Army awards $46M contract for helicopter rotor blades, drive mechanisms, and components to McDonnell Douglas

Contract Overview

Contract Amount: $51,750,073 ($51.8M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2005-04-22

End Date: 2008-08-31

Contract Duration: 1,227 days

Daily Burn Rate: $42.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Defense

Official Description: 200507!003511!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!DAAH2303D0162 !A!N! !N!0044 ! !20050422!20071231!047800297!006265946!009256819!N!DOUGLAS MCDONNELL HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000051750073!N!N!000000000000!1615!HELICOPTER ROTOR BLADES, DRIVE MECHANISMS & COMPON!A1A!AIRFRAMES AND SPARES !000 !* !336413!E! !5!B!M! !C! !20200930!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 $51.8 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: 200507!003511!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!DAAH2303D0162 !A!N! !N!0044 ! !20050422!20071231!047800297!006265946!009256819!N!DOUGLAS MCDONNELL HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARI… Key points: 1. Contract awarded for critical helicopter components, indicating a need for specialized aviation parts. 2. The contract was not competed, raising questions about potential cost efficiencies and market exploration. 3. The fixed-price redetermination contract type suggests potential for cost adjustments during performance. 4. The award duration of 1227 days indicates a long-term need for these specific helicopter parts. 5. The contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, highlighting a niche industrial sector.

Value Assessment

Rating: fair

The contract value of $46 million for helicopter rotor blades and related components appears within a reasonable range for specialized aerospace manufacturing. However, without specific details on the quantity and technical specifications of the parts, a precise value-for-money assessment is challenging. The fixed-price redetermination structure implies that initial pricing may be adjusted, which could lead to cost overruns if not managed carefully. Benchmarking against similar sole-source awards for comparable components would be necessary for a more definitive valuation.

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 vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when there is an urgent need that cannot be met through a competitive process. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from a bidding process.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is less pressure on the contractor to offer the most competitive pricing. It also limits opportunities for other businesses to secure government contracts.

Public Impact

The primary beneficiaries are likely military aviation units requiring these specific helicopter components for operational readiness. The contract delivers essential parts for helicopter maintenance and repair, ensuring the continued functionality of aircraft. The geographic impact is primarily centered around Mesa, Arizona, where McDonnell Douglas Helicopter Company is located. The contract supports jobs within the aerospace manufacturing sector, specifically in the production of helicopter parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing for taxpayers.
Fixed-price redetermination contract type introduces cost uncertainty.
Sole-source award limits market exploration and potential for innovation from other vendors.

Positive Signals

Award ensures supply of critical helicopter components for military operations.
Contract supports a specific manufacturing capability within the aerospace industry.
Long contract duration suggests a sustained need and potential for stable production.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) encompasses a broad range of components beyond engines and airframes. The market for such specialized parts is often characterized by high barriers to entry due to technical expertise, certifications, and established relationships with prime contractors or government agencies. Spending in this sub-sector is driven by military readiness requirements and the lifecycle of existing aircraft fleets.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a sole-source award to a large aerospace manufacturer, it is unlikely to involve significant subcontracting opportunities for small businesses unless specified by the prime contractor. The absence of a set-aside means that small businesses in this specialized manufacturing niche did not have a direct opportunity to compete for this specific award, potentially limiting their access to this segment of government contracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management office within the Department of the Army. The fixed-price redetermination nature of the contract necessitates close monitoring of costs and performance to ensure that the final price is fair and reasonable. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Inspector General could be employed to ensure accountability.

Related Government Programs

Army Aviation and Missile Command Contracts
Helicopter Component Procurement
Aerospace Manufacturing Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Fixed-price redetermination introduces cost uncertainty.
Long contract duration increases exposure to market volatility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.8 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. 200507!003511!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!DAAH2303D0162 !A!N! !N!0044 ! !20050422!20071231!047800297!006265946!009256819!N!DOUGLAS MCDONNELL HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000051750073!N!N!000000000000!1615!HELICOPTER ROTOR BLADES, DRIVE MECHANISMS & COMPON!A1A!AIRFRAMES AND SPARES !000 !* !336413!E! !5!B!M! !C! !202

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 $51.8 million.

What is the period of performance?

Start: 2005-04-22. End: 2008-08-31.

What is the specific technical nature of the 'helicopter rotor blades, drive mechanisms & components' being procured under this contract?

The data indicates the contract (DAAH2303D0162) is for 'HELICOPTER ROTOR BLADES, DRIVE MECHANISMS & COMPON' under NAICS code 336413. This code covers 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' While the specific technical details are not provided in the abbreviated data, it implies the procurement of critical sub-assemblies and parts essential for the operational function of helicopter rotor systems. This could include main rotor blades, tail rotor blades, swashplates, rotor hubs, drive shafts, gearboxes, and associated hardware. The complexity and precision required for these components are characteristic of the aerospace industry, demanding high standards of material science, engineering, and manufacturing.

Why was this contract awarded on a sole-source basis instead of being competed?

The provided data explicitly states the contract type as 'NOT COMPETED' and identifies the awardee as 'MCDONNELL DOUGLAS HELICOPTER COMPANY'. While the specific justification for the sole-source award is not detailed in the abbreviated data, common reasons for such awards in defense contracting include: unique proprietary technology or design held by the contractor, a critical and urgent need where a competitive process would cause unacceptable delays, or the contractor being the only source capable of meeting the specialized requirements. Without further documentation, it's presumed that one of these justifications was formally accepted by the procuring agency (Department of the Army).

What are the potential risks associated with a 'Fixed Price Redetermination' contract type for these components?

A Fixed Price Redetermination (FPR) contract type, as indicated for this award, presents specific risks. Initially, a target price is established, and the contractor is reimbursed for actual costs plus a fee. However, the final price is subject to negotiation and redetermination after a specified period or upon completion of a certain percentage of the work. The primary risk for the government is that the final negotiated price could be significantly higher than the initial target price, especially if costs escalate unexpectedly due to factors like material price increases, labor cost fluctuations, or unforeseen technical challenges. This uncertainty can make budget forecasting more difficult and potentially lead to higher overall expenditure compared to a firm fixed-price contract, although it can be beneficial when cost uncertainties are high at the outset.

How does the contract duration of 1227 days impact the overall value and risk?

The contract duration of 1227 days (approximately 3 years and 5 months, from May 2005 to August 2008) suggests a long-term requirement for these helicopter components. A longer duration can offer benefits such as production stability and potential economies of scale for the contractor, which could translate into more predictable pricing over time. However, it also increases the exposure to market volatility, such as fluctuations in raw material costs (e.g., specialized metals or composites used in rotor blades) and labor rates over the contract period. For the government, a long duration requires sustained funding and commitment, and it extends the period during which cost overruns associated with the redetermination clause could occur. It also means the technology or design might become dated before the contract concludes.

What is the historical spending pattern for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of the Army?

The provided data snippet focuses on a single contract award. To understand historical spending patterns for NAICS code 336413 ('Other Aircraft Parts and Auxiliary Equipment Manufacturing') by the Department of the Army, a broader analysis of federal procurement databases would be necessary. This would involve querying contract awards over several fiscal years, filtering by the specific agency (Department of the Army) and the relevant NAICS code. Such an analysis would reveal trends in total spending, average contract values, common awardees, and the prevalence of different contract types (e.g., competitive vs. sole-source). Without this broader dataset, it's impossible to contextualize the $46 million award within the Army's historical procurement activities for this category.

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

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION (A)

Evaluated Preference: NONE

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