DoD's $45.2M R&D contract with McDonnell Douglas Helicopter Company awarded without competition

Contract Overview

Contract Amount: $45,233,167 ($45.2M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2010-09-22

End Date: 2015-12-31

Contract Duration: 1,926 days

Daily Burn Rate: $23.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: EATTS2 - COST PLUS FIXED FEE TO22 YJ

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215, UNITED STATES OF AMERICA

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $45.2 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: EATTS2 - COST PLUS FIXED FEE TO22 YJ Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can incentivize cost overruns. 2. The contract was not competed, raising questions about potential price discovery and value. 3. Research and Development (R&D) contracts often carry inherent risks due to the uncertainty of outcomes. 4. The duration of the contract (1926 days) suggests a significant, long-term R&D effort. 5. Awarded to a single source, limiting opportunities for broader market engagement and innovation. 6. The contract falls under the R&D in Physical, Engineering, and Life Sciences NAICS code.

Value Assessment

Rating: questionable

Benchmarking the value of this R&D contract is challenging due to its sole-source nature and the inherent uncertainties of research and development. Without competitive bids, it's difficult to assess if the fixed fee and cost reimbursement represent a fair market price. The cost-plus-fixed-fee structure, while common in R&D, requires careful oversight to ensure costs remain reasonable and the fixed fee is appropriate for the scope of work. Further analysis would require access to detailed cost breakdowns and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential contractors. This approach is typically used when only one contractor possesses the unique capabilities or technology required for the project, or in cases of urgent need. The lack of competition means there was no opportunity for price negotiation through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium for this contract due to the absence of competitive pressure to drive down prices. The government did not benefit from the cost efficiencies that typically arise from a competitive bidding environment.

Public Impact

The primary beneficiaries are likely the Department of Defense, which gains access to specialized R&D capabilities. The contract supports advancements in physical, engineering, and life sciences relevant to defense applications. The geographic impact is centered in Arizona, where the contractor is located. Workforce implications include employment for researchers, engineers, and support staff at McDonnell Douglas Helicopter Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
Cost-plus-fixed-fee contracts can incentivize higher spending if not rigorously managed.
R&D projects inherently carry risk of failure or unmet objectives, impacting return on investment.
Lack of transparency in sole-source R&D can obscure true value and efficiency.

Positive Signals

Contract awarded to a known entity (McDonnell Douglas Helicopter Company) with potential expertise in the field.
Fixed fee component provides some cost predictability for the government, unlike pure cost-plus contracts.
R&D focus suggests investment in future capabilities, potentially yielding long-term strategic advantages.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically under NAICS code 541710 for Physical, Engineering, and Life Sciences. The R&D sector is characterized by innovation, high upfront investment, and often long development cycles. Government spending in this area is crucial for technological advancement, particularly in defense, where cutting-edge capabilities are essential. Comparable spending benchmarks are difficult to establish for unique R&D projects, but overall federal R&D spending is substantial, with defense R&D being a significant portion.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The award to a large prime contractor like McDonnell Douglas Helicopter Company suggests that subcontracting opportunities for small businesses may exist, but these are not explicitly mandated by the contract terms provided. The impact on the small business ecosystem would depend on the extent to which the prime contractor engages small businesses for specialized services or supplies.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. DCMA is responsible for ensuring contractor compliance with contract terms, monitoring performance, and verifying costs. The cost-plus-fixed-fee structure necessitates close financial oversight to prevent cost overruns and ensure the fixed fee remains appropriate. Transparency regarding R&D outcomes and expenditures would be subject to government reporting requirements and potentially Inspector General reviews.

Related Government Programs

Defense Research and Development Programs
Advanced Helicopter Technology Development
Aerospace Engineering Services
Department of Defense Research Contracts

Risk Flags

Sole-source award
Cost-plus contract type
R&D inherent uncertainty

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.2 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. EATTS2 - COST PLUS FIXED FEE TO22 YJ

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $45.2 million.

What is the period of performance?

Start: 2010-09-22. End: 2015-12-31.

What specific R&D objectives was this contract intended to achieve?

The provided data does not specify the exact R&D objectives. However, given the contractor (McDonnell Douglas Helicopter Company) and the R&D focus (NAICS 541710), it is highly probable that the contract aimed to advance technologies related to helicopter design, performance, materials, or operational capabilities for defense applications. Such objectives could include improving speed, maneuverability, stealth, payload capacity, or developing new sensor integration. Without access to the contract statement of work or related documentation, the precise goals remain speculative but are certainly within the realm of advanced aerospace engineering and defense technology.

How does the cost-plus-fixed-fee structure compare to other R&D contract types in terms of risk and incentive?

The Cost-Plus-Fixed-Fee (CPFF) structure is common for R&D where the scope of work is not fully defined at the outset, making fixed-price contracts impractical. In CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee. This structure shifts some cost risk to the government, as it covers all allowable costs. The fixed fee provides the contractor with an incentive to control costs, as it does not increase with higher expenditures. However, compared to fixed-price incentive contracts, CPFF offers less incentive for aggressive cost reduction. It balances the need for flexibility in R&D with a degree of cost control, but requires robust government oversight to manage potential cost growth.

What is the typical track record of McDonnell Douglas Helicopter Company with DoD R&D contracts?

McDonnell Douglas Helicopter Company, now part of Boeing, has a long history of developing and producing helicopters for military applications. Their track record with DoD R&D contracts would likely include numerous successful projects contributing to advancements in rotorcraft technology. While specific details of past R&D performance are not in the provided data, the company's established presence in the defense sector suggests a significant level of expertise and experience. Assessing their specific performance on this particular $45.2 million contract would require reviewing project milestones, deliverables, and any documented performance evaluations or disputes.

Are there any publicly available performance reports or evaluations for this specific contract?

The provided data does not contain information on publicly available performance reports or evaluations for this specific contract (EATTS2 - COST PLUS FIXED FEE TO22 YJ). Such reports, if they exist, would typically be found in government contract databases like the Federal Procurement Data System (FPDS) or through agency-specific transparency portals. However, detailed R&D performance metrics and evaluations are often considered sensitive or proprietary, especially for defense-related projects, and may not be readily accessible to the public. Further investigation through official government procurement channels would be necessary.

What are the potential risks associated with a sole-source R&D award of this magnitude?

A sole-source R&D award of this magnitude carries several risks. Firstly, the lack of competition means the government may not have secured the best possible price or the most innovative solution available in the market. Secondly, without competitive pressure, the contractor might have less incentive to aggressively manage costs or expedite development, potentially leading to budget overruns or delays. Thirdly, R&D inherently involves uncertainty; if the project fails to yield the desired technological advancements, the entire $45.2 million investment could be considered a loss. Finally, sole-source awards can sometimes raise concerns about fairness and the equitable distribution of government contracts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 5000 E MCDOWELL RD, MESA, AZ, 85215

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $46,433,167

Exercised Options: $45,233,167

Current Obligation: $45,233,167

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W911W607D0002

IDV Type: IDC

Timeline