DoD's $14M contract for airframe components awarded to McDonnell Douglas Helicopter Company shows potential value concerns

Contract Overview

Contract Amount: $14,079,598 ($14.1M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2003-12-08

End Date: 2007-01-10

Contract Duration: 1,129 days

Daily Burn Rate: $12.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200408!000965!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04C0016 !A!N! !N! ! !20031208!20060430!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000007118324!N!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1A!AIRFRAMES AND SPARES !000 !* !541330!E! !1! ! ! ! ! !99990909!B! ! !A! !D!N!J!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!D!N! ! ! !Y! ! !0001! !

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $14.1 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: 200408!000965!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04C0016 !A!N! !N! ! !20031208!20060430!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARI… Key points: 1. The contract's value of $14.1 million for airframe structural components raises questions about cost-effectiveness. 2. Awarded on a sole-source basis, the lack of competition limits price discovery and potentially inflates costs. 3. The contract duration of over three years suggests a need for ongoing supply, but the pricing needs scrutiny. 4. The specific components procured are critical for aviation platforms, indicating a significant operational impact. 5. The contractor, McDonnell Douglas Helicopter Company, has a history in defense manufacturing, but this specific award warrants further review. 6. The absence of small business subcontracting goals on this contract may limit opportunities for smaller enterprises.

Value Assessment

Rating: questionable

The contract's total value of $14,079,598 for airframe structural components appears high given the lack of competitive bidding. Without benchmark data or multiple bids, it is difficult to definitively assess value for money. However, the unit cost for the components, if calculable, should be compared against industry standards for similar parts. The firm-fixed-price nature of the contract shifts some risk to the contractor, but the overall price needs validation against market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly limits the opportunity for competitive pricing and potentially leads to higher costs for the government. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur when multiple companies vie for a contract. This approach is often justified by unique capabilities or urgent needs, but transparency around these justifications is crucial.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The government's ability to secure the best possible price is diminished when only one source is considered.

Public Impact

The primary beneficiaries are likely the U.S. Army aviation units that rely on these airframe structural components for their helicopters. The contract delivers essential parts for maintaining and operating military aircraft, ensuring operational readiness. The geographic impact is primarily within the defense sector, supporting military aviation infrastructure. The contract supports jobs within McDonnell Douglas Helicopter Company and its supply chain, contributing to the aerospace workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to overpayment.
Lack of transparency in the justification for sole-source award.
Absence of small business subcontracting goals may limit opportunities for smaller firms.
The specific components and their pricing require further validation against market rates.

Positive Signals

Firm-fixed-price contract shifts some cost risk to the contractor.
Contractor has experience in helicopter manufacturing.
Award supports critical aviation components for military readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft components. The market for such specialized parts is often characterized by high barriers to entry due to technical expertise and stringent quality requirements. While the overall market size for aerospace components is substantial, individual contracts for specific parts can be niche. Benchmarking this contract's value against similar procurements for airframe structural components would be necessary for a comprehensive assessment.

Small Business Impact

This contract does not appear to have included small business set-aside provisions, nor are there explicit mentions of subcontracting goals for small businesses. This suggests that opportunities for small businesses to participate in this specific procurement were limited. The absence of such provisions means that the potential economic benefits for the small business ecosystem associated with this contract may not have been fully realized.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management systems. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is a concern due to the sole-source nature of the award, and further review would be needed to assess the adequacy of the justification and any associated oversight processes.

Related Government Programs

Aircraft Parts and Auxiliary Equipment
Military Aircraft Manufacturing
Aerospace Component Procurement
Defense Logistics Agency (DLA) Contracts
Army Aviation Systems

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency on justification
Absence of small business subcontracting goals

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.1 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. 200408!000965!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04C0016 !A!N! !N! ! !20031208!20060430!047800297!006265946!009256819!N!MCDONNELL DOUGLAS HELICOPTER C!5000 E MCDOWELL ROAD !MESA !AZ!85215!46000!013!04!MESA !MARICOPA !ARIZONA !+000007118324!N!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1A!AIRFRAMES AND SPARES !000 !* !541330!E! !1! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is MCDONNELL DOUGLAS HELICOPTER COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $14.1 million.

What is the period of performance?

Start: 2003-12-08. End: 2007-01-10.

What is the specific type and function of the 'AIRFRAME STRUCTURAL COMPONENTS' procured under this contract?

The data indicates the contract is for 'AIRFRAME STRUCTURAL COMPONENTS' under Product Service Code (PSC) 541330, which falls under the category of 'AIRFRAMES AND SPARES'. These components are critical structural elements of helicopters or other aircraft, essential for the integrity and flightworthiness of the airframe. Examples could include fuselage sections, wing spars, tail booms, or other load-bearing parts. Their specific function is to provide the foundational structure upon which all other aircraft systems are mounted and to withstand the stresses of flight operations. The exact nature of these components would be detailed in the contract's statement of work.

Can the value of this contract be benchmarked against similar procurements for airframe structural components?

Benchmarking this contract's value is challenging without access to a broader dataset of similar sole-source or competitively awarded contracts for comparable airframe structural components. The $14.1 million award for a duration of over three years (1129 days) suggests an average annual value of approximately $4.7 million. However, the complexity, material, and criticality of the specific components are unknown. A thorough benchmark would require identifying contracts with similar PSCs, quantities, specifications, and contractor capabilities. Given the sole-source nature, it is highly probable that competitive bids would have yielded a lower price, making direct benchmarking difficult and highlighting a potential value concern.

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

Sole-source awards for critical aviation components carry several risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the price discovery process inherent in competitive bidding. This can result in a lower value for taxpayer money. Secondly, there's a risk of reduced innovation and quality, as the sole contractor may face less pressure to improve products or services. Thirdly, it creates a dependency on a single supplier, which can be problematic if the contractor experiences production issues, financial instability, or decides to exit the market. Finally, the justification for a sole-source award must be robust to ensure it is truly necessary and not a result of poor planning or market research.

What is the track record of McDonnell Douglas Helicopter Company regarding government contracts, particularly for aviation components?

McDonnell Douglas Helicopter Company, now part of Boeing, has a long and significant history of supplying helicopters and related components to the U.S. military. They were a major manufacturer of various helicopter platforms, including attack and transport models. Their track record generally includes successful delivery of complex systems and components. However, like any large defense contractor, they would have been subject to various contract reviews and performance evaluations over the years. For this specific contract, the focus would be on their performance related to 'AIRFRAME STRUCTURAL COMPONENTS' and whether they met the quality and delivery requirements within the agreed-upon terms.

How does this contract's spending compare to overall U.S. Army aviation spending or similar component procurements?

Comparing this $14.1 million contract to overall U.S. Army aviation spending provides context but requires broader data. The U.S. Army's aviation budget typically runs into billions of dollars annually, covering procurement, research, development, and sustainment of a vast fleet of aircraft. This single contract represents a small fraction of that total budget. To assess its significance, it would be more relevant to compare it to the historical spending on similar airframe structural components or to the total sustainment costs for the specific helicopter platforms these parts are intended for. Without that granular data, it's difficult to determine if this spending level is typical or anomalous.

What are the implications of the contract's duration (1129 days) on its overall value and risk?

A contract duration of 1129 days (approximately 3 years and 1 month) for airframe structural components suggests a sustained need for these parts, likely for ongoing maintenance, repair, and overhaul (MRO) activities or for integration into new platforms over an extended period. From a value perspective, a longer duration can sometimes allow for better pricing through economies of scale or multi-year production planning. However, it also extends the period during which the government is committed to a potentially non-competitive price. The risk associated with a longer duration includes potential obsolescence of technology (less likely for structural components), contractor performance degradation over time, and the risk of the government being locked into a suboptimal price if market conditions change significantly.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

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

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 5000 E MCDOWELL ROAD, MESA, AZ, 04

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline