The contract's fixed-price redetermination structure may allow for price adjustments, impacting final cost to taxpayers. 4. Focus on Apache helicopter parts indicates a specialized and high-value segment of defense procurement. 5. The award to a single, established contractor may limit opportunities for smaller businesses to participate.

Value Assessment

Rating: questionable

The contract value of $30.1 million for helicopter rotor blades and drive mechanisms is substantial. Without comparable sole-source awards or detailed cost breakdowns, it is difficult to definitively benchmark value for money. The fixed-price redetermination pricing structure introduces uncertainty, as final costs could exceed initial estimates if not carefully managed and audited. This type of contract can sometimes lead to higher costs compared to fully competitive bids.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, McDonnell Douglas Helicopter Company, was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. While sole-source awards can be justified for unique capabilities or urgent needs, they inherently reduce price discovery and may result in higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through a competitive marketplace. This can lead to less efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Army, ensuring the continued operational readiness of its Apache attack helicopter fleet. Services delivered include the provision of essential helicopter rotor blades, drive mechanisms, and related components. The geographic impact is primarily within the United States, with potential implications for the defense industrial base in Arizona where the contractor is located. Workforce implications include the potential for sustained employment at McDonnell Douglas Helicopter Company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs.
Fixed-price redetermination pricing structure introduces cost uncertainty.
Lack of transparency in the sole-source justification could mask inefficiencies.
Long contract duration may not reflect current market efficiencies.
No clear indication of small business subcontracting goals.

Positive Signals

Ensures availability of critical components for a key military asset (Apache helicopter).
Contract awarded to an established manufacturer with likely expertise in the product.
Potential for stable supply chain for essential helicopter parts.
Contract duration suggests a recognized, ongoing need for these components.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for specialized helicopter components, particularly for advanced attack helicopters like the Apache, is often concentrated among a few key manufacturers. Spending in this area is driven by military readiness requirements and the lifecycle of existing aircraft fleets. Comparable spending benchmarks would typically involve other sole-source or limited-competition contracts for similar high-value, specialized military aircraft components.

Small Business Impact

The contract data indicates that this was not a small business set-aside. As a sole-source award to a large prime contractor, there is no explicit information provided regarding subcontracting opportunities for small businesses. This lack of set-aside or mandated subcontracting goals may limit the direct participation of small businesses in this specific contract, potentially impacting the broader small business defense ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Inspector General (IG) investigations could be initiated if specific concerns regarding fraud, waste, or abuse arise. Transparency is limited due to the sole-source nature of the award; however, contract modifications and payment data would likely be subject to standard government auditing and reporting requirements.

Related Government Programs

Apache AH-64 Attack Helicopter Sustainment
U.S. Army Aviation and Missile Command Procurement
Defense Contract Management Agency (DCMA) Oversight
Aerospace Parts Manufacturing Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns due to FPR
Limited transparency
No small business set-aside specified

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.1 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. 200306!002434!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303D0162 !A!N! !N!0001 !20030317!20071231!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000031800737!N!N!000000000000!1615!HELICOPTER ROTOR BLADES, DRIVE MECHANISMS & COMPON!A1A!AIRFRAMES AND SPARES !1AIC!APACHE (AH-64) ADV ATTACK !336413!E! !5!B!M! !C! !99990909!B

Who is the contractor on this award?

The obligated recipient is MCDONNELL DOUGLAS HELICOPTER COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $30.1 million.

What is the period of performance?

Start: 2003-03-17. End: 2007-02-28.

What is the justification for awarding this contract on a sole-source basis to McDonnell Douglas Helicopter Company?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. This could be due to proprietary technology, unique manufacturing capabilities, or the need for compatibility with existing systems where no other vendor can provide the required parts. For helicopter components like rotor blades and drive mechanisms, especially for a specific platform like the Apache, the original equipment manufacturer often holds unique design data and tooling. Without specific documentation from the contract file, the precise justification remains unconfirmed, but it likely centers on the specialized nature of the components and the contractor's established role in producing them for the Apache program.

How does the fixed-price redetermination (FPR) pricing structure impact the final cost to taxpayers compared to a firm-fixed-price contract?

A Fixed-Price Redetermination (FPR) contract establishes an initial price that is subject to adjustment based on actual costs incurred. Initially, it functions like a fixed-price contract, but it allows for negotiation and revision of the price after a certain period or upon completion of specific milestones. This differs from a Firm-Fixed-Price (FFP) contract, where the price is set and generally not subject to change. FPR contracts can be beneficial when initial cost estimates are uncertain, but they shift some of the cost risk to the government. Taxpayers may end up paying more under an FPR contract if costs escalate beyond initial projections and the redetermination results in a higher final price than an FFP contract might have yielded, especially if the contractor's cost control is weak.

What is the historical spending pattern for helicopter rotor blades and drive mechanisms for the Apache program?

Historical spending data for helicopter rotor blades and drive mechanisms for the Apache program would reveal trends in procurement volume, pricing, and contractor reliance over time. This specific contract, awarded in 2003 and ending in 2007 for approximately $30.1 million, represents a snapshot within a longer program lifecycle. Analyzing prior contracts for similar components, especially those awarded to McDonnell Douglas Helicopter Company (later part of Boeing), would indicate whether this award amount is consistent, increasing, or decreasing relative to previous periods. Understanding historical spending helps assess if current prices are reasonable and if there's a pattern of sole-source awards or price increases that warrant closer scrutiny.

What are the potential risks associated with a sole-source contract for critical helicopter components?

The primary risk of a sole-source contract for critical helicopter components is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for the contractor to innovate or improve efficiency. Taxpayers may overpay for goods and services. Additionally, reliance on a single supplier can create supply chain vulnerabilities; if the sole source experiences production issues, financial instability, or decides to discontinue the product line, the government may face significant operational disruptions. There's also a risk of complacency, where the contractor may not feel compelled to maintain the highest standards of quality or customer service without the threat of competition.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' classification relate to the specific components being procured?

The North American Industry Classification System (NAICS) code '336413 - Other Aircraft Parts and Auxiliary Equipment Manufacturing' broadly covers establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment, except engines, engine parts, propellers, and landing gear. Helicopter rotor blades and drive mechanisms fall squarely within this category as critical structural and mechanical components essential for aircraft operation, but not typically classified as engines or landing gear. This classification helps categorize the contract within the broader industrial landscape and allows for comparisons with other spending in the aerospace parts manufacturing sub-sector.

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

Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION (A)

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 5000 E MCDOWELL ROAD, MESA, AZ, 04

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: DAAH2303D0162

IDV Type: IDC

Timeline