DoD awards $350M for Apache helicopter manufacturing, with significant portion for Longbow systems

Contract Overview

Contract Amount: $349,885,152 ($349.9M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2002-12-23

End Date: 2011-11-30

Contract Duration: 3,264 days

Daily Burn Rate: $107.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200303!000576!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303C0028 !A!N! !N! !20021223!20071230!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000022344413!Y!N!000000000000!1520!AIRCRAFT ROTARY WING !A1C!OTHER AIRCRAFT EQUIPMENT !1AIG!LONGBOW APACHE !336411!E! !1! ! ! ! ! !99990909!B! ! !N!Z!B!Y!J!1!001!N!4A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!* !A!D!N! ! ! ! ! ! !0001! !

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $349.9 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: 200303!000576!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303C0028 !A!N! !N! !20021223!20071230!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARIC… Key points: 1. Contract awarded to McDonnell Douglas Helicopter Company for aircraft manufacturing. 2. Significant portion of the contract value is tied to the Longbow Apache system. 3. The contract duration spans over 9 years, indicating a long-term production need. 4. Fixed-price contract type suggests cost certainty for the government. 5. The contract was not competed, raising questions about potential cost efficiencies. 6. Geographic location of the contractor is Mesa, Arizona.

Value Assessment

Rating: fair

The total award of approximately $350 million over a 9-year period for Apache helicopter manufacturing appears substantial. Without specific details on the number of units or configurations, a direct value-for-money assessment is challenging. However, the fixed-price nature of the contract provides some cost predictability. Benchmarking against similar large-scale defense manufacturing contracts would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This could be due to specialized manufacturing capabilities, proprietary technology, or a specific program requirement where only one contractor could fulfill the need. The lack of competition means there was no direct price comparison or incentive for multiple bidders to offer their best pricing, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding, as the government did not benefit from the price discovery mechanisms inherent in a competitive procurement process.

Public Impact

The U.S. Army is the primary beneficiary, receiving advanced Apache helicopters. Services delivered include the manufacturing and production of rotary-wing aircraft, specifically the Longbow Apache. The geographic impact is concentrated in Mesa, Arizona, where the contractor is located, supporting local employment and the regional economy. Workforce implications include skilled labor in aerospace manufacturing, engineering, and assembly within the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Long contract duration could expose the government to risks if market conditions or technology change significantly.
Sole-source awards can limit opportunities for other capable manufacturers to enter the market.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Award to an established manufacturer suggests a focus on reliable production.
Long-term award may ensure a steady supply of critical defense assets.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a significant segment of the U.S. industrial base. The production of advanced attack helicopters like the Apache is a high-value, technology-intensive activity. Comparable spending benchmarks would involve other large-scale defense procurement contracts for major weapon systems, where costs can run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

There is no explicit indication of small business set-asides or subcontracting plans within the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is unclear. However, large defense contractors often utilize a network of small business suppliers for components and services, so there could be indirect subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and oversight bodies, such as the Defense Contract Management Agency (DCMA). Accountability measures would be defined by the contract terms and conditions, including performance metrics and delivery schedules. Transparency is generally limited for sole-source defense contracts, with details often classified or restricted.

Related Government Programs

Apache Helicopter Program
Aviation and Missile Command Contracts
Longbow Fire Control Radar Systems
Rotary Wing Aircraft Procurement
Defense Manufacturing Contracts

Risk Flags

Sole-source award
Long contract duration
Lack of detailed performance metrics in summary data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $349.9 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. 200303!000576!2100!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2303C0028 !A!N! !N! !20021223!20071230!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000022344413!Y!N!000000000000!1520!AIRCRAFT ROTARY WING !A1C!OTHER AIRCRAFT EQUIPMENT !1AIG!LONGBOW APACHE !336411!E! !1! ! ! ! ! !99990909!B

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $349.9 million.

What is the period of performance?

Start: 2002-12-23. End: 2011-11-30.

What is the specific breakdown of the $350 million award for the Longbow Apache helicopter production?

The provided data indicates a total award amount of $349,885,152.08 for contract DAAH2303C0028. While the data specifies the Product Service Code (PSC) as '1520 AIRCRAFT ROTARY WING' and identifies the item as 'LONGBOW APACHE', it does not offer a granular breakdown of how this total amount is allocated across different components, labor, or specific configurations of the Longbow Apache system. This level of detail would typically be found in the contract's statement of work or detailed pricing proposals, which are not publicly available in this summary.

What is the historical spending trend for similar Apache helicopter manufacturing contracts awarded by the U.S. Army?

Historical spending on Apache helicopter manufacturing contracts has been substantial, reflecting the platform's long service life and continuous upgrades. The U.S. Army has consistently invested in the AH-64 Apache, including variants like the AH-64D and AH-64E, over several decades. Major production contracts have often been multi-year, firm-fixed-price agreements awarded to prime contractors like McDonnell Douglas (now Boeing). While specific historical dollar figures for comparable contracts are not detailed here, the cumulative investment in the Apache program runs into many billions of dollars, encompassing initial procurement, upgrades, and sustainment efforts.

What are the key performance indicators (KPIs) or metrics used to assess the performance of McDonnell Douglas Helicopter Company on this contract?

The provided data does not specify the key performance indicators (KPIs) or metrics used to assess McDonnell Douglas Helicopter Company's performance on this particular contract. Typically, defense contracts include clauses related to on-time delivery, quality standards (e.g., defect rates), adherence to technical specifications, and cost control. Performance assessments are usually conducted by the contracting officer and may influence future contract awards or incentive structures. Without access to the contract's specific terms and conditions or performance reports, these KPIs remain unknown.

What is the rationale behind awarding this contract on a sole-source basis rather than through full and open competition?

The rationale for awarding this contract on a sole-source basis is not explicitly detailed in the provided summary data. However, sole-source procurements in the defense sector often occur when there is only one responsible source capable of meeting the government's requirements. This could be due to unique manufacturing capabilities, proprietary technology, specialized tooling, or the need for commonality with existing systems. For complex platforms like the Apache, maintaining production continuity with the original manufacturer or a designated successor is often prioritized, potentially overriding the benefits of competition.

How does the $350 million award compare to the overall U.S. Army aviation procurement budget for the fiscal years it covers?

The $350 million award for Apache helicopter manufacturing represents a significant, but not overwhelming, portion of the U.S. Army's aviation procurement budget over its multi-year duration. The Army's annual aviation procurement budgets typically range from several billion to tens of billions of dollars, depending on strategic priorities and fiscal constraints. While this specific contract is substantial for the Apache program, it would be one of many investments the Army makes in rotary-wing aircraft, fixed-wing assets, and unmanned systems. A precise comparison would require analyzing the Army's specific budget allocations for aviation procurement during the contract's performance period (2002-2011).

What are the potential risks associated with a long-term, sole-source contract for aircraft manufacturing?

Long-term, sole-source contracts for aircraft manufacturing carry several potential risks. Firstly, the lack of competition can lead to higher prices and reduced incentive for innovation or efficiency improvements by the contractor. Secondly, the government becomes heavily reliant on a single supplier, creating vulnerability if the contractor faces financial difficulties, production issues, or decides to exit the market. Thirdly, over a long duration, the technology or operational requirements might evolve, making the contracted system less relevant or requiring costly modifications. Finally, without competitive pressure, there's a risk of complacency in quality or performance.

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

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, 04

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline