Boeing awarded $26.9M for Apache helicopter support, raising questions about competition and value
Contract Overview
Contract Amount: $26,910,558 ($26.9M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2015-06-11
End Date: 2021-02-28
Contract Duration: 2,089 days
Daily Burn Rate: $12.9K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: IGF::CL,CT::IGF APACHE AH-64E FOREIGN MILITARY SALES, SAUDI ARABIAN NATIONAL GUARD POST PRODUCTION SUPPORT SERVICES UNDEFINITIZED CONTRACT ACTION
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $26.9 million to THE BOEING COMPANY for work described as: IGF::CL,CT::IGF APACHE AH-64E FOREIGN MILITARY SALES, SAUDI ARABIAN NATIONAL GUARD POST PRODUCTION SUPPORT SERVICES UNDEFINITIZED CONTRACT ACTION Key points: 1. Contract awarded to a single source, limiting price discovery and potentially increasing costs. 2. Long contract duration of 2089 days suggests a need for sustained support services. 3. The contract is for post-production support, indicating a focus on sustainment rather than new development. 4. Awarded as an undefinitized contract action, which can carry higher risk and cost uncertainty. 5. The specific services provided are engineering-related, supporting complex military hardware. 6. Lack of competition is a significant indicator of potential value-for-money concerns.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to the lack of competitive bids and the nature of undefinitized contract actions. The $26.9 million award for post-production support of Apache helicopters to a sole-source provider, The Boeing Company, suggests a premium may be paid compared to a competitively bid scenario. Without comparable contract data for similar support services under open competition, it's difficult to definitively assess if the pricing reflects fair market value. The undefinitized nature of the award also introduces cost uncertainty, as final pricing is determined post-award.
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. The data indicates it was 'NOT AVAILABLE FOR COMPETITION.' This approach typically occurs when only one responsible source can provide the required supplies or services. In this case, as the original manufacturer of the Apache AH-64E, Boeing is likely the only entity capable of providing the specialized post-production support. The lack of competition means that the government did not benefit from the price reductions and innovation that typically arise from a competitive bidding process.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This can result in less efficient use of public funds compared to contracts secured through open competition.
Public Impact
The primary beneficiaries are the Saudi Arabian National Guard, receiving essential support for their Apache AH-64E helicopter fleet. The services delivered include engineering support crucial for maintaining the operational readiness of advanced military aircraft. The geographic impact is primarily within Arizona, where the contractor is located, but the ultimate impact is on the operational capabilities of a foreign military partner. Workforce implications include employment for engineers and technical specialists at The Boeing Company.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potential cost savings for the government.
- Undefinitized Contract Action (UCA) introduces cost uncertainty and potential for price increases.
- Long contract duration may indicate a lack of strategic planning for long-term support solutions.
- Limited transparency due to sole-source nature makes independent value assessment difficult.
Positive Signals
- Ensures continued operational readiness of critical Apache AH-64E aircraft for a key foreign partner.
- Leverages the specialized expertise of the original equipment manufacturer (Boeing) for complex support.
- Addresses a specific need for post-production support, indicating a focus on sustainment.
Sector Analysis
This contract falls within the Engineering Services sector, specifically supporting defense-related aerospace platforms. The market for military aircraft sustainment and post-production support is highly specialized, often dominated by original equipment manufacturers (OEMs) like Boeing due to proprietary knowledge and technical requirements. Comparable spending benchmarks are difficult to establish without detailed service breakdowns and competitive data, but the overall defense aerospace sustainment market represents billions of dollars annually.
Small Business Impact
This contract does not appear to involve small business set-asides, as indicated by 'sb: false'. The prime contractor is The Boeing Company, a large aerospace firm. There is no explicit information regarding subcontracting plans for small businesses within this specific award. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, though Boeing's broader supply chain may involve small businesses for component parts or less specialized services.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense. As an undefinitized contract action, there would be a heightened need for close monitoring of costs and progress to ensure the eventual definitization results in a fair and reasonable price. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.
Related Government Programs
- Apache AH-64E Helicopter Program
- Foreign Military Sales (FMS) Program
- Defense Logistics Agency (DLA) Support Contracts
- Aerospace Engineering Services Contracts
Risk Flags
- Sole Source Award
- Undefinitized Contract Action (UCA)
- Lack of Competition
- Potential for Cost Overruns
Tags
defense, department-of-defense, department-of-the-army, foreign-military-sales, apache-helicopter, engineering-services, sole-source, undefinitized-contract-action, post-production-support, the-boeing-company, arizona, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $26.9 million to THE BOEING COMPANY. IGF::CL,CT::IGF APACHE AH-64E FOREIGN MILITARY SALES, SAUDI ARABIAN NATIONAL GUARD POST PRODUCTION SUPPORT SERVICES UNDEFINITIZED CONTRACT ACTION
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 $26.9 million.
What is the period of performance?
Start: 2015-06-11. End: 2021-02-28.
What is the track record of The Boeing Company in providing post-production support for military aircraft, particularly the Apache AH-64E?
The Boeing Company has a long and established history as the original manufacturer of the Apache AH-64E helicopter. They are a primary provider of sustainment, maintenance, repair, and overhaul (MRO) services for this platform, both domestically and for foreign military sales customers. Their expertise is deeply embedded in the aircraft's design and manufacturing. Boeing's track record includes numerous contracts for spare parts, technical data, training, and engineering support for various Apache variants. While generally considered a capable provider, like any large defense contractor, they have faced scrutiny on specific contract terms, pricing, and delivery schedules across their diverse portfolio. For this specific contract, the sole-source nature and undefinitized award type are key factors influencing the assessment of their performance and value proposition.
How does the pricing of this contract compare to similar post-production support contracts for military helicopters, assuming competitive bidding?
Direct comparison of pricing is difficult without access to detailed cost breakdowns and competitive bid data for similar contracts. However, sole-source awards, especially undefinitized ones, are generally expected to be less cost-effective than competitively procured contracts. In a competitive environment, multiple bidders would vie for the contract, driving down prices through negotiation and innovation. The absence of this competitive pressure for the Boeing contract suggests that the government may be paying a premium. Benchmarking against other sole-source contracts for similar services could provide some context, but the unique nature of each contract's scope, duration, and specific requirements makes precise comparisons challenging. The undefinitized nature also means the final price is not yet fixed, adding another layer of uncertainty.
What are the primary risks associated with this undefinitized contract action (UCA)?
The primary risks associated with this undefinitized contract action (UCA) revolve around cost and schedule certainty. UCAs are awarded when a definitive contract cannot be completed before the work must begin. This means the contractor begins work based on estimated costs, with the final price to be negotiated and finalized later. Key risks include: 1. Cost Overruns: The government may end up paying more than initially anticipated if negotiations for the final price are not favorable. 2. Scope Creep: Without a fully defined scope upfront, there's a risk of work expanding beyond the original intent, leading to increased costs. 3. Delayed Definitization: The process of finalizing the contract terms can be lengthy, delaying cost certainty and potentially impacting program budgets. 4. Reduced Leverage: The government's negotiating position may be weaker once the contractor has already begun performance. 5. Potential for Disputes: Disagreements over scope, cost, or schedule during the definitization process can lead to contract disputes.
What is the expected effectiveness of the engineering services provided under this contract for maintaining the Apache AH-64E fleet?
The effectiveness of the engineering services provided by The Boeing Company is expected to be high, given their role as the original equipment manufacturer (OEM) for the Apache AH-64E. These services are critical for ensuring the continued operational readiness, safety, and performance of the helicopter fleet. This likely includes technical support, troubleshooting, design modifications, reliability improvements, and addressing obsolescence issues. As a sole-source provider, Boeing possesses the most intimate knowledge of the aircraft's systems and performance characteristics. The contract's focus on post-production support suggests it aims to sustain the fleet effectively over its lifecycle, mitigating risks associated with aging aircraft and evolving operational demands. The long duration further implies a commitment to ongoing, integrated support.
How has federal spending on Apache helicopter support services, particularly through Foreign Military Sales, trended over the past five years?
Analyzing the precise trend of federal spending specifically on Apache AH-64E post-production support via Foreign Military Sales (FMS) over the past five years requires access to detailed FMS transaction data, which is not directly provided in the given data snippet. However, general trends in defense spending and FMS indicate a sustained demand for military aircraft sustainment globally. Countries operating advanced platforms like the Apache often prioritize long-term support contracts to maintain fleet readiness. Factors such as geopolitical stability, regional security concerns, and the lifecycle of existing fleets influence FMS spending. It is plausible that spending in this category remains significant, potentially fluctuating based on specific customer needs, new sales, and the aging of existing aircraft inventories. The $26.9 million award in this case represents a portion of that broader spending.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W58RGZ13R0380
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 5000 EAST MCDOWELL ROAD, 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: $30,099,404
Exercised Options: $26,910,558
Current Obligation: $26,910,558
Subaward Activity
Number of Subawards: 6
Total Subaward Amount: $561,788
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2015-06-11
Current End Date: 2021-02-28
Potential End Date: 2021-02-28 12:02:00
Last Modified: 2025-09-17
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