DoD's $65M McDonnell Douglas contract for aircraft parts awarded without competition, spanning 18 years

Contract Overview

Contract Amount: $64,999,980 ($65.0M)

Contractor: Mcdonnell Douglas Corporation

Awarding Agency: Department of Defense

Start Date: 1993-03-15

End Date: 2011-08-13

Contract Duration: 6,725 days

Daily Burn Rate: $9.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: SAINT LOUIS, ST. LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $65.0 million to MCDONNELL DOUGLAS CORPORATION for work described as: Key points: 1. Value for money is difficult to assess due to the lack of competition and long duration. 2. Competition dynamics were non-existent, as the contract was sole-sourced. 3. Risk indicators include the extended contract period and sole-source award, potentially leading to higher costs. 4. Performance context is limited without specific details on the aircraft parts or their criticality. 5. Sector positioning is within the defense industrial base, specifically aircraft component manufacturing.

Value Assessment

Rating: questionable

Assessing value for money is challenging given the sole-source nature of this contract and the absence of competitive bids. The firm fixed-price structure provides some cost certainty, but without benchmarks or comparisons to similar contracts, it's difficult to determine if the $65 million price tag represents a fair market value. The extended duration of over 18 years also raises questions about potential cost escalations or whether more competitive pricing could have been achieved through periodic re-competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. The data does not provide the justification for this sole-source award, which could be due to factors like proprietary technology, unique capabilities of the contractor, or urgent national security needs. The lack of competition limits price discovery and may result in less favorable pricing for the government compared to a competed procurement.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, potentially funding inefficiencies or higher profit margins for the contractor.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches relying on the specific aircraft parts supplied. Services delivered include the provision of critical aircraft components, ensuring the operational readiness of military aircraft. Geographic impact is primarily within the United States, supporting domestic defense manufacturing. Workforce implications include sustained employment at McDonnell Douglas and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award lacks competitive pressure, potentially inflating costs over the long contract term.
Extended contract duration (18+ years) increases the risk of price creep and reduced value.
Lack of transparency regarding the justification for sole-sourcing hinders accountability.
Limited performance data makes it difficult to assess the true value and effectiveness of the contract.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Long-standing relationship with a major defense contractor suggests established supply chain and quality control.
Sustained delivery of critical aircraft parts likely contributed to ongoing military readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a critical component of the U.S. industrial base. The market for military aircraft parts is often characterized by high barriers to entry, specialized manufacturing processes, and a limited number of qualified suppliers, which can sometimes lead to sole-source procurements. Spending in this area is substantial, reflecting the ongoing need to maintain and modernize military aviation fleets.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it suggest significant subcontracting opportunities for small businesses were a primary consideration in its award. As a sole-source contract with a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless McDonnell Douglas actively engaged small businesses in its supply chain for these specific parts.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Defense Contract Management Agency (DCMA), responsible for contract administration and ensuring compliance. Accountability measures are inherent in the firm fixed-price structure, but the lack of competition and the long duration limit the government's ability to actively manage costs and performance through market forces. Transparency is limited due to the sole-source nature and the absence of publicly available justification details.

Related Government Programs

Aircraft Component Procurement
Defense Logistics Agency Contracts
Military Aircraft Maintenance and Repair
Sole-Source Defense Contracts
McDonnell Douglas Contracts

Risk Flags

Sole-source award without clear justification.
Long contract duration increases risk of cost inefficiency.
Lack of competitive benchmarking hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $65.0 million to MCDONNELL DOUGLAS CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is MCDONNELL DOUGLAS CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $65.0 million.

What is the period of performance?

Start: 1993-03-15. End: 2011-08-13.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data does not specify the justification for the sole-source award of this contract to McDonnell Douglas Corporation. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is capable of providing the required supplies or services, or when there is a compelling urgency. Without further documentation or context, it is impossible to determine the exact reason, which could range from proprietary technology to unique manufacturing capabilities or a critical, time-sensitive need that precluded a competitive process. This lack of transparency is a common concern with sole-source awards.

How does the $65 million total obligation compare to similar aircraft parts contracts?

Directly comparing the $65 million total obligation for this contract to similar aircraft parts contracts is challenging without more specific information about the nature of the parts, their quantity, and the specific aircraft platforms they support. The contract spanned over 18 years, making a simple total obligation comparison potentially misleading. A more accurate assessment would require benchmarking the per-unit costs or the cost of equivalent systems procured competitively during the contract's period of performance. Given the sole-source nature, it is plausible that the pricing may not reflect the most competitive market rates achievable through open competition.

What are the primary risks associated with a sole-source contract of this duration?

The primary risks associated with a sole-source contract of this duration (over 18 years) include potential cost escalation, reduced incentive for contractor efficiency, and a lack of innovation. Without competitive pressure, the contractor may have less incentive to reduce costs or improve processes over time. The government also loses the opportunity to benefit from new technologies or more cost-effective solutions that might emerge in the market. Furthermore, the extended period increases the risk of the government becoming locked into a potentially suboptimal arrangement, making it difficult and costly to switch suppliers if needed.

Can the performance effectiveness of this contract be assessed based on the available data?

The available data provides limited insight into the performance effectiveness of this contract. We know the contract was for aircraft parts and was awarded to McDonnell Douglas Corporation, with a total obligation of $65 million over approximately 18 years. However, there is no information regarding the specific parts, their criticality, delivery schedules, quality metrics, or mission impact. While the contract's duration suggests a sustained need and likely ongoing delivery, a true assessment of effectiveness would require performance reports, user feedback, and data on operational readiness or mission success directly attributable to these parts.

What has been the historical spending trend for this specific type of aircraft part or system?

The provided data does not offer historical spending trends for the specific aircraft parts covered under this contract. It only presents a single contract award to McDonnell Douglas Corporation totaling $65 million, initiated in 1993 and ending in 2011. To understand historical spending patterns, one would need access to broader contract databases or historical procurement records for the relevant aircraft systems and their components. Analyzing past procurements, including both competitive and sole-source awards, would be necessary to identify trends in volume, pricing, and supplier choices over time.

What is the significance of the contract type being 'FIRM FIXED PRICE' in this context?

The 'FIRM FIXED PRICE' (FFP) contract type is significant because it places the primary risk of cost overruns on the contractor, McDonnell Douglas Corporation. In an FFP agreement, the price is set and is not subject to adjustment based on the contractor's cost experience. This provides the government with cost certainty, as the total expenditure is known upfront, assuming the contract is fulfilled as specified. However, for a sole-source contract of long duration, the initial fixed price might have been set at a level that already accounted for anticipated risks and profit margins, potentially at a higher rate than if competition had been present.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: P O BOX 516, SAINT LOUIS

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline