Boeing awarded $751.6M for 30 Apache helicopters to Taiwan, a sole-source acquisition
Contract Overview
Contract Amount: $751,610,035 ($751.6M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2009-07-30
End Date: 2020-03-11
Contract Duration: 3,877 days
Daily Burn Rate: $193.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: LONG LEAD CONTRACT FOR 30 AH-64D AIRCRAFT FOR THE GOVERNMENT OF TAIWAN
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $751.6 million to THE BOEING COMPANY for work described as: LONG LEAD CONTRACT FOR 30 AH-64D AIRCRAFT FOR THE GOVERNMENT OF TAIWAN Key points: 1. This contract represents a significant foreign military sale, indicating strategic defense cooperation. 2. The acquisition of advanced aircraft like the AH-64D suggests a focus on modernizing Taiwan's defense capabilities. 3. As a sole-source award, the absence of competition may impact price negotiation and value for money. 4. The long duration of the contract (over 10 years) implies a complex manufacturing and delivery process. 5. The firm-fixed-price structure shifts most of the cost risk to the contractor, Boeing. 6. This transaction highlights the role of the US defense industry in supporting international security partnerships.
Value Assessment
Rating: fair
Benchmarking the value of this specific contract is challenging due to its nature as a foreign military sale and a sole-source acquisition. However, the per-unit cost can be estimated by dividing the total contract value by the number of aircraft. This provides a baseline for comparison with other similar aircraft sales or domestic procurements, though direct comparisons must account for differences in configuration, support packages, and market conditions. The firm-fixed-price nature suggests that the government has secured a predictable cost, but the lack of competition means there's less assurance of achieving the lowest possible price.
Cost Per Unit: Approximately $25.05M per aircraft (based on $751.6M for 30 aircraft).
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis to The Boeing Company. As such, there was no open competition among multiple bidders. Sole-source procurements are typically justified when only one responsible source can provide the required supplies or services, often due to unique capabilities, proprietary technology, or specific program requirements. The lack of competition means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process.
Taxpayer Impact: Taxpayers are not directly funding this acquisition, as it is a foreign military sale. However, the US government's role in facilitating such sales and the potential impact on US defense industrial base capacity are considerations.
Public Impact
The primary beneficiary is the government of Taiwan, which will receive advanced AH-64D Apache attack helicopters to enhance its defense capabilities. The contract supports the modernization of Taiwan's military, potentially contributing to regional stability. The delivery of these aircraft will impact Taiwan's operational readiness and strategic posture. This sale reinforces the security relationship between the United States and Taiwan. The contract supports jobs within the US defense manufacturing sector, specifically at Boeing and its supply chain partners.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price escalation over the long contract duration, despite firm-fixed-price structure, if unforeseen costs arise for the contractor.
- Dependence on a single supplier (Boeing) for critical defense assets could create long-term supply chain vulnerabilities.
- The sole-source nature limits opportunities for other manufacturers to compete and potentially offer more cost-effective solutions.
- Ensuring adequate technical support and spare parts availability over the aircraft's lifecycle will be crucial.
Positive Signals
- The AH-64D is a proven and highly capable attack helicopter, providing Taiwan with a significant military advantage.
- The firm-fixed-price contract provides cost certainty for the acquisition phase.
- Boeing has extensive experience in manufacturing and supporting Apache helicopters, suggesting a high likelihood of successful delivery.
- This contract supports US foreign policy objectives by strengthening an ally's defense capabilities.
Sector Analysis
The global market for military aircraft manufacturing is dominated by a few major players, including Boeing. This contract falls within the aerospace and defense sector, specifically focusing on rotorcraft manufacturing. The value of the global defense market is substantial, with significant portions allocated to aircraft procurement. This specific sale represents a component of that larger market, driven by geopolitical considerations and the need for advanced aerial combat capabilities. Comparable spending benchmarks would involve analyzing other foreign military sales of attack helicopters or large aircraft procurement programs by allied nations.
Small Business Impact
This contract does not appear to involve small business set-asides, as it is a direct award to a large prime contractor, The Boeing Company. However, Boeing is expected to utilize its extensive supply chain, which likely includes numerous small and medium-sized businesses for component manufacturing and specialized services. The subcontracting opportunities generated by this large contract could provide significant business for these smaller firms within the aerospace ecosystem.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Defense's foreign military sales (FMS) program, managed by the Department of the Army. Mechanisms include contract administration, quality assurance, and delivery monitoring. Transparency is facilitated through reporting requirements associated with FMS cases. While there isn't a specific Inspector General investigation mentioned for this contract, the DoD IG has broad jurisdiction over defense spending and contracts, including FMS, to ensure accountability and prevent fraud.
Related Government Programs
- Foreign Military Sales Program
- Attack Helicopter Procurement
- US-Taiwan Defense Cooperation
- Boeing Defense, Space & Security
- AH-64 Apache Program
Risk Flags
- Sole-source justification requires rigorous review to ensure no viable competition exists.
- Long contract duration increases exposure to potential cost overruns or schedule delays.
- Foreign military sales require careful management of international relations and delivery timelines.
- Dependence on a single supplier for critical defense assets poses strategic risk.
Tags
defense, foreign-military-sale, helicopter, attack-helicopter, boeing, department-of-defense, department-of-the-army, sole-source, firm-fixed-price, aircraft-manufacturing, taiwan, arizona
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $751.6 million to THE BOEING COMPANY. LONG LEAD CONTRACT FOR 30 AH-64D AIRCRAFT FOR THE GOVERNMENT OF TAIWAN
Who is the contractor on this award?
The obligated recipient is THE BOEING 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 $751.6 million.
What is the period of performance?
Start: 2009-07-30. End: 2020-03-11.
What is the track record of The Boeing Company in delivering complex military aircraft, particularly for foreign customers?
The Boeing Company has a long and extensive track record in manufacturing and delivering complex military aircraft to both the U.S. military and numerous international partners. They are a primary producer of various fighter jets, bombers, transport aircraft, and helicopters, including the AH-64 Apache. Historically, Boeing has successfully executed numerous large-scale foreign military sales, often involving significant customization, training, and logistical support packages. While large defense contracts can face delays or cost adjustments, Boeing's overall performance in delivering advanced platforms is generally considered robust, underpinned by decades of experience and established production lines. Their ability to manage global supply chains and meet stringent quality and performance requirements is critical for programs like this.
How does the per-unit cost of these AH-64D aircraft compare to other recent procurements or sales?
The estimated per-unit cost of approximately $25.05 million for the AH-64D Apache helicopters in this contract requires careful comparison. This figure is derived from the total contract value divided by the number of aircraft and does not include potential separate costs for training, spare parts, or support equipment, which are often bundled in FMS cases. When comparing to other AH-64D sales or domestic procurements, it's essential to consider the specific configuration, avionics upgrades, and any included support packages. Prices can vary significantly based on these factors, as well as the volume of the order and the specific economic conditions at the time of sale. For instance, older sales might appear cheaper due to inflation and technological advancements in newer variants. Direct comparisons should ideally be made with sales of similar configurations and quantities to ensure a fair assessment of value.
What are the primary risks associated with a sole-source acquisition of this magnitude?
The primary risks associated with a sole-source acquisition of this magnitude, such as the $751.6 million contract for AH-64D helicopters, revolve around price and potential lack of innovation. Without competition, there is less pressure on the contractor (Boeing) to offer the lowest possible price, potentially leading to a higher cost for the acquiring entity. Furthermore, the absence of competing proposals can reduce the incentive for the sole provider to innovate or offer alternative solutions that might be more cost-effective or technologically advanced. For the government facilitating the sale, risks include ensuring the sole-source justification remains valid throughout the contract period and managing the relationship with the single supplier to ensure favorable terms and timely delivery. There's also a risk of vendor lock-in, making future procurements or upgrades potentially more expensive.
What is the expected effectiveness of the AH-64D Apache in Taiwan's defense strategy?
The AH-64D Apache attack helicopter is a highly capable platform designed for anti-armor, reconnaissance, and close air support missions. Its inclusion in Taiwan's defense inventory is expected to significantly enhance its ability to counter potential threats, particularly armored ground forces. The AH-64D's advanced sensor suites, targeting systems, and armament (such as Hellfire missiles and rockets) provide a potent offensive capability. For Taiwan, which faces specific regional security challenges, these helicopters would bolster its asymmetric warfare capabilities and provide a crucial element for defensive operations. The effectiveness will depend on Taiwan's ability to integrate them into its existing military structure, provide adequate training, and maintain operational readiness over the long term.
How has US spending on foreign military sales of aircraft evolved over the past decade, and where does this contract fit?
US spending on foreign military sales (FMS) of aircraft has fluctuated over the past decade, influenced by global security dynamics, allied modernization needs, and US foreign policy priorities. While specific aggregate data for aircraft FMS can vary year by year, major platforms like fighter jets, helicopters, and transport aircraft consistently represent a significant portion of total FMS value. This $751.6 million contract for 30 AH-64D Apache helicopters is a substantial single-case award, indicative of a major allied nation investing in advanced rotary-wing attack capabilities. Such large helicopter sales are less frequent than fighter jet sales but are critical for nations requiring specialized ground-attack and reconnaissance assets. This contract aligns with a broader trend of allies seeking to upgrade their air power and maintain a technological edge, often through US-sourced platforms.
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
Address: 5000 E MCDOWELL RD, MESA, AZ, 85215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $751,610,035
Exercised Options: $751,610,035
Current Obligation: $751,610,035
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2009-07-30
Current End Date: 2020-03-11
Potential End Date: 2020-03-11 12:03:00
Last Modified: 2023-10-27
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