DoD Awards Boeing $1.3B for Apache Block III Production, Raising Concerns Over Competition
Contract Overview
Contract Amount: $1,298,998,009 ($1.3B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2012-06-29
End Date: 2023-12-31
Contract Duration: 4,202 days
Daily Burn Rate: $309.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: ADVANCE PROCUREMENT FOR LOTS 3 AND 4 OF APACHE BLOCK III FULL RATE PRODUCTION
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $1.30 billion to THE BOEING COMPANY for work described as: ADVANCE PROCUREMENT FOR LOTS 3 AND 4 OF APACHE BLOCK III FULL RATE PRODUCTION Key points: 1. Significant contract value of $1.3 billion awarded to a single large business. 2. Lack of competition raises questions about price discovery and potential overspending. 3. Long contract duration (2012-2023) may indicate evolving requirements or extended sole-source justification. 4. The sector is dominated by a few large defense contractors, limiting competitive opportunities.
Value Assessment
Rating: questionable
The contract value of $1.3 billion for Apache Block III production is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market alternatives or previous production runs.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to The Boeing Company. This limits price discovery mechanisms and may result in higher costs for taxpayers.
Taxpayer Impact: The absence of competition for a contract of this magnitude suggests taxpayers may be paying a premium for these aircraft components.
Public Impact
Taxpayers may be overpaying for critical defense components due to a lack of competitive bidding. The long-term nature of the contract could impact the agility of defense procurement and innovation. Reliance on a single supplier for major components can create supply chain vulnerabilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- High contract value
- Long contract duration
- Sole-source award
Positive Signals
- Advance procurement for critical defense assets
- Award to established prime contractor
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically for aircraft parts. Spending in this sector is often characterized by high R&D costs, long production cycles, and significant government oversight due to national security implications.
Small Business Impact
The contract was awarded to The Boeing Company, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award, which is common for prime contracts of this nature.
Oversight & Accountability
Given the sole-source nature and high value, robust oversight is crucial to ensure fair pricing and performance. The contract's long duration warrants continuous monitoring of cost and schedule adherence.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competitive bidding
- Potential for inflated pricing
- Limited transparency in cost determination
- Dependency on a single supplier
- Long contract duration without clear performance milestones
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, az, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.30 billion to THE BOEING COMPANY. ADVANCE PROCUREMENT FOR LOTS 3 AND 4 OF APACHE BLOCK III FULL RATE PRODUCTION
Who is the contractor on this award?
The obligated recipient is THE BOEING 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 $1.30 billion.
What is the period of performance?
Start: 2012-06-29. End: 2023-12-31.
What specific justifications were provided for not competing this advance procurement contract, and how do they align with federal procurement regulations?
Federal regulations allow for sole-source procurement under specific circumstances, such as when only one responsible source can provide the required supplies or services. For this Apache Block III advance procurement, the justification likely centers on the unique capabilities of The Boeing Company as the prime contractor for the Apache platform, potentially citing proprietary technology, existing infrastructure, or the need for seamless integration with ongoing production. A thorough review would examine the documented rationale against the criteria for non-competitive awards to ensure it was fully justified and not simply a matter of convenience.
How does the per-unit cost of components under this contract compare to industry benchmarks or previous procurements of similar Apache components?
Without access to detailed cost breakdowns and competitive bidding data, a direct per-unit cost comparison is challenging. However, the absence of competition inherently raises concerns that the pricing may not reflect the most cost-effective options available. Benchmarking against historical data for the Apache program or similar military aircraft components, adjusted for inflation and technological upgrades, would be necessary. A significant deviation from historical trends or industry averages, especially without clear justification, would signal potential value concerns.
What are the potential risks associated with a long-term, sole-source contract for critical defense components like those for the Apache helicopter?
Long-term, sole-source contracts for critical defense components carry several risks. Firstly, they can lead to complacency and reduced incentive for the contractor to innovate or optimize costs, potentially resulting in higher prices for taxpayers. Secondly, they create a dependency on a single supplier, increasing vulnerability to supply chain disruptions, production delays, or even contractor viability issues. Lastly, the lack of competition hinders the government's ability to leverage market forces to secure the best possible value and technological advancements.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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
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: $1,298,998,009
Exercised Options: $1,298,998,009
Current Obligation: $1,298,998,009
Contract Characteristics
Consolidated Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2012-06-29
Current End Date: 2023-12-31
Potential End Date: 2023-12-31 12:12:00
Last Modified: 2025-09-02
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