DoD's $298.6M Aircraft Manufacturing Contract with McDonnell Douglas Helicopter Company Lacked Competition

Contract Overview

Contract Amount: $298,579,826 ($298.6M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2001-11-15

End Date: 2013-04-30

Contract Duration: 4,184 days

Daily Burn Rate: $71.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Plain-Language Summary

Department of Defense obligated $298.6 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: Key points: 1. Significant spending of $298.6 million on aircraft manufacturing. 2. Sole-source award to McDonnell Douglas Helicopter Company indicates limited competition. 3. Long contract duration (2001-2013) may impact price competitiveness over time. 4. Lack of competition raises concerns about potential overpayment and value for taxpayer money.

Value Assessment

Rating: questionable

The contract value is substantial at $298.6 million. Without competitive bidding, it's difficult to assess if the pricing is fair or reflects market rates for aircraft manufacturing. Benchmarking against similar sole-source contracts would be necessary for a more accurate valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits price discovery and may lead to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: The absence of competition for a nearly $300 million contract suggests taxpayers may have paid a premium, as the government did not leverage market forces to secure the best possible price.

Public Impact

Taxpayers funded a large contract for aircraft manufacturing without competitive bidding. The long duration of the contract could mean outdated technology or pricing by the end of its term. Lack of transparency in pricing due to sole-source award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of competition
No small business participation reported

Positive Signals

Firm Fixed Price contract type can provide cost certainty

Sector Analysis

This contract falls under Aircraft Manufacturing, a sector often characterized by high technical complexity and specialized production capabilities. Spending benchmarks in this area can vary widely based on the specific aircraft type and technological advancements.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. This represents a missed opportunity to support small business growth within the defense industrial base.

Oversight & Accountability

The sole-source nature of this contract warrants scrutiny regarding the justification for not seeking competitive bids. Oversight should focus on ensuring the necessity of this approach and the fairness of the negotiated price.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition
Sole-source award justification
Long contract duration
No reported small business participation
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $298.6 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. See the official description on USAspending.

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 $298.6 million.

What is the period of performance?

Start: 2001-11-15. End: 2013-04-30.

What was the justification for awarding this significant aircraft manufacturing contract on a sole-source basis?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that cannot be met by other sources. Without specific documentation, it's presumed the Department of the Army determined McDonnell Douglas Helicopter Company was the only viable option, potentially due to specialized expertise or existing platform integration.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risks include inflated pricing due to lack of competition, potential for vendor complacency leading to lower quality or less innovation, and the government's reduced leverage in negotiating terms. Over a long duration, the technology could become outdated, and the fixed price might not reflect evolving market conditions or cost efficiencies.

How can the effectiveness of this contract be assessed given the lack of competitive benchmarks?

Effectiveness is difficult to gauge solely on price. It would need to be evaluated against performance metrics, delivery schedules, and the operational utility of the aircraft produced. Post-award audits and comparisons with similar, albeit potentially non-competitive, procurements could offer some insights into value realization.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $299,524,379

Current Obligation: $298,579,826

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline