DoD Awards Boeing $58.6M for Apache Helicopter Post-Production Support to South Korea
Contract Overview
Contract Amount: $58,615,706 ($58.6M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2018-05-01
End Date: 2023-10-31
Contract Duration: 2,009 days
Daily Burn Rate: $29.2K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: REPUBLIC OF KOREA ARMY POST PRODUCTION SUPPORT SERVICES FOR FLEET OF THIRTY SIX (36) AH-64E APACHE ATTACK HELICOPTERS.
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $58.6 million to THE BOEING COMPANY for work described as: REPUBLIC OF KOREA ARMY POST PRODUCTION SUPPORT SERVICES FOR FLEET OF THIRTY SIX (36) AH-64E APACHE ATTACK HELICOPTERS. Key points: 1. Contract awarded to a single, dominant provider (Boeing) for specialized support. 2. High value contract for sustainment services, indicating critical operational needs. 3. Limited competition raises concerns about potential price escalation and value for money. 4. Services are essential for maintaining the operational readiness of the Republic of Korea's Apache fleet.
Value Assessment
Rating: questionable
The contract's total value is $58.6 million. Without comparable contract data or a competitive bidding process, it's difficult to definitively assess if this price is optimal. The firm-fixed-price structure offers some cost control, but the lack of competition is a significant factor.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
This contract was not available for competition, likely due to the specialized nature of the support required for the AH-64E Apache helicopters and Boeing's role as the original equipment manufacturer. This limits price discovery and potentially leads to higher costs than a competitive scenario.
Taxpayer Impact: Taxpayer funds are being used for this contract. The lack of competition means taxpayers may be paying a premium for these support services, impacting the overall value for money.
Public Impact
Ensures operational readiness of a key allied military asset. Supports advanced attack helicopter technology and its continued functionality. Impacts international defense cooperation and security agreements. Potential for follow-on contracts for similar support services.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Sole-source provider
- Long contract duration
Positive Signals
- Essential support for critical defense asset
- Firm-fixed-price contract
Sector Analysis
This contract falls under Engineering Services within the Defense sector. Spending on defense sustainment and support services is substantial, with benchmarks varying widely based on the specific platforms and scope of work. This contract represents a significant investment in maintaining advanced rotary-wing aircraft.
Small Business Impact
There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The nature of specialized aerospace support often favors large, established manufacturers.
Oversight & Accountability
The Department of Defense is responsible for oversight. Given the limited competition and sole-source nature, robust oversight is crucial to ensure fair pricing and effective service delivery, mitigating potential risks of cost overruns or performance issues.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Potential for overpricing due to lack of competition.
- Dependency on a single provider for critical support.
- Risk of scope creep or unmanaged cost increases.
- Limited transparency in cost build-up.
- Long-term sustainment costs may exceed initial projections.
Tags
engineering-services, department-of-defense, az, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $58.6 million to THE BOEING COMPANY. REPUBLIC OF KOREA ARMY POST PRODUCTION SUPPORT SERVICES FOR FLEET OF THIRTY SIX (36) AH-64E APACHE ATTACK 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 $58.6 million.
What is the period of performance?
Start: 2018-05-01. End: 2023-10-31.
What is the justification for limiting competition on this critical support contract?
The justification for limiting competition likely stems from the highly specialized nature of post-production support for the AH-64E Apache attack helicopters. Boeing, as the original equipment manufacturer, possesses unique technical knowledge, proprietary data, and access to specific parts and tooling essential for maintaining these complex aircraft. This often leads to sole-source or limited-source awards to ensure proper maintenance and operational readiness.
How does the firm-fixed-price structure mitigate risk in a limited competition scenario?
A firm-fixed-price (FFP) contract establishes a total price that is not subject to adjustment based on the contractor's cost experience. In a limited competition scenario, FFP helps control costs by setting a ceiling. However, without competitive pressure, the initial price might be higher than in a fully competitive environment. Oversight is still needed to ensure the price reflects reasonable costs and profit.
What is the long-term value proposition for taxpayers given this contract structure?
The long-term value proposition is tied to the operational readiness and lifespan of the AH-64E Apache fleet for an allied nation. While the immediate cost may be higher due to limited competition, ensuring the effective maintenance of these advanced assets contributes to regional security and strengthens alliances. Future value depends on whether subsequent contracts can introduce more competition or achieve better pricing through negotiation.
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
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: $145,525,083
Exercised Options: $58,615,706
Current Obligation: $58,615,706
Subaward Activity
Number of Subawards: 43
Total Subaward Amount: $4,603,160
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-05-01
Current End Date: 2023-10-31
Potential End Date: 2023-10-31 12:10:00
Last Modified: 2024-03-14
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