DoD's $401M contract for Apache helicopter engineering services awarded to McDonnell Douglas Helicopter Company

Contract Overview

Contract Amount: $401,091,114 ($401.1M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 1999-04-23

End Date: 2011-06-30

Contract Duration: 4,451 days

Daily Burn Rate: $90.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 199911!2100!1239!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2399C0111 !A!*!* !19990423!19990930!047800297!006265946!009256819!N!8V613!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !0001!+000000175000!Y!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !A1A!AIRFRAMES AND SPARES !1AIC!APACHE (AH-64) ADV ATTACK !3721!3!*!*!*!B!N!Z!B !N!J!1!001!N!4A!Z!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $401.1 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: 199911!2100!1239!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2399C0111 !A!*!* !19990423!19990930!047800297!006265946!009256819!N!8V613!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICO… Key points: 1. Contract awarded for engineering and technical services related to the Apache attack helicopter. 2. The contract was not competed, raising questions about potential cost savings. 3. A significant portion of the contract value was awarded to a single entity. 4. The contract duration spans over a decade, indicating a long-term need. 5. The services provided are critical for maintaining the operational readiness of a key military asset.

Value Assessment

Rating: questionable

The total contract value of $401 million over approximately 12 years represents a substantial investment. Without comparable contracts or detailed cost breakdowns, it is difficult to definitively assess value for money. The lack of competition suggests that pricing may not have been subjected to market pressures, potentially leading to higher costs than if it had been competed. Benchmarking this specific engineering service for Apache helicopters against similar contracts is challenging due to proprietary data and the specialized nature of the work.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential bidders. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process.

Taxpayer Impact: Sole-source awards can potentially result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure fair pricing and prevent potential overspending.

Public Impact

The primary beneficiaries are the U.S. Army, ensuring the continued operational readiness and support for its fleet of Apache attack helicopters. Services include engineering and technical support, crucial for maintaining the complex systems of the AH-64 Apache. The geographic impact is primarily within the United States, supporting military operations and maintenance facilities. Workforce implications include employment for engineers, technicians, and support staff at McDonnell Douglas Helicopter Company and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to inflated costs.
Long contract duration without re-competition limits opportunities for cost savings.
Sole-source award requires strong justification and oversight to ensure fair pricing.

Positive Signals

Contract supports a critical military asset (Apache helicopter).
McDonnell Douglas Helicopter Company likely possesses specialized knowledge for this platform.
Engineering services ensure continued operational capability and safety.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aviation support and engineering services. The market for specialized aviation engineering and maintenance is often characterized by a limited number of highly qualified contractors due to the technical expertise and security clearances required. Spending in this area is driven by the need to maintain aging fleets and integrate new technologies into complex aircraft platforms like the Apache.

Small Business Impact

Information regarding small business set-asides or subcontracting plans for this specific sole-source contract was not provided in the data. Typically, sole-source awards may have less emphasis on small business participation compared to competed contracts, unless specifically mandated by the contracting agency. Further investigation would be needed to determine if any small business goals were incorporated into this award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would include performance reviews, milestone tracking, and financial audits. Transparency is limited due to the sole-source nature, but contract modifications and performance reports should be available through official channels. The Inspector General's office would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Apache AH-64 Attack Helicopter Program
Aviation Engineering Services
Department of the Army Procurement
Defense Contract Management Agency

Risk Flags

Sole-source award
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $401.1 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. 199911!2100!1239!AH23 !USA AVIATION AND MISSILE COMMAND!DAAH2399C0111 !A!*!* !19990423!19990930!047800297!006265946!009256819!N!8V613!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !0001!+000000175000!Y!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !A1A!AIRFRAMES AND SPARES !1AIC!APACHE (AH-64) ADV ATTACK !3721!3!*!*!*!B!N!Z!B !N!J!1!0

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 $401.1 million.

What is the period of performance?

Start: 1999-04-23. End: 2011-06-30.

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

The provided data indicates the contract was 'NOT COMPETED'. Specific justifications for sole-source awards typically include factors such as the existence of only one responsible source, urgency of the requirement, or when the contract is a follow-on to a previous contract awarded competitively where only the original contractor can provide the necessary services or supplies. For this particular contract, the justification would likely stem from McDonnell Douglas Helicopter Company's unique expertise, proprietary data, or established role in the development and support of the Apache helicopter platform. Without explicit documentation of the justification, it is presumed that the Army determined that no other contractor could fulfill the requirement as effectively or efficiently.

How does the per-unit cost of these engineering services compare to industry benchmarks?

Determining a precise per-unit cost for these engineering and technical services is challenging without more granular data on the specific tasks performed and the labor categories involved. The contract is a firm-fixed-price type, but the total value of $401 million covers a broad scope over many years. Industry benchmarks for specialized aerospace engineering services can vary widely based on complexity, required expertise, and security demands. Given the sole-source nature, direct comparison to competitively bid services is difficult. However, the long duration and significant value suggest a substantial and ongoing need for specialized support, implying that the costs, while potentially higher than a competed contract, reflect the unique capabilities required for the Apache platform.

What is the track record of McDonnell Douglas Helicopter Company (now part of Boeing) in fulfilling similar defense contracts?

McDonnell Douglas Helicopter Company, prior to its acquisition by Boeing, had a long and established history of supporting military aviation programs, including extensive work on the Apache helicopter. Their track record in fulfilling defense contracts, particularly those related to the AH-64, is generally considered strong, given their role as a primary manufacturer and developer of the platform. While specific performance metrics for this exact contract are not detailed in the provided data, the company's historical involvement suggests a deep understanding of the aircraft's systems and maintenance requirements. Boeing, as the successor entity, continues to be a major defense contractor with significant experience in complex aerospace engineering and sustainment.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, there is less incentive for the contractor to offer the lowest possible price. Additionally, there's a risk of complacency or reduced innovation if the contractor faces no threat of losing future business to competitors. Oversight becomes critical to ensure the government is receiving fair value and that the contractor is performing efficiently and effectively. Dependence on a single source can also pose a risk if that source encounters financial difficulties or decides to exit the market, although this is less likely with a major defense contractor like Boeing.

How has historical spending on Apache helicopter support evolved, and does this contract represent a significant shift?

Historical spending on Apache helicopter support has been substantial, reflecting the platform's long service life and critical role in military operations. Contracts for engineering, maintenance, and upgrades are common throughout the lifecycle of major defense systems. This $401 million contract, awarded in 1999 and spanning over a decade, represents a significant, long-term commitment to engineering and technical services for the Apache. While it is a large sum, it is likely consistent with the ongoing sustainment needs of a complex, frontline military asset. Without comparative data on previous or subsequent contracts for similar services, it's difficult to definitively state if it represents a 'shift' in spending patterns, but it underscores the continuous investment required for advanced military aviation.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 5000 E MCDOWELL RD, MESA, AZ, 04

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline