DoD's $239.9M contract for aircraft parts awarded to McDonnell Douglas Helicopter Company, with limited competition

Contract Overview

Contract Amount: $23,993,406 ($24.0M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2005-12-23

End Date: 2009-09-30

Contract Duration: 1,377 days

Daily Burn Rate: $17.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200603!001329!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ05C0205 !A!N! !N! ! !20051223!20080930!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000018815927!N!N!000000000000!6930!OPERATIONAL TRAINING DEVICES !A1A!AIRFRAMES AND SPARES !000 !NOT DISCERNABLE !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1A!Z!Y!Z! ! !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 $24.0 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: 200603!001329!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ05C0205 !A!N! !N! ! !20051223!20080930!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARI… Key points: 1. The contract value of $239.9 million represents a significant investment in aviation readiness. 2. Awarded to a single, established contractor, raising questions about competitive pricing and innovation. 3. The firm-fixed-price contract type suggests a defined scope, but potential for cost overruns remains. 4. This spending supports the operational readiness of Army aviation assets. 5. The contract's duration of over three years indicates a long-term need for these components. 6. The lack of small business participation is notable, potentially limiting broader economic impact.

Value Assessment

Rating: fair

The contract value of $239.9 million for aircraft manufacturing components is substantial. Without specific benchmarks for these particular parts, it's difficult to definitively assess value for money. However, the 'NOT COMPETED' status suggests that the government may not have achieved the most competitive pricing possible. The firm-fixed-price nature of the contract provides cost certainty for the government, but the absence of competition could mean the price is higher than it might have been in a more open bidding environment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not openly competed. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition limits the government's ability to leverage market forces to drive down prices and encourage innovation. It also means that the pricing is determined through negotiation with a single entity, rather than through a competitive bidding process.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of securing the best possible price. The government relies on negotiation skills and contractor transparency to ensure a fair price, which may not always be as advantageous as a price derived from robust competition.

Public Impact

The primary beneficiaries are the U.S. Army aviation units that rely on these aircraft components for operational readiness. The contract delivers essential parts for maintaining and operating military aircraft, ensuring mission capability. The geographic impact is primarily centered around the contractor's facility in Mesa, Arizona, and the military bases receiving the components. The contract supports jobs within the aerospace manufacturing sector, specifically at McDonnell Douglas Helicopter Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competed contract.
Sole-source awards can stifle innovation by not encouraging new entrants or alternative solutions.
Dependence on a single contractor can create supply chain risks if that contractor faces production issues.

Positive Signals

Award to an established contractor with a known track record in helicopter manufacturing.
Firm-fixed-price contract provides budget certainty for the government.
Contract duration suggests a stable, long-term supply of critical components.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft components. The U.S. defense industry is a significant global market, with substantial government spending dedicated to maintaining and modernizing its fleet. Contracts for aircraft parts are crucial for ensuring operational readiness and supporting the complex supply chains that keep military aviation assets flying. Benchmarking this contract's value against similar sole-source awards for specialized aircraft components would be necessary for a more precise value assessment.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The award to a large, established prime contractor suggests that the primary focus was on fulfilling a specific requirement rather than on maximizing small business participation. This could limit the economic benefits for the small business ecosystem within the aerospace supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring performance and compliance. Transparency is generally maintained through contract award databases, but detailed operational oversight information is often considered sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Parts Manufacturing
Aviation Systems Procurement
Department of Defense Supply Chain Management
Helicopter Maintenance and Repair
Aerospace Component Production

Risk Flags

Sole-source award limits price competition.
Lack of small business participation.
Potential for higher costs due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.0 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. 200603!001329!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ05C0205 !A!N! !N! ! !20051223!20080930!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL RD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000018815927!N!N!000000000000!6930!OPERATIONAL TRAINING DEVICES !A1A!AIRFRAMES AND SPARES !000 !NOT DISCERNABLE !336411!E! !3! ! ! ! ! !999

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 $24.0 million.

What is the period of performance?

Start: 2005-12-23. End: 2009-09-30.

What is the specific nature of the 'OPERATIONAL TRAINING DEVICES' and 'AIRFRAMES AND SPARES' being procured under this contract?

The data indicates two primary product service codes (PSCs) associated with this contract: '6930' for OPERATIONAL TRAINING DEVICES and 'A1A' for AIRFRAMES AND SPARES. For '6930', this typically refers to equipment used for training personnel on the operation and maintenance of aircraft, such as simulators, mock-ups, or training aids. For 'A1A', this category encompasses parts and components essential for the structural integrity and operational functionality of aircraft airframes, as well as spare parts needed for ongoing maintenance and repair. The specific types of training devices and airframe spares would be detailed in the contract's statement of work, which is not publicly available in this dataset.

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

The provided data indicates the contract was 'NOT COMPETED' and has a 'sole-source' justification. While the specific reason is not detailed, sole-source awards are typically justified when only one responsible contractor can provide the required goods or services. This could be due to unique technical capabilities, proprietary technology, urgent and compelling needs where competition is impractical, or if the original contract was awarded competitively and subsequent modifications or follow-on contracts are only feasible with the incumbent. Without the specific justification document, the exact reason remains unknown, but it implies a perceived lack of viable alternatives or a specific necessity for McDonnell Douglas Helicopter Company's involvement.

How does the $239.9 million contract value compare to historical spending on similar aircraft components by the Department of the Army?

Comparing the $239.9 million contract value requires access to historical spending data for similar aircraft components procured by the Department of the Army. This dataset provides the total value for this specific contract but lacks comparative figures. To assess if this amount is high or low, one would need to analyze spending trends for 'AIRFRAMES AND SPARES' and 'OPERATIONAL TRAINING DEVICES' over several fiscal years, looking at the average contract values, the number of contracts awarded, and the types of components procured. A sole-source award of this magnitude might suggest a critical or specialized need, but without broader market data, it's difficult to benchmark effectively against typical spending patterns.

What are the potential risks associated with awarding a contract of this size to a single contractor without competition?

The primary risks associated with awarding a large contract like this ($239.9 million) on a sole-source basis include potential overpricing, reduced innovation, and supply chain vulnerability. Without competitive pressure, the contractor may not be incentivized to offer the lowest possible price. The lack of competition can also stifle the introduction of new technologies or more efficient manufacturing processes. Furthermore, relying on a single supplier for critical aircraft components creates a significant risk; any disruption in the contractor's operations, such as production issues, labor disputes, or financial difficulties, could severely impact the Army's aviation readiness.

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

McDonnell Douglas Helicopter Company, which became part of The Boeing Company, has a long and established history in defense contracting, particularly in rotorcraft and related systems. They have been a key supplier for various U.S. military branches, including the Army. Their track record generally includes the production of military helicopters (like the AH-64 Apache and MD 500 series) and associated components. While specific performance metrics for this particular contract are not detailed here, the company's extensive experience suggests a capability to meet complex aerospace manufacturing requirements. However, like any large defense contractor, they would be subject to performance reviews and potential contract disputes on specific programs.

What are the implications of the firm-fixed-price contract type for cost control and potential overruns?

A firm-fixed-price (FFP) contract is generally favored by the government for cost control because it establishes a ceiling price that the contractor must adhere to. The contractor assumes the risk of cost overruns; if their expenses exceed the agreed-upon price, they absorb the loss. Conversely, if they can complete the work for less than the fixed price, they retain the profit. This contract type provides budget certainty for the government. However, for complex or long-term procurements, contractors may build in higher contingency amounts into the FFP to mitigate their risk, potentially leading to a higher initial price compared to other contract types. Overruns are less likely to impact the government's budget directly but could arise from scope changes or unforeseen issues if not managed carefully through contract modifications.

Industry Classification

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

Product/Service Code: TRAINING AIDS AND DEVICES

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline