DoD's $38.4M contract for Bell Helicopter airframe components shows limited competition and potential value concerns

Contract Overview

Contract Amount: $38,404,185 ($38.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2002-03-15

End Date: 2010-09-15

Contract Duration: 3,106 days

Daily Burn Rate: $12.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200207!2P3122!1700!JA101 !NAVAL INVENTORY CONTROL POINT !N0038397G002N !A!N! !N!0028 !20020315!20020315!062923321!062923321!001338979!N!BELL HELICOPTER TEXTRON, INC !600 E HURST BLVD !HURST !TX!76053!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000041804185!N!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1A!AIRFRAMES AND SPARES !2AHD!AH-1J SEA COBRA !336413!E! !4! ! ! ! ! !99990909!B! ! !N!A!D!U!J!1!001!N!2A!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: AMARILLO, POTTER County, TEXAS, 79111

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $38.4 million to THE BOEING COMPANY for work described as: 200207!2P3122!1700!JA101 !NAVAL INVENTORY CONTROL POINT !N0038397G002N !A!N! !N!0028 !20020315!20020315!062923321!062923321!001338979!N!BELL HELICOPTER TEXTRON, INC !600 E HURST BLVD !HURST !TX!76053!27000!439!48!FORT WORTH !TARRA… Key points: 1. The contract was awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. Limited competition suggests taxpayers may not have received the best possible pricing for these critical airframe components. 3. The contract duration of over 8 years (3106 days) indicates a long-term commitment, requiring careful performance monitoring. 4. The award to Bell Helicopter Textron, Inc. aligns with its role as a primary manufacturer, but raises questions about broader market engagement. 5. The fixed-price nature of the contract shifts some risk to the contractor, but the lack of competition limits upside for the government. 6. Analysis of per-unit costs against market benchmarks is crucial to assess the value for money delivered.

Value Assessment

Rating: questionable

The total award amount of $38.4 million for airframe structural components requires careful benchmarking. Without competitive bids, it's difficult to definitively assess if this price represents fair market value. Comparing the per-unit cost of specific components to similar contracts or industry standards would be essential. The long contract duration also necessitates ongoing scrutiny to ensure costs remain reasonable throughout its life cycle.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Bell Helicopter Textron, Inc., was solicited. This approach is typically used when a unique product or service is required, or when only one responsible source exists. The lack of competition means there was no opportunity for multiple vendors to bid, which can limit price negotiation and potentially lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through a competitive bidding process. This can result in higher overall spending for the same goods or services.

Public Impact

The primary beneficiaries are the U.S. military branches relying on AH-1J Sea Cobra helicopters, ensuring operational readiness. This contract delivers essential airframe structural components and spares, critical for maintaining the fleet's airworthiness. The contract's geographic impact is centered around Bell Helicopter's facilities in Texas, supporting local and regional economies. Workforce implications include the direct employment of skilled labor at Bell Helicopter and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award limits opportunities for other qualified suppliers.
Long contract duration requires sustained oversight to prevent cost creep.
Potential for vendor lock-in due to specialized components.

Positive Signals

Award to an established manufacturer ensures product familiarity and expertise.
Firm Fixed Price contract shifts some performance risk to the contractor.
Contract supports critical defense assets, ensuring operational capability.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on aircraft components and maintenance. The aerospace and defense industry is characterized by high technological barriers to entry and significant government procurement. Spending on aircraft parts and related services represents a substantial portion of the defense budget, with major contractors like Bell Helicopter playing a vital role in supporting military aviation fleets. Benchmarking against other similar sole-source awards for aircraft components would provide further context.

Small Business Impact

There is no indication of a small business set-aside for this contract. As a sole-source award to a large prime contractor, the opportunities for small businesses would likely be through subcontracting. The extent to which Bell Helicopter Textron, Inc. engages small businesses in its supply chain for these components is not detailed in the provided data, but is a key area for potential impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with terms and conditions. The firm fixed-price nature of the contract provides some level of accountability by capping the government's financial exposure. However, the lack of competition limits the transparency typically gained through a robust bidding process. Further details on specific performance metrics and reporting requirements would be needed to fully assess accountability.

Related Government Programs

DoD Aircraft Component Procurement
Bell Helicopter Support Contracts
Sole-Source Defense Contracts
Naval Inventory Control Point Spending
AH-1J Sea Cobra Helicopter Sustainment

Risk Flags

Sole-source award
Lack of competition
Long contract duration
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.4 million to THE BOEING COMPANY. 200207!2P3122!1700!JA101 !NAVAL INVENTORY CONTROL POINT !N0038397G002N !A!N! !N!0028 !20020315!20020315!062923321!062923321!001338979!N!BELL HELICOPTER TEXTRON, INC !600 E HURST BLVD !HURST !TX!76053!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000041804185!N!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1A!AIRFRAMES AND SPARES !2AHD!AH-1J SEA COBRA !336413!E! !4! ! ! ! ! !99990909!B

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 $38.4 million.

What is the period of performance?

Start: 2002-03-15. End: 2010-09-15.

What is the historical spending pattern for airframe structural components for the AH-1J Sea Cobra helicopter?

Historical spending data for airframe structural components specifically for the AH-1J Sea Cobra helicopter is not directly available in the provided snippet. However, the total award of $38.4 million over a period of approximately 8 years (from March 2002 to September 2010) suggests an average annual spending of around $4.8 million. This figure represents the total contract value and does not break down spending by year or by specific component. To understand historical patterns, one would need to access procurement databases for previous contracts related to this helicopter model or similar platforms, looking at trends in component replacement, upgrades, and overall fleet sustainment costs.

How does the per-unit cost of these components compare to industry benchmarks or other similar government contracts?

A direct comparison of per-unit costs is not possible with the provided data, as it only offers a total contract value and does not specify the quantity or type of individual components purchased. The contract is for 'AIRFRAME STRUCTURAL COMPONENTS,' which is a broad category. To perform a benchmark analysis, detailed specifications of the components, their quantities, and their unit prices would be required. This information would then need to be compared against publicly available data for similar components procured by the Department of Defense or other government agencies, as well as against commercial aviation industry pricing, if available. Given the sole-source nature, a robust benchmark is even more critical to ensure fair pricing.

What are the specific risks associated with a sole-source award for critical defense components?

Sole-source awards for critical defense components carry several risks. Primarily, the lack of competition can lead to inflated prices, as the contractor faces no pressure to offer the most cost-effective solution. This can result in taxpayers paying more than necessary. Secondly, it can stifle innovation and reduce the incentive for the contractor to improve efficiency or quality beyond the contract minimums. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, making it difficult and costly to switch providers in the future. Furthermore, without competitive proposals, assessing the contractor's true capabilities and the reasonableness of their proposed costs becomes more challenging for the procuring agency.

What is Bell Helicopter Textron, Inc.'s track record with similar sole-source contracts?

The provided data indicates Bell Helicopter Textron, Inc. received this sole-source contract for airframe structural components. To assess their track record with similar sole-source contracts, one would need to examine their broader contract history with the Department of Defense and other government agencies. This would involve searching procurement databases for other sole-source awards, particularly those for aircraft components or sustainment services. Key factors to evaluate would include the number and value of such contracts, their performance history (e.g., on-time delivery, quality), any past performance issues or disputes, and the pricing structures used in those contracts. A consistent pattern of sole-source awards might suggest a dominant market position or specific government needs.

How does the duration of this contract (over 8 years) impact program effectiveness and cost control?

A contract duration of over 8 years (3106 days) for airframe structural components presents both potential benefits and significant risks for program effectiveness and cost control. On the positive side, a long-term contract can provide stability and predictability for both the government and the contractor, potentially leading to better planning, resource allocation, and a more streamlined supply chain. It can also foster a stronger working relationship. However, the extended duration significantly increases the risk of cost escalation if not properly managed. Without regular re-competition or robust price adjustment clauses tied to market indices, the government could end up paying above-market rates over time. Furthermore, long contracts can reduce flexibility to adapt to technological changes or evolving requirements. Effective oversight, performance monitoring, and mechanisms for price review are crucial to mitigate these risks and ensure cost control throughout the contract's life.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 25 GATE 6 BLDG 3, RIDLEY PARK, PA, 05

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline