DoD's $988M Block III Helicopter Contract Awarded to McDonnell Douglas Without Competition

Contract Overview

Contract Amount: $987,774,841 ($987.8M)

Contractor: Mcdonnell Douglas Helicopter Company

Awarding Agency: Department of Defense

Start Date: 2009-07-30

End Date: 2018-09-30

Contract Duration: 3,349 days

Daily Burn Rate: $294.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BLOCK III LOW RATE INITIAL PRODUCTION

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $987.8 million to MCDONNELL DOUGLAS HELICOPTER COMPANY for work described as: BLOCK III LOW RATE INITIAL PRODUCTION Key points: 1. Significant spending on aircraft manufacturing, specifically helicopters. 2. Sole-source award to McDonnell Douglas raises questions about price discovery. 3. Long contract duration (3349 days) may indicate complex program needs. 4. High contract value suggests substantial taxpayer investment.

Value Assessment

Rating: questionable

The contract value of $987,774,841.18 is substantial. Without competitive bidding, it's difficult to benchmark pricing against similar contracts or market rates, making a direct value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This method limits price discovery and potentially leads to higher costs for the government compared to a competitive process.

Taxpayer Impact: The lack of competition for nearly $1 billion in spending means taxpayers may not have received the best possible price for these helicopters.

Public Impact

Taxpayers funded a large sole-source contract for helicopter production. The Department of the Army is the primary beneficiary of this spending. The long duration of the contract suggests a sustained need for these aircraft.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
High contract value
Long contract duration

Positive Signals

Firm Fixed Price contract type can provide cost certainty if negotiated well.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a significant part of the defense industrial base. Spending benchmarks for similar sole-source helicopter programs are difficult to establish due to the nature of the award.

Small Business Impact

The data does not indicate any specific provisions or participation by small businesses in this contract, suggesting it was likely awarded to a large prime contractor without significant subcontracting to smaller entities.

Oversight & Accountability

The sole-source nature of this contract warrants scrutiny from oversight bodies to ensure the government received fair value and that the justification for not competing the award was sound.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $987.8 million to MCDONNELL DOUGLAS HELICOPTER COMPANY. BLOCK III LOW RATE INITIAL PRODUCTION

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 $987.8 million.

What is the period of performance?

Start: 2009-07-30. End: 2018-09-30.

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

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Without further documentation, the specific rationale for this nearly $1 billion helicopter contract remains unclear and requires investigation to ensure it was appropriate and in the government's best interest.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risk is inflated pricing due to the absence of competitive pressure. Other risks include potential for contractor complacency, reduced innovation, and a lack of transparency in cost justification. For a contract valued at nearly $1 billion, these risks are amplified, necessitating robust government oversight and negotiation.

How does the firm fixed price (FFP) structure impact the value and risk for this sole-source contract?

An FFP contract aims to provide cost certainty for the government. However, in a sole-source scenario, the 'fixed price' is negotiated without competitive benchmarks. While it shifts cost overrun risk to the contractor, the initial price might be higher than in a competed environment, potentially diminishing the overall value proposition for taxpayers.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

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 RD, MESA, AZ, 85215

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $987,774,841

Exercised Options: $987,774,841

Current Obligation: $987,774,841

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline