DoD awards $4.86B for 155 CH-47F helicopters, with 34 new builds and 121 renewals

Contract Overview

Contract Amount: $4,864,238,446 ($4.9B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2013-06-10

End Date: 2022-12-20

Contract Duration: 3,480 days

Daily Burn Rate: $1.4M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CH-47F CARGO HELICOPTER MULTIYEAR II. 34 NEW BUILD HELICOPTERS AND 121 RENEW HELICOPTERS.

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $4.86 billion to THE BOEING COMPANY for work described as: CH-47F CARGO HELICOPTER MULTIYEAR II. 34 NEW BUILD HELICOPTERS AND 121 RENEW HELICOPTERS. Key points: 1. Significant investment in fleet modernization and sustainment for critical cargo transport. 2. Sole-source award raises questions about price competition and potential cost savings. 3. Long-term contract duration (3480 days) suggests a strategic, ongoing need. 4. Firm Fixed Price contract type shifts cost risk to the contractor. 5. Focus on a single, established platform indicates a preference for proven capabilities. 6. High value suggests substantial impact on aviation manufacturing sector.

Value Assessment

Rating: fair

The total award of $4.86 billion for 155 CH-47F helicopters represents a substantial commitment. While specific per-unit costs are not directly comparable without detailed configuration and scope, the inclusion of both new builds and renewals suggests a blended average. The firm fixed price nature of the contract aims to control costs, but the lack of competition in the award process limits the ability to benchmark against alternative pricing models or identify potential cost efficiencies that might arise from a competitive bidding environment. Further analysis would require detailed breakdowns of new vs. renewal units and associated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to The Boeing Company. This indicates that the Army determined Boeing was the only source capable of meeting the requirement, likely due to the specialized nature of the CH-47F platform and its existing production capabilities. The absence of a competitive bidding process means that the price was negotiated directly, and there was no opportunity for other manufacturers to offer alternative solutions or potentially lower prices. This approach is often used for highly specialized or existing systems where transitioning to a new provider would be prohibitively expensive or disruptive.

Taxpayer Impact: Taxpayers may not benefit from the cost savings typically achieved through competitive bidding. The negotiated price reflects the government's assessment of a fair price without the pressure of competing offers, potentially leading to a higher overall cost compared to a competed contract.

Public Impact

The U.S. Army benefits from the continued availability and modernization of its heavy-lift cargo helicopter fleet. Services delivered include the manufacturing of new CH-47F helicopters and the refurbishment/renewal of existing ones. The geographic impact is primarily national, supporting military operations and readiness across various theaters. Workforce implications include sustained employment at Boeing facilities involved in aircraft manufacturing and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings for taxpayers.
Long-term contract duration could lead to price increases if not managed effectively.
Reliance on a single contractor for a critical asset poses supply chain risks.

Positive Signals

Firm Fixed Price contract shifts cost risk to the contractor, promoting budget predictability.
Awarding to an incumbent contractor ensures continuity of operations for a vital platform.
Focus on a proven platform (CH-47F) minimizes technical risks associated with new development.

Sector Analysis

The CH-47F Chinook is a key asset in the U.S. military's rotary-wing aviation capabilities, primarily used for heavy lift and troop/cargo transport. This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft production and sustainment. The market for such specialized military aircraft is highly concentrated, with a limited number of prime contractors capable of producing and supporting these complex systems. Spending in this category is driven by defense modernization priorities and the need to maintain operational readiness for aging fleets.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss: false' and 'sb: false'. The prime contractor, The Boeing Company, is a large aerospace manufacturer. While Boeing may engage in subcontracting with small businesses for various components and services, the primary award itself is not directed towards small businesses. The lack of a specific small business set-aside means that opportunities for small businesses are likely indirect, through Boeing's supply chain, rather than direct prime contracting.

Oversight & Accountability

The contract is managed by the Department of the Army, a component of the Department of Defense. Oversight mechanisms would typically include program management reviews, contract performance monitoring, and potentially audits by the Defense Contract Audit Agency (DCAA) and the Department of Defense Office of Inspector General (DoD OIG). Transparency is facilitated through contract databases like FPDS, though detailed pricing and negotiation specifics for sole-source awards are often less public. The firm fixed price structure provides a degree of accountability by capping the government's financial exposure.

Related Government Programs

CH-47 Chinook Helicopter Program
Army Aviation Modernization Programs
Heavy-Lift Helicopter Procurement
Defense Aircraft Manufacturing Contracts

Risk Flags

Sole-source award
Long contract duration
High dollar value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $4.86 billion to THE BOEING COMPANY. CH-47F CARGO HELICOPTER MULTIYEAR II. 34 NEW BUILD HELICOPTERS AND 121 RENEW HELICOPTERS.

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 $4.86 billion.

What is the period of performance?

Start: 2013-06-10. End: 2022-12-20.

What is the historical spending trend for the CH-47F program?

Historical spending on the CH-47F program, including previous multiyear contracts and individual procurements, indicates a consistent and significant investment by the Department of the Army over many years. Prior to this $4.86 billion multiyear award, the Army had already procured hundreds of CH-47F aircraft and invested in upgrades and sustainment. Data from sources like the Federal Procurement Data System (FPDS) would show a cumulative spending in the tens of billions of dollars for the CH-47 family of aircraft over the past two decades. This sustained investment reflects the platform's critical role in military logistics and its long service life, necessitating ongoing procurement and modernization efforts to maintain fleet readiness and capability.

How does the per-unit cost of new CH-47F builds compare to previous procurements?

Determining an exact per-unit cost comparison for new CH-47F builds under this contract is challenging without a detailed breakdown of the $4.86 billion award between the 34 new builds and 121 renewals, and without access to the negotiated pricing details. However, general trends in defense contracting suggest that per-unit costs for aircraft can increase over time due to inflation, evolving technological requirements, and potential changes in production efficiency. Given that this is a sole-source award, direct benchmarking against competitive bids for similar aircraft is not possible. The inclusion of renewals, which typically involve refurbishment and upgrades rather than full new production, further complicates a direct 'apples-to-apples' cost comparison. The firm fixed price nature aims to cap costs, but the baseline price is subject to negotiation.

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

The primary risks associated with this sole-source contract stem from the lack of competition. Firstly, there is a risk of paying a premium price, as the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process. Secondly, there's a potential for reduced innovation or efficiency gains, as the sole contractor may face less pressure to optimize production or introduce cost-saving measures. Thirdly, a sole-source award can create a dependency on a single supplier, potentially leading to supply chain vulnerabilities or difficulties in future contract negotiations if the contractor leverages their unique position. Finally, oversight becomes even more critical to ensure the negotiated price is indeed fair and reasonable, requiring robust cost analysis by the government.

What is the expected performance period and delivery schedule for these helicopters?

The contract has a duration of 3480 days, which translates to approximately 9.5 years, spanning from the start date of June 10, 2013, to the estimated completion date of December 20, 2022. This long duration indicates a phased delivery and production schedule for the 34 new build and 121 renewal CH-47F helicopters. The specific delivery schedule for individual aircraft or batches would be detailed within the contract's CLINs (Contract Line Item Numbers) and delivery orders. The extended period allows for the integration of production, sustainment, and modernization efforts over a significant portion of the aircraft's lifecycle, ensuring a steady supply and support for the Army's fleet.

What is the significance of the 'Aircraft Manufacturing' Product Service Code (PSC)?

The Product Service Code (PSC) '336411' specifically designates 'Aircraft Manufacturing.' This classification indicates that the primary purpose of this contract is the production of aircraft. For the CH-47F CARGO HELICOPTER MULTIYEAR II contract, this PSC signifies that the core of the award involves the manufacturing of new helicopters and potentially the remanufacturing or significant overhaul (renewal) of existing ones, aligning with the definition of aircraft production. This code helps categorize federal spending and allows for analysis of procurement trends within the aerospace manufacturing industry.

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

Solicitation ID: W58RGZ11R0001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ROUTE 291 & STEWART AVE, RIDLEY PARK, PA, 19078

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: $5,246,282,275

Exercised Options: $4,864,238,446

Current Obligation: $4,864,238,446

Subaward Activity

Number of Subawards: 855

Total Subaward Amount: $261,902,535

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline