DoD awards $18.9M for KC-135 aircraft parts, with no competition

Contract Overview

Contract Amount: $18,879,216 ($18.9M)

Contractor: Mcdonnell Douglas Corp

Awarding Agency: Department of Defense

Start Date: 2009-10-14

End Date: 2011-02-21

Contract Duration: 495 days

Daily Burn Rate: $38.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KC-135 R/T/D & E MODELS (PDM) OPTION V

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78226

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $18.9 million to MCDONNELL DOUGLAS CORP for work described as: KC-135 R/T/D & E MODELS (PDM) OPTION V Key points: 1. Contract awarded to McDonnell Douglas Corp. for sustainment of KC-135 aircraft. 2. The contract was not competed, raising questions about potential cost savings. 3. A significant portion of the contract value is tied to a single award. 4. The contract duration spans over a year, indicating ongoing support needs. 5. The firm-fixed-price structure aims to control costs, but competition is key. 6. The award falls under the 'Other Aircraft Parts' manufacturing NAICS code.

Value Assessment

Rating: fair

The contract value of $18.9 million for aircraft parts is moderate. Without competitive bidding, it's difficult to benchmark the pricing against market rates or similar contracts. The firm-fixed-price type suggests an attempt to control costs, but the lack of competition means potential savings may have been forgone. Further analysis would require comparing the unit prices of parts to industry standards or previous contract awards for the same items.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down prices. Without multiple bids, the government lacks assurance that it received the best possible value.

Public Impact

The U.S. Air Force's KC-135 Stratotanker fleet benefits from this contract, ensuring operational readiness. This contract supports the maintenance and sustainment of critical aerial refueling and strategic airlift capabilities. The contract's impact is primarily national, supporting a key component of U.S. airpower. The workforce implications are likely within the aerospace manufacturing and maintenance sectors, particularly at McDonnell Douglas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can reduce government leverage in negotiations.
Dependence on a single contractor can create supply chain risks.

Positive Signals

Firm-fixed-price contract type provides cost certainty.
Award to an established manufacturer suggests reliability.
Contract supports critical military aviation assets.

Sector Analysis

This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for military aircraft sustainment is often characterized by specialized components and long-term support requirements, where original equipment manufacturers (OEMs) or their authorized suppliers frequently dominate. Spending in this area is crucial for maintaining the operational readiness of aging fleets like the KC-135.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for them based on the available data. The award to a large corporation like McDonnell Douglas suggests the primary focus is on established manufacturing capabilities rather than fostering small business participation. This could limit the direct economic benefits to the small business ecosystem in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring compliance with contract terms and quality standards. Transparency is limited due to the sole-source nature of the award. Accountability rests with the contractor to deliver parts as specified and with the agency to manage the contract effectively, though the lack of competition reduces external accountability.

Related Government Programs

KC-135 Stratotanker Sustainment Programs
DoD Aircraft Parts Procurement
Sole-Source Defense Contracts
Aerospace Manufacturing Support

Risk Flags

Sole-source award
Lack of competition
Potential for uncompetitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.9 million to MCDONNELL DOUGLAS CORP. KC-135 R/T/D & E MODELS (PDM) OPTION V

Who is the contractor on this award?

The obligated recipient is MCDONNELL DOUGLAS CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $18.9 million.

What is the period of performance?

Start: 2009-10-14. End: 2011-02-21.

What is the historical spending pattern for KC-135 PDM parts with McDonnell Douglas?

Analyzing historical spending for KC-135 PDM (Program Depot Maintenance) parts with McDonnell Douglas requires access to detailed contract databases beyond this single award. However, the current award of $18.9 million from October 2009 to February 2011 suggests a consistent need for these parts. To understand the pattern, one would look at the total obligated amounts across multiple contract actions over several years, identifying trends in spending volume, frequency of awards, and whether the pricing has escalated or remained stable. Without this broader context, it's difficult to ascertain if this $18.9 million represents a typical expenditure or an anomaly.

How does the pricing of these KC-135 parts compare to similar aircraft parts procured by the DoD?

Benchmarking the pricing of these KC-135 parts against similar aircraft parts procured by the DoD is challenging without specific part numbers and detailed specifications. However, given this was a sole-source award, there's a strong possibility that the prices are not as competitive as they would be in a fully competed environment. A proper comparison would involve identifying comparable parts (e.g., engine components, structural elements) for other aircraft types (like C-130 or B-52) and analyzing their unit costs, factoring in differences in complexity, materials, and manufacturing processes. The absence of competition here inherently limits the ability to definitively state if the pricing is favorable.

What are the specific risks associated with relying on a sole-source contractor for critical aircraft parts?

Relying on a sole-source contractor for critical aircraft parts presents several risks. Firstly, there's a significant risk of price gouging, as the contractor faces no competitive pressure to offer the best possible price. Secondly, it can lead to supply chain vulnerabilities; if the sole-source provider experiences production issues, financial instability, or decides to discontinue the product line, the government has limited alternatives. Thirdly, innovation may be stifled, as the contractor may have less incentive to invest in improving manufacturing processes or materials. Finally, the government's negotiating power is diminished, potentially leading to less favorable contract terms and conditions.

What is the track record of McDonnell Douglas Corp. in fulfilling DoD aircraft parts contracts?

McDonnell Douglas Corporation, now a part of Boeing, has a long and extensive track record of fulfilling aircraft and aircraft parts contracts for the Department of Defense. Historically, they have been a major prime contractor for numerous military aircraft programs, including the KC-135 itself during its initial production. Their experience spans decades, encompassing design, manufacturing, and sustainment support. While specific performance metrics for every contract are not publicly detailed, their continued role as a key defense supplier indicates a generally reliable, albeit sometimes costly, performance history in delivering complex aerospace components and systems to the DoD.

How effective are firm-fixed-price contracts in controlling costs for sole-source aircraft parts procurements?

Firm-fixed-price (FFP) contracts aim to provide cost certainty by establishing a set price for the goods or services. In the context of sole-source procurements for aircraft parts, FFP contracts can be effective in preventing cost overruns *after* the price has been agreed upon. However, they do not inherently guarantee a fair or competitive price at the outset. The effectiveness in controlling costs hinges heavily on the initial price negotiation and the government's ability to benchmark or estimate a reasonable price, which is significantly hampered in a sole-source situation. Therefore, while FFP provides budget predictability, it doesn't substitute for the cost-saving benefits of competition.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

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: 375 AIRLIFT DRIVE, SAN ANTONIO, TX, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,879,216

Exercised Options: $18,879,216

Current Obligation: $18,879,216

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810505D0004

IDV Type: IDC

Timeline