DoD awards $30M for Apache helicopter parts, raising questions about competition and value

Contract Overview

Contract Amount: $29,988,000 ($30.0M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2007-09-26

End Date: 2009-05-31

Contract Duration: 613 days

Daily Burn Rate: $48.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Defense

Official Description: APACHE SPARES.

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $30.0 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: APACHE SPARES. Key points: 1. Contract awarded without competition, potentially limiting price discovery. 2. Significant contract value for specialized aircraft parts. 3. Limited transparency on the specific components and their necessity. 4. Long contract duration suggests ongoing support requirements. 5. Contractor has a history with military helicopter production. 6. Geographic concentration of contract performance in Arizona.

Value Assessment

Rating: questionable

The contract value of $29.99 million for Apache spares is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The fixed-price redetermination contract type suggests that costs were estimated and will be adjusted, which can introduce uncertainty. Further analysis would be needed to determine if the final price reflects fair market value.

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 lack of competition means that the government did not explore potential alternative suppliers or negotiate based on multiple offers. The absence of competition can lead to higher prices and reduced innovation.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure to drive down costs.

Public Impact

Benefits the Department of the Army by ensuring the availability of critical spare parts for Apache helicopters. Supports the operational readiness of aviation units within the Army. Primarily impacts the aerospace manufacturing sector, specifically in Arizona. Maintains specialized manufacturing capabilities for military aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Fixed-price redetermination contract type introduces cost uncertainty.
Lack of detailed public information on specific parts and justification for sole-sourcing.

Positive Signals

Contract awarded to a known manufacturer with experience in Apache helicopter systems.
Ensures continued availability of critical spare parts for a key military asset.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized military aircraft components is often characterized by high barriers to entry and a limited number of qualified suppliers. Spending in this area is critical for maintaining military readiness, but the specialized nature can sometimes lead to less competitive environments.

Small Business Impact

There is no indication that this contract included small business set-asides or subcontracting requirements. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless the prime contractor voluntarily engages them for subcontracting. Further investigation into the prime's subcontracting plan would be necessary.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. The effectiveness of oversight depends on the diligence of contracting officers in monitoring performance and costs, especially given the fixed-price redetermination nature. Transparency is limited by the sole-source award and the proprietary nature of spare parts pricing.

Related Government Programs

Apache Helicopter Modernization Programs
Department of Defense Aircraft Maintenance and Repair
Military Aviation Spare Parts Procurement
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns due to FPR contract type
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.0 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. APACHE SPARES.

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 $30.0 million.

What is the period of performance?

Start: 2007-09-26. End: 2009-05-31.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. A sole-source award typically occurs when only one responsible source is available or capable of meeting the requirement. For specialized military aircraft parts, this could be due to proprietary designs, unique manufacturing processes, or the original equipment manufacturer (OEM) being the only entity with the necessary technical data and tooling. Without further documentation from the agency, the precise justification remains unclear, but it is often rooted in technical necessity or the lack of viable alternatives in the market for such specific components.

How does the fixed-price redetermination contract type impact cost certainty for the government?

A fixed-price redetermination (FPR) contract establishes an initial price that is subject to adjustment based on actual costs incurred. This type of contract is often used when costs are uncertain at the outset, such as with new or complex products. For the government, it offers some price ceiling protection initially but introduces uncertainty as the final price is not fixed until costs are determined. This requires robust monitoring and auditing by the contracting agency to ensure the redetermined price is fair and reasonable, preventing potential overpayment compared to a firm fixed-price contract where the price is set upfront.

What is the historical spending pattern for Apache helicopter spare parts from this contractor?

The provided data only details this specific contract awarded in 2007. To understand historical spending patterns, one would need to access broader contract databases and analyze all awards made to McDonnell Douglas Helicopter Company (and its successors) for Apache spares over time. This would involve looking at contract values, quantities, types, and competition levels for similar items. Without this broader dataset, it's impossible to establish a historical trend or benchmark this $30 million award against past procurement activities for these specific parts.

What are the potential risks associated with a sole-source award for critical military components?

Sole-source awards for critical military components carry several risks. Primarily, the lack of competition can lead to inflated prices, as the contractor faces no pressure to offer the most cost-effective solution. It also reduces the government's leverage in negotiations. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the sole source experiences production issues, delays, or ceases operations, the military's ability to maintain its assets could be severely impacted. This also limits opportunities for innovation and the development of alternative, potentially superior, or more affordable components from other manufacturers.

How does the contract duration of 613 days compare to typical support cycles for such parts?

A contract duration of 613 days (approximately 20 months) for spare parts suggests a medium-term supply requirement. Typical support cycles for military aircraft components can vary significantly depending on the part's criticality, obsolescence, and the overall lifespan of the aircraft platform. For high-demand, relatively standard spares, shorter durations might be expected, while for less common or newly developed components, longer durations could be justified. Without knowing the specific parts covered and their usage rates, it's difficult to definitively assess if 613 days is typical, but it indicates a sustained need rather than an immediate, short-term procurement.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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

Financial Breakdown

Contract Ceiling: $29,988,000

Exercised Options: $29,988,000

Current Obligation: $29,988,000

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: DAAH2303D0162

IDV Type: IDC

Timeline