Boeing awarded $49.3M for AH64 Apache helicopter support services, with no competition
Contract Overview
Contract Amount: $49,346,160 ($49.3M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2010-12-31
End Date: 2025-07-31
Contract Duration: 5,326 days
Daily Burn Rate: $9.3K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: TO FUND THE AH64 COMPONENT MATERIAL AND TECHNICAL, ENGINEERING, AND LOGISTICAL SERVICES SUPPPORT
Place of Performance
Location: CORPUS CHRISTI, NUECES County, TEXAS, 78419
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $49.3 million to THE BOEING COMPANY for work described as: TO FUND THE AH64 COMPONENT MATERIAL AND TECHNICAL, ENGINEERING, AND LOGISTICAL SERVICES SUPPPORT Key points: 1. Contract focuses on critical component material and technical, engineering, and logistical support for the AH64 Apache. 2. Sole-source award raises concerns about potential overpricing and lack of market-driven cost efficiencies. 3. Long contract duration (over 14 years) may indicate a need for sustained, specialized support. 4. Awarded to The Boeing Company, the original equipment manufacturer, suggesting reliance on proprietary knowledge. 5. Texas-based performance indicates potential regional economic impact and workforce implications. 6. Firm Fixed Price contract type aims to control costs, but limited competition hinders price validation.
Value Assessment
Rating: questionable
Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The $49.3 million award for AH64 component material and support services over its extended period suggests a significant investment. Without comparable contracts or market data from competing suppliers, it's difficult to definitively assess if the pricing reflects fair market value or if taxpayers are receiving optimal value for money. The reliance on the original equipment manufacturer for specialized support is common, but it necessitates careful oversight to ensure costs remain reasonable.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was considered. This approach is typically used when a product or service is unique and only available from a single source, or in cases of urgent need where competition is not feasible. The lack of competition means there was no opportunity for other qualified companies to bid, potentially limiting price discovery and innovation.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to secure the best possible value.
Public Impact
The U.S. Army benefits from continued operational readiness of its AH64 Apache helicopter fleet. Essential component materials and specialized technical, engineering, and logistical support are delivered. Services are performed in Texas, potentially creating or sustaining jobs in the region. The contract ensures the availability of critical parts and expertise for a key defense asset.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition, potentially leading to higher costs.
- Long contract duration may obscure true cost-effectiveness over time.
- Lack of transparency in the procurement process due to sole-source nature.
- Dependence on a single contractor for critical support could pose supply chain risks.
Positive Signals
- Firm Fixed Price contract type provides cost certainty for the government.
- Award to OEM ensures access to specialized knowledge and proprietary data.
- Contract supports a critical defense asset, ensuring national security readiness.
- Long-term nature of the contract suggests a stable and predictable support environment.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically supporting rotary-wing aircraft. The AH64 Apache is a significant platform for the U.S. Army, and contracts for its sustainment are crucial for maintaining fleet readiness. The market for such specialized support is often dominated by the original equipment manufacturer due to proprietary knowledge and established supply chains. Comparable spending benchmarks would likely involve other major defense platforms requiring similar levels of OEM-integrated support.
Small Business Impact
This contract does not appear to include a small business set-aside. As a sole-source award to a large prime contractor, there is a potential for limited subcontracting opportunities for small businesses unless specifically mandated or pursued by the prime. The impact on the small business ecosystem depends on Boeing's subcontracting strategy and whether they engage small businesses for specific components or services related to the AH64 support.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be tied to performance metrics outlined in the contract and adherence to the Firm Fixed Price terms. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- AH64 Apache Helicopter Program
- Department of the Army Aviation Sustainment
- Defense Contract Management Agency (DCMA) Oversight
- Aerospace Component Manufacturing
- Logistics and Technical Support Services
Risk Flags
- Sole Source Procurement
- Lack of Competition
- Potential for Cost Overruns
- Long-Term Contract Duration
Tags
defense, department-of-the-army, helicopter-manufacturing, aircraft-manufacturing, sole-source, firm-fixed-price, component-material, technical-support, engineering-services, logistical-support, texas, boeing-company
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $49.3 million to THE BOEING COMPANY. TO FUND THE AH64 COMPONENT MATERIAL AND TECHNICAL, ENGINEERING, AND LOGISTICAL SERVICES SUPPPORT
Who is the contractor on this award?
The obligated recipient is THE BOEING 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 $49.3 million.
What is the period of performance?
Start: 2010-12-31. End: 2025-07-31.
What is The Boeing Company's track record with AH64 support contracts?
The Boeing Company, as the original equipment manufacturer (OEM) for the AH64 Apache, has a long-standing and integral role in supporting the platform. Their track record typically involves providing a comprehensive range of services, including manufacturing, maintenance, repair, overhaul, and technical support. Historically, Boeing has been the primary, and often sole, source for critical components and specialized engineering services due to proprietary designs and manufacturing processes. While this ensures access to essential expertise, past performance reviews of such sole-source contracts often focus on delivery timelines, quality of service, and cost control measures. Specific performance data for this particular contract would be detailed in internal Army evaluations and contract close-out reports, assessing adherence to schedules, technical specifications, and budget.
How does the pricing of this contract compare to similar sole-source support agreements for other military aircraft?
Directly comparing the pricing of this $49.3 million AH64 support contract to similar sole-source agreements for other military aircraft is challenging without access to proprietary contract details and specific service scopes. Sole-source contracts inherently lack the price transparency provided by competitive bidding. However, the value proposition is typically assessed against the OEM's established price lists, historical pricing trends for the specific platform, and internal cost estimates. Factors influencing price include the complexity of the components, the level of engineering and technical support required, and the duration of the contract. The U.S. Army likely benchmarks this against internal cost models and potentially against sustainment costs for comparable platforms like the Black Hawk or Chinook, while acknowledging the unique nature of the AH64's systems and Boeing's exclusive role.
What are the primary risks associated with this sole-source contract for AH64 support?
The primary risk associated with this sole-source contract is the potential for inflated costs due to the absence of competitive pressure. The Boeing Company, being the sole provider, may have greater leverage in pricing negotiations. Another significant risk is vendor lock-in, where the government becomes heavily reliant on a single supplier, making it difficult and costly to switch providers even if performance or pricing becomes unsatisfactory. There's also a risk related to supply chain disruptions if Boeing faces internal production issues or if geopolitical factors impact their global supply network for critical components. Furthermore, without competition, there's a reduced incentive for the contractor to innovate or seek cost-saving efficiencies beyond what is contractually required.
How effective is the Firm Fixed Price (FFP) contract type in managing costs for this type of specialized support?
The Firm Fixed Price (FFP) contract type is generally considered effective in managing costs for specialized support services like this, as it shifts the cost risk to the contractor. Under an FFP agreement, the total price is fixed, and the contractor is responsible for all costs incurred to deliver the specified goods or services. This provides budget certainty for the government. However, the effectiveness is contingent on the accuracy of the initial cost estimates and the contractor's ability to manage their expenses. In a sole-source scenario, the initial estimate's reasonableness is critical, and the government must ensure robust oversight to prevent the contractor from exploiting the fixed price by cutting corners on quality or delivering substandard support. The FFP structure incentivizes the contractor to control their own costs efficiently.
What are the historical spending patterns for AH64 Apache sustainment and support services?
Historical spending patterns for AH64 Apache sustainment and support services, particularly those involving component material and technical services, have been substantial and ongoing, reflecting the platform's long service life and critical role. These expenditures are typically characterized by a mix of contract types, including sole-source awards to The Boeing Company for unique parts and engineering, as well as potentially competitively awarded contracts for broader maintenance, repair, and overhaul (MRO) services. Annual spending can fluctuate based on operational tempo, modernization programs, and depot maintenance cycles. Over the past decade, sustainment costs for major rotorcraft platforms like the Apache have consistently represented a significant portion of the Army's aviation budget, underscoring the importance of effective contract management and cost control for these long-term investments.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 5000 EAST MCDOWELL ROAD, MESA, AZ, 85215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $49,346,160
Exercised Options: $49,346,160
Current Obligation: $49,346,160
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: W58RGZ10D0027
IDV Type: IDC
Timeline
Start Date: 2010-12-31
Current End Date: 2025-07-31
Potential End Date: 2025-07-31 12:07:00
Last Modified: 2025-04-22
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