Army awards $37.2M for Apache helicopter parts, citing sole-source justification

Contract Overview

Contract Amount: $37,240,000 ($37.2M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2007-12-31

End Date: 2011-09-30

Contract Duration: 1,369 days

Daily Burn Rate: $27.2K/day

Competition Type: NOT COMPETED

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 $37.2 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: APACHE SPARES. Key points: 1. Contract awarded to McDonnell Douglas Helicopter Company for essential Apache helicopter components. 2. Sole-source award raises questions about potential lack of competitive pricing. 3. Long contract duration (1369 days) may indicate complex supply chain or sustained need. 4. Focus on spare parts suggests a critical role in maintaining operational readiness. 5. Awarded under the 'Other Aircraft Parts' manufacturing NAICS code. 6. Geographic location of performance in Arizona noted.

Value Assessment

Rating: questionable

The contract value of $37.2 million for Apache spares is difficult to benchmark without specific part details and quantities. However, the absence of competition inherently limits the ability to assess if the government received the best possible value. Without comparative pricing from other potential suppliers, it's challenging to determine if the fixed-price redetermination structure yielded optimal cost savings. The contract's duration suggests a significant volume of parts, making price efficiency a key concern.

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. The justification for sole-sourcing is not detailed in the provided data, but typically involves reasons such as unique capabilities, proprietary technology, or urgent needs where competition is not feasible. The lack of multiple bidders means there was no direct price comparison, potentially leading to higher costs than if the contract had been competed.

Taxpayer Impact: Sole-source awards can result in higher prices for taxpayers as the government does not benefit from the cost-saving pressures of a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Army aviation units relying on Apache helicopters for combat and support missions. The contract delivers critical spare parts necessary for the maintenance and operational readiness of the Apache fleet. Services are performed in Arizona, potentially supporting local jobs and the aerospace supply chain in that region. Ensures the continued availability of a key military asset, impacting national defense capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Fixed-price redetermination contract type requires careful monitoring to ensure fair pricing.
Long contract duration may obscure potential inefficiencies or cost overruns.
Lack of detailed justification for sole-sourcing raises transparency concerns.

Positive Signals

Addresses a critical need for Apache helicopter spare parts, ensuring operational readiness.
Awarded to a known entity in helicopter manufacturing, potentially leveraging existing expertise.
Contract performance is tied to a specific geographic location (Arizona).

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for military aircraft spares is often characterized by specialized manufacturers and long-standing relationships with government agencies. While the broader aircraft parts manufacturing industry is substantial, contracts for specific military platforms like the Apache are typically awarded to a limited number of qualified suppliers, often with significant barriers to entry due to technical requirements and security clearances. Benchmarking spending in this niche requires comparison to similar sole-source or limited-competition awards for specialized military aircraft components.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false) and there is no information on subcontracting plans (sb: false). As a sole-source award to a large prime contractor, it is unlikely to directly benefit small businesses through set-asides. However, the prime contractor may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed. The impact on the broader small business ecosystem is likely minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Given the sole-source nature, scrutiny may focus on the justification for the award and the administration of the fixed-price redetermination terms to ensure fair and reasonable pricing. Transparency is limited by the lack of competitive bidding, and specific Inspector General (IG) involvement would depend on identified issues or audits related to performance or cost.

Related Government Programs

Apache Attack Helicopter Program
Department of Defense Aviation Procurement
Military Aircraft Spare Parts Procurement
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for non-competitive pricing
Fixed-price redetermination requires careful oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.2 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 $37.2 million.

What is the period of performance?

Start: 2007-12-31. End: 2011-09-30.

What is the specific justification provided by the Department of the Army for awarding this contract on a sole-source basis to McDonnell Douglas Helicopter Company?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source is available or capable of meeting the agency's needs. Reasons can include proprietary data rights, unique technical capabilities, urgent and compelling requirements, or the existence of a critical defense supply base. Without the official justification document, it is impossible to ascertain the precise rationale. However, for specialized military aircraft components like those for the Apache, it is common for a single manufacturer or a very limited number of entities to possess the necessary technical expertise, tooling, and security clearances.

How does the 'Fixed Price Redetermination' (FPR) contract type function in this context, and what are its implications for cost control?

A Fixed Price Redetermination (FPR) contract establishes an initial price that is subject to revision later, based on actual costs incurred. In this case, the initial price for the Apache spares would have been set, but it could be adjusted upwards or downwards after the contract is completed or at specified milestones, based on the contractor's demonstrated costs. This type of contract aims to balance the risk between the government and the contractor. It's often used when cost uncertainties are high at the outset. For cost control, the government relies on the redetermination clause to ensure the final price reflects actual, reasonable, and allowable costs. Effective administration and auditing of the contractor's cost data are crucial for the government to prevent excessive pricing.

What is the historical spending pattern for Apache helicopter spare parts by the Department of the Army, and how does this $37.2M award compare?

The provided data snippet focuses solely on this single $37.2 million contract awarded in late 2007. To understand historical spending patterns, one would need to analyze a broader dataset encompassing all Apache spare parts procurements over several years. This would involve looking at the total annual spending on Apache sustainment, the number of contracts awarded, their types (competed vs. sole-source), and the average value per contract. Without this broader context, it's impossible to definitively state how this $37.2 million award compares. It could represent a significant portion of annual spending or a routine replenishment order, depending on the overall sustainment budget and fleet size.

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

The primary risk of a sole-source award for critical military components is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government may pay a higher price than necessary. Other risks include reduced innovation, as the sole provider may have less incentive to improve efficiency or offer new solutions. There's also a dependency risk; if the sole provider faces production issues, financial instability, or decides to exit the market, the government could face significant supply chain disruptions for essential parts. Furthermore, the lack of transparency inherent in sole-source justifications can sometimes mask underlying issues or inefficiencies.

Are there any known performance issues or track record concerns with McDonnell Douglas Helicopter Company (now part of Boeing) regarding previous contracts for Apache helicopter parts?

McDonnell Douglas Helicopter Company, now integrated into Boeing, has a long history of producing and supporting Apache helicopters. While specific performance issues related to this particular $37.2 million contract for spares are not detailed in the provided data, large defense contractors generally have a mixed record across their extensive portfolios. Boeing, as the successor entity, has faced scrutiny on various programs for cost overruns, schedule delays, and performance issues. However, for critical components like Apache spares, the focus is often on ensuring consistent supply and quality. A thorough assessment would require reviewing contract performance reports, past performance evaluations, and any documented disputes or corrective actions related to McDonnell Douglas/Boeing's supply of Apache parts over the years.

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

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

Financial Breakdown

Contract Ceiling: $37,240,000

Exercised Options: $37,240,000

Current Obligation: $37,240,000

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: DAAH2303D0162

IDV Type: IDC

Timeline