DoD's $404M contract for aircraft components awarded to McDonnell Douglas Helicopter Company, with a 13-year duration

Contract Overview

Contract Amount: $404,192,347 ($404.2M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2001-03-23

End Date: 2014-03-31

Contract Duration: 4,756 days

Daily Burn Rate: $85.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200506!001162!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!DAAH2301C0092 !A!N! !N! !P00027!20050323!20040331!047800297!006265946!009256819!N!DOUGLAS MCDONNELL HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !-000000032378!Y!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1A!AIRFRAMES AND SPARES !000 !* !336411!E! !3! ! !D! ! !20200930!B! ! !A! !D!N!J!1!001!N!1G!Z!Y!A! ! !N!C!N! ! ! !Z!Z!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $404.2 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: 200506!001162!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!DAAH2301C0092 !A!N! !N! !P00027!20050323!20040331!047800297!006265946!009256819!N!DOUGLAS MCDONNELL HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARI… Key points: 1. The contract value of $404M over 13 years suggests a significant but potentially high per-year cost for aircraft components. 2. Awarded as 'NOT COMPETED', this raises questions about the absence of competitive bidding and potential price impacts. 3. The long contract duration of over 13 years could indicate a stable, long-term need for these components. 4. The 'DEFINITIVE CONTRACT' type implies a single, established agreement rather than multiple task orders. 5. The primary product code '336411' points to a focus on Airframe Structural Components, a critical part of aircraft. 6. The contractor, McDonnell Douglas Helicopter Company, has a substantial history in defense contracting.

Value Assessment

Rating: fair

The total contract value of $404M over approximately 13 years averages to about $31M per year. Without specific details on the quantity and type of airframe structural components, a direct value-for-money assessment is challenging. However, given the specialized nature of aircraft components and the long-term commitment, the price may be reasonable if it reflects market rates for such critical parts. Benchmarking against similar sole-source or non-competed contracts for specialized aerospace components would be necessary for a more definitive valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED', indicating that a competitive bidding process was not utilized. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or when there are urgent needs that preclude a full solicitation. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the government did not benefit from multiple offers driving down prices.

Public Impact

The U.S. Army benefits from the supply of essential airframe structural components, crucial for maintaining its aviation fleet. This contract ensures the availability of critical parts for aircraft maintenance, repair, and potentially new production. The geographic impact is primarily within Arizona, where McDonnell Douglas Helicopter Company is located, potentially supporting local jobs and the regional economy. The contract supports the defense industrial base, specifically within the aircraft manufacturing sector, sustaining specialized manufacturing capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
The long duration of the contract could lead to complacency or reduced incentive for innovation from the contractor.
Reliance on a single source for critical components can create supply chain vulnerabilities.
Limited transparency due to non-competitive award makes it difficult to assess the fairness of the price.

Positive Signals

The long-term award suggests a stable and reliable supply of critical aircraft components for the Department of Defense.
The contractor's established presence in aircraft manufacturing indicates expertise and capability in producing these components.
A definitive contract provides a clear framework for a long-standing relationship, potentially streamlining procurement processes.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically focusing on aircraft manufacturing and component supply. The market for airframe structural components is highly specialized, often dominated by a few key players due to the stringent quality, safety, and technological requirements. Spending in this area is critical for national defense, supporting the operational readiness of military aviation assets. Comparable spending benchmarks would typically involve analyzing other large, long-term contracts for similar specialized components within the DoD.

Small Business Impact

There is no indication from the provided data that this contract included small business set-asides or subcontracting requirements. As a large, non-competed award to a major defense contractor, the direct impact on small businesses is likely minimal unless McDonnell Douglas Helicopter Company voluntarily engages them for subcontracting. Further investigation into subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Given it's a definitive contract, oversight would focus on ensuring compliance with contract terms, delivery schedules, and quality standards. Transparency is limited due to the non-competitive nature of the award. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Manufacturing
Airframe Components
Defense Procurement
U.S. Army Aviation Programs
Aerospace Supply Chain

Risk Flags

Non-competitive award
Long contract duration
Lack of detailed performance data
Potential for price escalation over time

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $404.2 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. 200506!001162!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!DAAH2301C0092 !A!N! !N! !P00027!20050323!20040331!047800297!006265946!009256819!N!DOUGLAS MCDONNELL HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !-000000032378!Y!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1A!AIRFRAMES AND SPARES !000 !* !336411!E! !3! ! !D! ! !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 $404.2 million.

What is the period of performance?

Start: 2001-03-23. End: 2014-03-31.

What is the specific nature and quantity of the 'AIRFRAME STRUCTURAL COMPONENTS' being procured under this contract?

The data identifies the Product Service Code (PSC) as '336411', which corresponds to 'Aircraft Structural Components'. However, the specific types, models, and quantities of these components are not detailed in the provided summary data. This level of detail is typically found in the contract's statement of work (SOW) or delivery schedules. Understanding the exact components is crucial for assessing the contract's necessity, the appropriateness of the price, and the technical risks involved. Without this information, it's difficult to determine if the $404 million expenditure is justified by the specific items being acquired.

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

The data explicitly states the contract was 'NOT COMPETED'. Common reasons for sole-source awards include the existence of unique capabilities or proprietary technology held by only one contractor, urgent and compelling needs that preclude a competitive process, or situations where only one responsible source exists. For McDonnell Douglas Helicopter Company, this could stem from specific design rights, specialized manufacturing processes, or integration requirements with existing platforms that only they can fulfill. A detailed justification for the sole-source award should exist within the contract file, outlining the specific rationale approved by the contracting authority.

How does the average annual cost of approximately $31 million compare to market rates for similar airframe structural components?

Benchmarking the average annual cost of $31 million is challenging without knowing the exact components and quantities. However, given the specialized nature of aerospace components and the fact that this was a sole-source award, the price might be at the higher end of the spectrum. A thorough comparison would require access to pricing data from other similar sole-source contracts for comparable components, or data from competitive solicitations if available. The absence of competition limits the ability to definitively state whether this price represents fair market value. The 'br' field shows a benchmark of 84986, but its context is unclear.

What are the potential risks associated with a 13-year definitive contract for critical aircraft components?

A 13-year definitive contract for critical components presents several risks. Firstly, there's the risk of price escalation over such a long period, especially if the contract doesn't include robust economic price adjustment clauses. Secondly, technological obsolescence is a concern; components designed today might be outdated or unsupported by future aircraft designs. Thirdly, the long-term commitment to a single supplier can reduce flexibility if requirements change or if a better alternative emerges. Finally, the lack of ongoing competition might disincentivize the contractor from maintaining optimal efficiency and cost control throughout the contract's life.

What is the track record of McDonnell Douglas Helicopter Company regarding performance on similar large defense contracts?

McDonnell Douglas Helicopter Company, now part of Boeing, has a long and extensive history of producing helicopters and related components for the U.S. military. While specific performance metrics for this particular contract (DAAH2301C0092) are not detailed in the provided data, the company's general track record in the defense sector is substantial. Historically, major defense contractors often face scrutiny regarding cost overruns and schedule delays on large programs. However, their continued success in securing significant contracts suggests a general capability to meet demanding military specifications. A deeper dive into contract performance databases and historical reviews would be needed for a precise assessment.

What is the significance of the 'DEFINITIVE CONTRACT' award type in this context?

A 'DEFINITIVE CONTRACT' is a fixed-price or cost-reimbursement contract that is fully funded and legally binding upon award. Unlike other contract types like 'Indefinite-Delivery/Indefinite-Quantity' (IDIQ) contracts, which allow for multiple orders over time, a definitive contract typically represents a single, comprehensive agreement for a specific scope of work or supply. In this case, it suggests a complete agreement was reached with McDonnell Douglas Helicopter Company for the specified airframe structural components, covering the entire duration and value, rather than a framework for future orders.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline