DoD's $159M contract for helicopter test stands awarded to McDonnell Douglas Helicopter Company shows long duration and high cost

Contract Overview

Contract Amount: $159,078,541 ($159.1M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2007-05-01

End Date: 2016-06-30

Contract Duration: 3,348 days

Daily Burn Rate: $47.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 11 EA REMANAUFACTURE 101 TEST STAND TRAINING

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $159.1 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: 11 EA REMANAUFACTURE 101 TEST STAND TRAINING Key points: 1. The contract's duration of 3,348 days (over 9 years) suggests a long-term need for these specialized training assets. 2. The firm-fixed-price structure aims to control costs, but the total value indicates a significant investment. 3. Competition was conducted under 'full and open competition after exclusion of sources,' implying a specific justification for limiting initial bidders. 4. The contract's value of over $159 million warrants scrutiny regarding cost-effectiveness over its extended period. 5. The primary contractor, McDonnell Douglas Helicopter Company, has a history in defense manufacturing, suggesting relevant expertise. 6. The North American Industry Classification System (NAICS) code 336411 points to Aircraft Manufacturing, aligning with the product's nature.

Value Assessment

Rating: fair

Benchmarking the value of specialized training equipment like helicopter test stands is challenging due to their unique nature. However, a contract duration exceeding nine years with a total value of $159 million suggests a substantial investment. Without comparable contract data for similar test stands, it's difficult to definitively assess if this represents excellent value. The firm-fixed-price nature is a positive indicator for cost control, but the overall expenditure requires careful monitoring of performance and any potential cost overruns or scope creep.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'full and open competition after exclusion of sources.' This specific procurement method indicates that while the competition was intended to be broad, there were initial exclusions, possibly due to specific technical requirements or prior relationships. The number of bidders is not specified, but the method suggests a deliberate narrowing of the field at some stage, which could impact price discovery compared to a truly unrestricted full and open competition.

Taxpayer Impact: The 'exclusion of sources' aspect means taxpayers may not have benefited from the widest possible pool of bidders, potentially leading to a less competitive price than if all potential suppliers were considered from the outset.

Public Impact

The primary beneficiaries are likely the U.S. Army personnel who will use these test stands for training on helicopter systems. The contract delivers specialized training equipment essential for maintaining and preparing helicopter fleets. The geographic impact is primarily within Arizona, where the contractor is located, and potentially at Army training bases nationwide. Workforce implications include jobs in aircraft manufacturing and related support services at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition method raises questions about whether the most competitive pricing was achieved.
The extended duration of the contract (over 9 years) increases the risk of cost escalation or obsolescence of the technology.
Lack of specific details on the number of bidders makes it hard to fully assess the competitive landscape.
The high total value of $159 million necessitates robust oversight to ensure funds are used efficiently.

Positive Signals

The use of a firm-fixed-price contract type is a positive signal for cost control.
McDonnell Douglas Helicopter Company's established presence in the aerospace sector suggests technical capability.
The contract supports critical training infrastructure for military aviation, indicating a strategic investment.
The award is associated with the Department of the Army, a major defense entity with established procurement processes.

Sector Analysis

The Aircraft Manufacturing sector (NAICS 336411) is characterized by high barriers to entry, significant capital investment, and stringent quality and safety standards, particularly for defense applications. This contract for specialized helicopter test stands fits within this high-value, niche segment of the aerospace industry. Spending in this sector is heavily influenced by defense budgets and technological advancements in aviation. Comparable spending benchmarks are difficult to establish without more specific details on the test stand's capabilities, but large-scale defense manufacturing contracts often run into hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the primary contractor, McDonnell Douglas Helicopter Company, is a large entity. There is no explicit information provided regarding subcontracting plans or goals for small businesses. Therefore, the direct impact on the small business ecosystem from this specific contract award is likely minimal, unless significant subcontracting opportunities arise that are not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's established procurement and contract management systems, likely involving the Army Contracting Command and potentially the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm-fixed-price structure, which places the cost risk on the contractor. Transparency is generally maintained through contract databases, though specific performance metrics and detailed oversight reports may not be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Manufacturing
Defense Training Equipment
Helicopter Maintenance Support
Aerospace Components
Military Logistics

Risk Flags

Extended contract duration
Competition method ('exclusion of sources')
High total contract value
Lack of detailed performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $159.1 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. 11 EA REMANAUFACTURE 101 TEST STAND TRAINING

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 $159.1 million.

What is the period of performance?

Start: 2007-05-01. End: 2016-06-30.

What specific capabilities do these '11 EA REMANAUFACTURE 101 TEST STAND TRAINING' units possess, and how do they compare to modern alternatives?

The provided data does not detail the specific capabilities of the '101 TEST STAND TRAINING' units. However, given the contract's duration (2007-2016) and the nature of test stands, they likely perform diagnostic, calibration, and functional testing of helicopter components or systems. The 'remanufacture' aspect suggests these might be upgrades or rebuilds of existing equipment. Comparing them to 'modern alternatives' is difficult without knowing their original specifications and the current state-of-the-art in test stand technology. Newer systems might offer enhanced automation, data logging, simulation capabilities, or compatibility with next-generation aircraft. The long service life of the contract implies these were considered essential and perhaps difficult to replace or upgrade significantly during that period.

What was the rationale for 'full and open competition after exclusion of sources' for this contract?

The procurement method 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' typically indicates that an initial solicitation was issued broadly, but only a subset of potential offerors were allowed to submit proposals. This exclusion usually occurs when specific technical requirements, unique capabilities, or prior performance necessitate limiting the pool. For instance, if the test stands required proprietary technology or integration with existing, specialized platforms, only contractors possessing those specific qualifications might be eligible. The rationale would need to be documented by the agency to justify why a broader competition was not feasible or advantageous, potentially impacting the final price achieved for taxpayers.

How does the cost per year of this contract compare to similar defense training equipment procurements?

The total contract value is $159,078,541.16 over a period of 3,348 days, which is approximately 9.17 years. This equates to an average annual spending of roughly $17.34 million per year ($159,078,541.16 / 9.17 years). Comparing this 'cost per year' to similar defense training equipment procurements is challenging without specific data on the complexity, quantity, and technological sophistication of other training systems. Specialized, high-fidelity simulators or unique testing apparatus for complex platforms like helicopters tend to be significantly more expensive than general training aids. The $17.34 million annual figure should be evaluated against the criticality and unique nature of these test stands to the Army's operational readiness.

What is the track record of McDonnell Douglas Helicopter Company (now part of Boeing) in delivering large, complex defense manufacturing contracts?

McDonnell Douglas Helicopter Company, which became part of Boeing through acquisition, has a long and significant track record in defense manufacturing, particularly in rotorcraft and related systems. They were known for producing helicopters like the AH-64 Apache and MD 500 series. Their history includes delivering complex military hardware under demanding specifications and timelines. While specific performance details for this particular test stand contract are not provided, the company's general reputation suggests a capacity to handle large-scale, technically challenging defense production. However, like any major defense contractor, they would have faced scrutiny regarding cost, schedule, and performance on various programs throughout their history.

Given the contract's end date in 2016, what is the current status of these test stands and the need for such equipment?

The contract concluded in June 2016. The current status of the '11 EA REMANAUFACTURE 101 TEST STAND TRAINING' units is not detailed in the provided data. It's possible these units are still in service, have been retired, or have undergone further upgrades or replacements. The need for such equipment persists as long as the Army operates helicopters requiring maintenance and testing. Future procurements would likely reflect advancements in technology, potentially leading to more integrated, digital, or automated testing solutions. The Army's ongoing fleet modernization and maintenance strategies would dictate the continued requirement for and evolution of test stand capabilities.

What are the potential risks associated with a firm-fixed-price contract spanning over nine years?

While firm-fixed-price (FFP) contracts are generally favored for cost control, a duration exceeding nine years introduces specific risks. The primary risk is that the initial price, set at the contract's inception, may not adequately account for inflation, material cost fluctuations, or unforeseen technological changes over such an extended period. The contractor might face pressure to cut corners on quality if costs escalate beyond their initial projections, although the FFP structure aims to prevent this by placing the risk on them. Conversely, if the contractor underestimated costs significantly, they could incur substantial losses, potentially impacting their long-term viability or willingness to bid on future long-term FFP contracts. Robust contract administration and monitoring are crucial to mitigate these risks.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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, 85215

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $159,078,541

Exercised Options: $159,078,541

Current Obligation: $159,078,541

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline