DoD's $43.8M helicopter contract awarded to McDonnell Douglas Helicopter Company without competition

Contract Overview

Contract Amount: $43,837,181 ($43.8M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2005-06-29

End Date: 2008-09-30

Contract Duration: 1,189 days

Daily Burn Rate: $36.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $43.8 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: Key points: 1. Contract awarded on a firm-fixed-price basis, indicating price certainty for the government. 2. The contract was not competed, raising questions about potential price overruns and limited market engagement. 3. A single award suggests potential reliance on a specific contractor, which could pose future supply chain risks. 4. The duration of the contract (1189 days) indicates a significant, long-term commitment. 5. The contract falls under the Aircraft Manufacturing NAICS code, a critical sector for defense readiness. 6. The award was made by the Department of the Army, highlighting its specific aviation needs.

Value Assessment

Rating: questionable

Without a competitive bidding process, it is difficult to benchmark the value for money. The firm-fixed-price contract type offers some cost control, but the absence of competition means the government may not have secured the best possible price. Further analysis would require comparing this contract's terms and pricing to similar helicopter manufacturing or support contracts awarded competitively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple potential bidders. This approach is typically used when only one responsible source can provide the required goods or services. The lack of competition limits the government's ability to leverage market forces to drive down costs and ensure the most innovative solutions are considered.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings and potential efficiencies that arise from a competitive bidding environment. This can lead to higher overall spending for the same level of goods or services.

Public Impact

The primary beneficiary is the Department of the Army, which receives critical aircraft manufacturing services. The contract supports the production or modification of helicopters essential for military operations. The geographic impact is centered in Arizona, where McDonnell Douglas Helicopter Company is located. This contract likely supports jobs within the aerospace manufacturing sector, particularly in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce incentive for contractor innovation and efficiency.
Dependence on a single contractor could create supply chain vulnerabilities.
Limited transparency in pricing due to non-competitive award.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established manufacturer like McDonnell Douglas suggests potential for reliable delivery.
Contract supports critical defense capabilities.

Sector Analysis

The Aircraft Manufacturing sector (NAICS 336411) is a vital component of the defense industrial base. This contract represents spending within a high-value, technologically advanced industry. Benchmarking would involve comparing this award to other government contracts for similar aircraft or manufacturing services, considering factors like aircraft type, complexity, and volume. The total government spending in this sector is substantial, reflecting the ongoing need for advanced aerial platforms.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to a large prime contractor like McDonnell Douglas suggests a focus on established, large-scale manufacturing capabilities rather than fostering small business participation directly through this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in the firm-fixed-price structure, which caps the government's liability. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Army Aviation Systems
Helicopter Manufacturing Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.8 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 $43.8 million.

What is the period of performance?

Start: 2005-06-29. End: 2008-09-30.

What is the track record of McDonnell Douglas Helicopter Company with the Department of Defense for similar contracts?

McDonnell Douglas Helicopter Company, now part of Boeing, has a long history of supplying helicopters and related services to the Department of Defense. Historically, they have been a major contractor for various military aircraft programs. Analyzing their past performance on similar firm-fixed-price, sole-source, or competed contracts would provide insight into their reliability, quality of work, and adherence to schedules and budgets. This context is crucial for understanding the risk associated with this specific award, even without direct comparative data for this exact contract.

How does the value of this contract compare to other helicopter manufacturing contracts awarded by the DoD?

Direct comparison is challenging without knowing the specific type and quantity of helicopters or services procured under this $43.8 million contract. However, helicopter manufacturing contracts can range from tens of millions for smaller batches or specialized modifications to billions for large fleet procurements. Given the duration of over three years and the sole-source nature, this $43.8 million figure suggests a significant, but not necessarily massive, procurement. Benchmarking against similar sole-source awards for comparable aircraft types would be the most relevant approach, though such data is often proprietary or difficult to access.

What are the primary risks associated with awarding a contract of this size without competition?

The primary risks of a sole-source award include potential overpayment due to lack of price competition, reduced incentive for the contractor to innovate or improve efficiency, and a potential lack of flexibility if requirements change. For taxpayers, this means a higher likelihood of paying more than necessary. There's also a strategic risk if the contractor faces financial difficulties or production issues, as there are no immediate alternative suppliers. The government might also miss out on potentially superior technologies or solutions offered by other manufacturers.

How effective is the firm-fixed-price contract type in managing costs for helicopter manufacturing?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and risks are understood. It shifts the cost risk to the contractor, who is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This provides budget certainty for the government. However, for complex or evolving requirements in areas like advanced helicopter manufacturing, an FFP contract might lead the contractor to build in higher contingencies, potentially increasing the price, or it could stifle innovation if the contractor is hesitant to propose changes that might increase their costs.

What is the historical spending pattern for aircraft manufacturing (NAICS 336411) by the Department of the Army?

The Department of the Army consistently spends significant amounts on aircraft manufacturing, reflecting its reliance on aviation for various operational needs, including transport, attack, reconnaissance, and training. Historical spending patterns show a substantial and often fluctuating budget allocation to this sector, driven by modernization programs, fleet replacements, and specific operational demands. While the exact annual spending varies, it typically runs into the billions of dollars over multi-year periods, encompassing both competitive and sole-source procurements for a wide range of aircraft, from helicopters to fixed-wing planes and drones.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

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

Financial Breakdown

Contract Ceiling: $43,837,181

Exercised Options: $43,837,181

Current Obligation: $43,837,181

Contract Characteristics

Cost or Pricing Data: YES

Timeline