Boeing awarded $625M for CH-47F aircraft and spares, with contract performance spanning over 5 years

Contract Overview

Contract Amount: $625,493,592 ($625.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2004-09-24

End Date: 2009-12-31

Contract Duration: 1,924 days

Daily Burn Rate: $325.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 200412!004846!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04G0023 !A!N! !N!0001 ! !20040924!20081231!172316432!172316432!009256819!N!THE BOEING COMPANY !ROUTE 291 & STEWART AVE !RIDLEY PARK !PA!19078!64832!045!42!RIDLEY PARK !DELAWARE !PENN !+000023684983!N!N!000000000000!1520!AIRCRAFT ROTARY WING !A1A!AIRFRAMES AND SPARES !278 !CH-47F !336411!E! !4! ! ! ! ! !99990909!B! ! !A! !D!N!L!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $625.5 million to THE BOEING COMPANY for work described as: 200412!004846!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04G0023 !A!N! !N!0001 ! !20040924!20081231!172316432!172316432!009256819!N!THE BOEING COMPANY !ROUTE 291 & STEWART AVE !RIDLEY PARK !PA!19078!64832!045!42!RIDLEY PARK !DELA… Key points: 1. Contract awarded for critical CH-47F aircraft components, supporting ongoing aviation readiness. 2. Significant investment in airframes and spares indicates a focus on long-term fleet sustainment. 3. The fixed-price incentive contract structure aims to balance cost control with performance incentives. 4. Sole-source award raises questions about potential cost efficiencies and market alternatives. 5. Contract duration of over 5 years suggests a substantial, ongoing need for these aviation assets. 6. The award to a single, established prime contractor may limit opportunities for emerging suppliers.

Value Assessment

Rating: fair

The total contract value of $625.5 million over approximately five years represents a substantial investment in aviation readiness. Benchmarking this value is challenging without specific details on the number of units procured and the exact scope of services. However, given the nature of advanced military aircraft components, the pricing is likely within a range expected for such specialized equipment. The fixed-price incentive (FPI) contract type suggests that both the government and contractor share in cost savings or overruns, which can be a mechanism for value, but requires careful monitoring of performance against targets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one vendor, The Boeing Company, was solicited. This approach is typically used when there is a compelling reason, such as unique capabilities, urgent needs, or lack of viable alternatives. The absence of a competitive bidding process means that the government did not benefit from price discovery through multiple offers, potentially leading to higher costs than if the contract had been competed.

Taxpayer Impact: A sole-source award limits the government's ability to leverage competition to secure the best possible pricing for taxpayers. Without competing offers, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Army aviation units relying on the CH-47F Chinook helicopter for troop transport, cargo movement, and special operations. The contract delivers essential airframes and spare parts, crucial for maintaining the operational readiness and service life of the CH-47F fleet. Geographic impact is national, supporting military operations across various theaters and domestic bases. Workforce implications include sustained employment at The Boeing Company's facilities and its supply chain partners involved in aircraft manufacturing and component production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of transparency in the procurement process due to non-competitive nature.
Reliance on a single contractor for critical components could pose supply chain risks.
Fixed-price incentive contracts require diligent oversight to ensure performance targets are met and costs are controlled.

Positive Signals

Award to a prime contractor with extensive experience in CH-47F production ensures technical expertise.
Contract duration suggests a stable, long-term commitment to supporting a vital military asset.
Fixed-price incentive structure can align contractor and government interests towards efficient performance.
Focus on airframes and spares directly addresses fleet sustainment needs.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Contracts for major aircraft platforms and their components, like the CH-47F, represent substantial portions of defense spending. The market for heavy-lift helicopters is dominated by a few major players, including Boeing. This contract fits within the broader strategy of maintaining and modernizing the U.S. military's rotary-wing aircraft fleet, ensuring operational superiority and readiness.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited to subcontracting opportunities. The extent to which The Boeing Company will utilize small businesses in its supply chain for this contract is not detailed in the provided data. Effective subcontracting plans are crucial for ensuring that small businesses can participate in and benefit from large federal contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded within the fixed-price incentive contract terms, requiring the contractor to meet performance specifications and cost targets. Transparency is limited due to the sole-source nature of the award; however, contract modifications and performance reports would be subject to internal government review and potentially Inspector General audits if performance issues or fraud are suspected.

Related Government Programs

CH-47 Chinook Helicopter Program
Aviation Systems Procurement
Rotary Wing Aircraft Support
Defense Logistics Agency (DLA) Aviation

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without competitive pressure
Long-term contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $625.5 million to THE BOEING COMPANY. 200412!004846!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04G0023 !A!N! !N!0001 ! !20040924!20081231!172316432!172316432!009256819!N!THE BOEING COMPANY !ROUTE 291 & STEWART AVE !RIDLEY PARK !PA!19078!64832!045!42!RIDLEY PARK !DELAWARE !PENN !+000023684983!N!N!000000000000!1520!AIRCRAFT ROTARY WING !A1A!AIRFRAMES AND SPARES !278 !CH-47F !336411!E! !4! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $625.5 million.

What is the period of performance?

Start: 2004-09-24. End: 2009-12-31.

What is the historical spending trend for CH-47F aircraft and spares with The Boeing Company?

Analyzing historical spending for CH-47F aircraft and spares with The Boeing Company requires access to comprehensive contract databases beyond the single award provided. Typically, such programs involve multiple contract actions over many years, including initial production, upgrades, and sustainment. The provided data shows a single, large contract valued at over $625 million awarded in 2004 and expiring in 2009. To understand the trend, one would need to examine prior and subsequent contracts for the CH-47F program, looking at total obligated amounts, contract types, and competition levels over time. This would reveal whether spending has been consistent, increasing, or decreasing, and if the reliance on sole-source awards has been a recurring pattern for this specific platform.

How does the per-unit cost of the CH-47F components in this contract compare to similar military aircraft components?

Determining the precise per-unit cost for the CH-47F components within this contract is not feasible with the given data, as the total value is for a mix of airframes and spares over several years, without specifying quantities. However, CH-47F components are known to be complex and expensive due to the advanced technology and robust construction required for a heavy-lift helicopter. Benchmarking against similar military aircraft components would involve comparing the cost of major subassemblies or spare parts for other heavy-lift or transport helicopters (e.g., Sikorsky's CH-53 variants). Generally, components for such specialized military platforms are significantly more expensive than commercial equivalents due to stringent reliability, safety, and performance requirements, as well as lower production volumes. Without detailed breakdowns, a direct comparison is speculative, but the costs are expected to be high.

What are the key performance indicators (KPIs) associated with this fixed-price incentive contract, and how was performance measured?

The provided data indicates the contract type is 'FIXED PRICE INCENTIVE' (FPI), which implies that performance is tied to achieving specific cost and delivery targets, with incentives for exceeding expectations or penalties for shortfalls. Key performance indicators (KPIs) for such a contract would typically include metrics related to production schedule adherence, quality of manufactured parts (e.g., defect rates, compliance with specifications), delivery timelines, and potentially performance-based metrics related to the reliability or maintainability of the delivered components. The government would monitor these KPIs through regular reporting from the contractor, inspections, and technical reviews. The 'incentive' aspect suggests that the final price could vary based on how well the contractor meets or exceeds these pre-defined targets, rewarding efficiency and penalizing inefficiency or failure to meet standards.

What is The Boeing Company's track record with the U.S. Army regarding CH-47F production and support?

The Boeing Company has a long and established track record as the prime contractor for the CH-47 Chinook family of helicopters, including the CH-47F variant. They have been responsible for the design, production, and sustainment of these aircraft for decades. The U.S. Army has consistently relied on Boeing for upgrades and new production of the CH-47F, indicating a generally positive working relationship and a high degree of confidence in Boeing's capabilities to meet the demanding requirements of this critical platform. While specific performance details for individual contracts vary, Boeing's continued role as the sole source for many CH-47F related procurements underscores their deep expertise and the Army's dependence on their specialized knowledge and manufacturing capacity for this specific helicopter.

What are the potential risks associated with a sole-source award for critical aviation components like airframes and spares?

Sole-source awards for critical aviation components like airframes and spares carry several potential risks. Firstly, the lack of competition can lead to higher prices than might be achieved in a competitive bidding process, as the government does not benefit from market forces driving down costs. Secondly, it can reduce the incentive for the sole contractor to innovate or improve efficiency, as there is no direct competitive pressure. Thirdly, it creates a dependency on a single supplier, which can be risky if that supplier experiences financial difficulties, production issues, or geopolitical disruptions. This dependency also limits the government's flexibility to switch suppliers or adopt alternative solutions if needed. Finally, without competitive proposals, it can be more challenging for the government to independently validate the reasonableness of the proposed costs and pricing.

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: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: ROUTE 291 & STEWART AVE, RIDLEY PARK, PA, 19078

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ04G0023

IDV Type: IDC

Timeline