DoD awards $269M fixed-price contract for T-45TS airframes and spares to McDonnell Douglas Corporation

Contract Overview

Contract Amount: $268,955,413 ($269.0M)

Contractor: Mcdonnell Douglas Corporation

Awarding Agency: Department of Defense

Start Date: 1999-10-01

End Date: 2031-01-01

Contract Duration: 11,415 days

Daily Burn Rate: $23.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200006!1700!000220!AC5G1 !COMNAVAIRSYSCOMHQ !N0001998C0114 !A!*!P00008 !19990908!20041030!006265946!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !LAMBERT ST LOUIS AIRPORT !SAINT LOUIS !MO!63103!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !0001!+000005169264!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !2ATS!T-45TS !3721!3!*!*!C!B!A!*!D !Y!J!1!001!N!1A!A!N!F!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: SAINT LOUIS, ST. LOUIS County, MISSOURI, 63134, UNITED STATES OF AMERICA

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $269.0 million to MCDONNELL DOUGLAS CORPORATION for work described as: 200006!1700!000220!AC5G1 !COMNAVAIRSYSCOMHQ !N0001998C0114 !A!*!P00008 !19990908!20041030!006265946!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !LAMBERT ST LOUIS AIRPORT !SAINT LOUIS !MO!63103!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !0001!+000005169264!N!… Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Long contract duration of over 11 years suggests a sustained need for these aircraft components. 3. The contract value of $269M is significant, indicating substantial investment in the T-45TS program. 4. Fixed-price contract type shifts risk to the contractor, potentially leading to higher initial pricing. 5. The award to a single, large defense contractor warrants scrutiny of market dynamics and potential barriers to entry. 6. Performance period spans from 1999 to 2031, encompassing multiple fiscal years and program phases.

Value Assessment

Rating: fair

The total contract value of $269 million for T-45TS airframes and spares over an 11-year period averages approximately $24.5 million annually. Without specific benchmarks for T-45TS airframe production or spare part costs, a direct value-for-money assessment is challenging. However, the sole-source nature of the award suggests limited opportunity for competitive pricing, which could lead to less favorable terms for the government compared to a competed contract. Further analysis would require comparing unit costs to historical data or similar aircraft programs.

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 typically occurs when only one responsible source can provide the required goods or services. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. While justified in certain circumstances, sole-source awards generally result in higher costs for taxpayers compared to fully competed contracts.

Taxpayer Impact: The absence of competition for this significant contract means taxpayers may not be receiving the most cost-effective solution. Without competitive pressure, the contractor has less incentive to offer the lowest possible price, potentially leading to overspending.

Public Impact

The primary beneficiaries are the U.S. Navy and Marine Corps, who utilize the T-45TS aircraft for training. The contract ensures the continued availability of critical airframes and spare parts for the T-45TS training aircraft fleet. This contract supports the operational readiness of naval aviation training programs. The contract has implications for the aerospace manufacturing workforce, particularly at McDonnell Douglas Corporation's facilities in St. Louis, Missouri.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Long contract duration may obscure potential cost efficiencies or opportunities for renegotiation.
Lack of transparency in the sole-source justification requires careful review to ensure necessity.
Reliance on a single contractor for critical components could pose supply chain risks.

Positive Signals

Firm Fixed Price contract type shifts cost overrun risk to the contractor.
Award to an established defense contractor suggests a degree of reliability and existing expertise.
Sustained contract provides long-term stability for production and supply chain planning.
The T-45TS is a critical platform for naval aviator training, ensuring program continuity.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on military aircraft components. The market for specialized military aircraft parts is often characterized by high barriers to entry due to stringent quality requirements, complex manufacturing processes, and established relationships with government agencies. Spending in this area is driven by defense modernization and sustainment programs. Comparable spending benchmarks would involve analyzing other contracts for airframes and major components for training or tactical aircraft.

Small Business Impact

This contract does not appear to include a small business set-aside. The award is made directly to McDonnell Douglas Corporation, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within this award notice. The absence of a set-aside or clear subcontracting goals may limit opportunities for small businesses to participate in this significant defense contract, potentially impacting the broader small business ecosystem within the aerospace supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and administration functions, likely through the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the firm fixed-price structure, which obligates the contractor to deliver specified goods within the agreed-upon price. Transparency is limited due to the sole-source nature of the award; however, contract modifications and performance reports would be subject to internal DoD review and potentially Inspector General oversight if performance issues arise.

Related Government Programs

T-45 Goshawk Program
Naval Air Training Command Aircraft Procurement
Military Aircraft Manufacturing
Aerospace Component Supply Contracts

Risk Flags

Sole-source award
Long contract duration
Lack of public cost transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $269.0 million to MCDONNELL DOUGLAS CORPORATION. 200006!1700!000220!AC5G1 !COMNAVAIRSYSCOMHQ !N0001998C0114 !A!*!P00008 !19990908!20041030!006265946!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !LAMBERT ST LOUIS AIRPORT !SAINT LOUIS !MO!63103!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !0001!+000005169264!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !2ATS!T-45TS !3721!3!*!*!C!B!A!*!D !Y!J!1!001!N!1A!A!N!F!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

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 $269.0 million.

What is the period of performance?

Start: 1999-10-01. End: 2031-01-01.

What is the historical spending pattern for T-45TS airframes and spares with McDonnell Douglas Corporation or its successors?

Analyzing historical spending requires access to detailed contract modification data and previous contract awards for the T-45TS program. This specific contract (N0001998C0114) represents a significant portion of spending from 1999 to 2031. Without prior contract data, it's difficult to establish a precise historical trend. However, the duration and value suggest a long-term commitment to this platform. Further investigation into prior contracts awarded to McDonnell Douglas (now part of Boeing) for the T-45 program would be necessary to fully understand the historical spending trajectory and identify any significant shifts in cost or volume.

How does the per-unit cost of T-45TS airframes under this contract compare to industry benchmarks or similar aircraft programs?

Determining the precise per-unit cost of T-45TS airframes is challenging without access to specific delivery schedules and the breakdown of the total contract value into unit prices for airframes versus spares. Furthermore, direct comparison to industry benchmarks is difficult due to the specialized nature of military training aircraft and the sole-source award, which limits public pricing data. To conduct a robust comparison, one would need to identify comparable fixed-wing training aircraft programs, analyze their acquisition costs per unit, and account for differences in complexity, technology, and production volume. The lack of competition in this sole-source award suggests that such a comparison might reveal a less favorable price than could be achieved through competitive bidding.

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

The primary risk of a sole-source award for critical aircraft components is the lack of price competition, which can lead to inflated costs for the government and taxpayers. Without competing bids, the contractor has less incentive to offer the lowest possible price. Additionally, sole-source contracts can reduce the government's leverage in negotiating terms and conditions. There's also a risk of complacency from the contractor, potentially impacting innovation or responsiveness. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the sole source experiences production issues or goes out of business, it could significantly disrupt the availability of essential parts, impacting aircraft readiness.

What is the track record of McDonnell Douglas Corporation (now Boeing) in delivering complex aerospace components for military aircraft programs?

McDonnell Douglas Corporation, prior to its merger with Boeing, had a long and established track record in the defense aerospace industry, delivering numerous complex military aircraft and components. They were known for programs such as the F/A-18 Hornet, AV-8B Harrier, and C-17 Globemaster III. Their experience in producing airframes and integrated systems for military applications is extensive. Since the merger, Boeing Defense, Space & Security has continued this legacy. While specific performance metrics for this particular T-45TS contract require detailed review of delivery orders and performance reports, the company's history suggests a strong capability in meeting the technical and quality demands of such contracts.

How does the duration of this contract (1999-2031) impact the assessment of its value and potential risks?

The exceptionally long duration of this contract, spanning over three decades, significantly impacts its assessment. On one hand, it provides long-term stability and predictability for both the government and the contractor, ensuring the sustained availability of critical training aircraft components. This can facilitate efficient production planning and supply chain management. However, such a lengthy commitment also introduces substantial risks. Market conditions, technological advancements, and geopolitical landscapes can change dramatically over 30 years, potentially rendering the contracted terms suboptimal or the technology obsolete. It also increases the risk of cost escalation over time if not adequately managed through contract clauses, and it limits the government's flexibility to adapt to future needs or explore alternative solutions.

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: P.O. BOX 516, SAINT LOUIS, MO, 63166

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline