Boeing awarded $58M for Apache helicopter logistics, impacting Army readiness and aviation sustainment
Contract Overview
Contract Amount: $58,066,606 ($58.1M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2016-08-01
End Date: 2023-12-31
Contract Duration: 2,708 days
Daily Burn Rate: $21.4K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: IGF::OT::IGF LETTER CONTRACT W58RGZ-16-C-0051 ISSUED FOR THE PROCUREMENT OF PERFORMANCE BASED LOGISTICS FOR UAE THIRTY (30) APACHE ATTACK HELICOPTER (AH)-64D AIRCRAFT
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85212
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $58.1 million to THE BOEING COMPANY for work described as: IGF::OT::IGF LETTER CONTRACT W58RGZ-16-C-0051 ISSUED FOR THE PROCUREMENT OF PERFORMANCE BASED LOGISTICS FOR UAE THIRTY (30) APACHE ATTACK HELICOPTER (AH)-64D AIRCRAFT Key points: 1. Contract provides essential performance-based logistics for 30 Apache attack helicopters. 2. Focus on sustainment and readiness for a critical Army aviation asset. 3. Long-term contract duration suggests a strategic commitment to fleet support. 4. Sole-source award raises questions about potential cost efficiencies and market alternatives. 5. Geographic location in Arizona may indicate a concentration of aviation support infrastructure. 6. Firm-fixed-price structure aims to control costs, but requires careful monitoring of scope.
Value Assessment
Rating: fair
The contract value of $58 million over approximately seven years for performance-based logistics for 30 Apache helicopters appears to be within a reasonable range for complex aviation sustainment. However, without specific benchmarks for similar performance-based logistics contracts for attack helicopters or detailed breakdowns of the services provided, a precise value-for-money assessment is challenging. The firm-fixed-price nature suggests an attempt to cap costs, but the long duration and sole-source award warrant scrutiny to ensure competitive pricing was not foregone.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning the Department of the Army did not conduct a competitive bidding process. This typically occurs when a single source is uniquely capable of fulfilling the requirement, often due to proprietary technology, existing infrastructure, or specific expertise. The lack of competition means that the government did not benefit from potential price reductions or innovative solutions that might arise from a bidding process.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competition. Without bids from other potential providers, there is less assurance that the price reflects the lowest possible cost for the required services.
Public Impact
The primary beneficiaries are the U.S. Army's aviation units operating the AH-64D Apache attack helicopters, ensuring their operational readiness. Services delivered include performance-based logistics, which encompasses maintenance, repair, and supply chain management for the aircraft. The geographic impact is centered in Arizona, likely supporting a key Army aviation training or operational base. Workforce implications include the potential for sustained employment for specialized aviation mechanics, logisticians, and support personnel.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits opportunities for competitive pricing and innovation.
- Long contract duration could lead to cost creep if not managed effectively.
- Dependence on a single contractor for critical logistics poses a risk to supply chain continuity.
Positive Signals
- Performance-based logistics aims to improve readiness and reduce downtime for a critical weapon system.
- Firm-fixed-price contract provides cost certainty for the government.
- Long-term commitment suggests a strategic focus on maintaining the Apache fleet's effectiveness.
Sector Analysis
The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for aircraft sustainment and logistics are a substantial part of this sector, often dominated by original equipment manufacturers like Boeing due to their deep knowledge of the systems. The market for such specialized services is typically limited, making sole-source or limited competition awards more common for unique platforms like the Apache helicopter.
Small Business Impact
This contract does not appear to have a specific small business set-aside. Given the nature of performance-based logistics for complex military aircraft, the prime contractor, Boeing, likely manages the overall program. Subcontracting opportunities for small businesses may exist within Boeing's supply chain for specific components or services, but the primary award is not directed towards small businesses.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring performance and ensuring compliance. Transparency is facilitated through contract databases, but detailed performance metrics and cost breakdowns may not be publicly available. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Apache Attack Helicopter Program
- Army Aviation Sustainment
- Defense Logistics Agency Contracts
- Aerospace Maintenance and Repair Services
Risk Flags
- Sole Source Award
- Long Duration Contract
- Critical System Sustainment
Tags
defense, army, aviation, logistics, apache-helicopter, performance-based, sole-source, firm-fixed-price, arizona, boeing, sustainment, attack-helicopter
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $58.1 million to THE BOEING COMPANY. IGF::OT::IGF LETTER CONTRACT W58RGZ-16-C-0051 ISSUED FOR THE PROCUREMENT OF PERFORMANCE BASED LOGISTICS FOR UAE THIRTY (30) APACHE ATTACK HELICOPTER (AH)-64D AIRCRAFT
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 $58.1 million.
What is the period of performance?
Start: 2016-08-01. End: 2023-12-31.
What is the historical spending pattern for performance-based logistics for the AH-64D Apache helicopter fleet?
Historical spending data for performance-based logistics (PBL) for the AH-64D Apache helicopter fleet prior to this $58 million contract (W58RGZ-16-C-0051) is not explicitly detailed in the provided data. However, sustainment and maintenance for major weapon systems like the Apache are consistently significant expenditures for the Department of Defense. PBL contracts are designed to shift risk to the contractor and incentivize performance, often involving multi-year commitments. The trend in defense logistics has been towards more integrated sustainment solutions like PBL to improve readiness and potentially control long-term costs, suggesting that similar, if not preceding, contracts likely existed to support the Apache fleet's operational readiness over its lifecycle.
How does the cost per helicopter for this logistics contract compare to industry benchmarks?
A precise per-helicopter cost benchmark for this specific performance-based logistics contract is difficult to establish without more granular data on the services included and the specific performance metrics. The total contract value is approximately $58 million over roughly seven years (August 2016 to December 2023) for 30 AH-64D Apache helicopters. This equates to roughly $1.93 million per helicopter per year. While this figure provides a basic calculation, it doesn't account for the varying levels of support, parts, maintenance, and readiness guarantees inherent in a performance-based contract. Industry benchmarks for similar complex military aircraft sustainment can vary widely based on aircraft type, age, operational tempo, and the scope of the logistics support package. Without a direct comparison of services and outcomes, this figure serves only as a preliminary indicator.
What are the key performance indicators (KPIs) associated with this performance-based logistics contract?
Performance-based logistics (PBL) contracts, by their nature, are driven by Key Performance Indicators (KPIs) that measure the contractor's success in delivering desired outcomes rather than just services. For this contract supporting 30 AH-64D Apache attack helicopters, typical KPIs would likely include metrics related to aircraft readiness rates (e.g., percentage of aircraft available for mission), supply chain responsiveness (e.g., order fulfillment time for parts), turnaround time for repairs, and potentially cost-per-flight-hour targets. The specific KPIs and their associated incentive or penalty structures are usually detailed within the contract itself. The success of this contract hinges on the contractor's ability to meet or exceed these predefined performance standards, ensuring the Army's aviation units maintain the required operational capability.
What is the track record of The Boeing Company in managing similar performance-based logistics contracts for military aircraft?
The Boeing Company has a significant and extensive track record in managing performance-based logistics (PBL) contracts for various military aircraft platforms, both domestically and internationally. As the original equipment manufacturer for many aircraft, including the Apache, Boeing possesses deep technical knowledge and established supply chains crucial for effective sustainment. They have managed complex PBL programs for platforms such as the C-17, F-15, F/A-18, and others. These contracts often involve comprehensive support, including supply chain management, maintenance, repair, and overhaul, with incentives tied to readiness and availability metrics. While specific outcomes vary, Boeing's long-standing presence in defense contracting indicates substantial experience in fulfilling the requirements of such long-term, performance-driven sustainment agreements.
What are the potential risks associated with the sole-source nature of this contract award?
The primary risk associated with the sole-source nature of this contract award is the potential for reduced price competition, which could lead to higher costs for the government compared to a fully competed procurement. Without multiple bidders vying for the contract, there is less pressure on the contractor (The Boeing Company) to offer the most competitive pricing. Furthermore, a sole-source award can limit the government's access to innovative solutions or alternative approaches that might be proposed by other capable companies. This dependence on a single provider also creates a strategic risk; if Boeing encounters significant performance issues or financial difficulties, the continuity of essential logistics support for the AH-64D Apache fleet could be jeopardized, potentially impacting Army readiness.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
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: $58,586,798
Exercised Options: $58,066,606
Current Obligation: $58,066,606
Subaward Activity
Number of Subawards: 79
Total Subaward Amount: $14,441,591
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-08-01
Current End Date: 2023-12-31
Potential End Date: 2023-12-31 12:12:00
Last Modified: 2025-09-03
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