Boeing awarded $33.5M for H-47 blade logistics, facing limited competition

Contract Overview

Contract Amount: $33,470,395 ($33.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2020-11-30

Contract Duration: 791 days

Daily Burn Rate: $42.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PERFORMANCE BASED LOGISTICS SUPPORT FOR THE H-47 FORWARD AND AFT BLADES AND ASSOCIATED CONTAINERS

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $33.5 million to THE BOEING COMPANY for work described as: PERFORMANCE BASED LOGISTICS SUPPORT FOR THE H-47 FORWARD AND AFT BLADES AND ASSOCIATED CONTAINERS Key points: 1. Contract focuses on performance-based logistics for critical H-47 helicopter components. 2. Sole-source award raises concerns about price competitiveness and potential overspending. 3. Limited competition may restrict innovation and alternative support solutions. 4. Long-term support for aging aircraft fleets presents ongoing sustainment challenges. 5. Performance metrics are key to ensuring value for taxpayer investment. 6. Geographic concentration in Pennsylvania for support operations.

Value Assessment

Rating: questionable

The contract value of $33.5 million for H-47 blade logistics support appears high given the limited competition. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The 'performance-based' nature suggests a focus on outcomes, but the lack of competitive pressure raises questions about whether the government is achieving the best possible value for this essential aviation component support.

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 no other vendors were considered or solicited for this requirement. While sole-source awards can sometimes be justified for unique capabilities or existing systems, they inherently limit price discovery and competitive pressure, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from a competitive bidding process, potentially resulting in a higher overall expenditure for this critical support.

Public Impact

The U.S. Army benefits from the continued operational readiness of its H-47 Chinook helicopters. Services include the provision of forward and aft blades and associated containers. Support operations are concentrated in Pennsylvania. Ensures the availability of critical components for aviation maintenance and repair.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings.
Reliance on a single contractor for critical components may create supply chain vulnerabilities.
Lack of competition could stifle innovation in logistics and support services.
Potential for cost overruns due to absence of market-driven price checks.

Positive Signals

Performance-based contract structure aims to align contractor efforts with desired outcomes.
Focus on critical H-47 components ensures support for a vital military asset.
Boeing's established role as the original equipment manufacturer may ensure technical expertise.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for sustainment and logistics support, particularly for aging platforms like the H-47, are crucial for maintaining fleet readiness. This contract fits within the broader category of aircraft parts and auxiliary equipment manufacturing, where specialized knowledge and long-term relationships are common. Benchmarking spending in this area is challenging due to the unique nature of military platforms and the proprietary information often held by prime contractors.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The sole-source nature of the award to a large prime contractor like Boeing typically limits the direct involvement of small businesses in the primary contract execution.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The performance-based nature suggests that contract performance will be monitored against defined metrics. Transparency may be limited due to the sole-source award, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight if performance issues arise.

Related Government Programs

H-47 Chinook Helicopter Support
Aviation Logistics Services
Department of Defense Aircraft Parts Procurement
Performance-Based Logistics Contracts

Risk Flags

Sole-source award
Limited competition
Potential for price inflation
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.5 million to THE BOEING COMPANY. PERFORMANCE BASED LOGISTICS SUPPORT FOR THE H-47 FORWARD AND AFT BLADES AND ASSOCIATED CONTAINERS

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 $33.5 million.

What is the period of performance?

Start: 2018-10-01. End: 2020-11-30.

What is Boeing's track record with performance-based logistics contracts, particularly for rotary-wing aircraft?

Boeing has extensive experience with performance-based logistics (PBL) contracts across various platforms, including both fixed-wing and rotary-wing aircraft. For the H-47 program specifically, Boeing, as the original equipment manufacturer (OEM), has a deep understanding of the aircraft's maintenance requirements and component lifecycles. Their track record with PBL generally involves managing supply chains, providing repair and overhaul services, and ensuring parts availability to meet defined performance metrics, such as aircraft availability rates or response times for critical components. However, the success of PBL hinges on well-defined metrics, effective government oversight, and a collaborative relationship between the contractor and the customer to ensure true value for money is achieved.

How does the $33.5 million contract value compare to historical spending on H-47 blade logistics?

Direct historical spending comparisons for this specific 'forward and aft blades and associated containers' logistics support are difficult to ascertain without access to detailed historical contract databases and specific line-item awards. However, the H-47 is a long-serving and critical asset for the U.S. Army, meaning sustainment costs are substantial and ongoing. Given the sole-source nature of this award and the duration (approximately two years), the $33.5 million figure represents a significant investment. Without competitive bids, it's challenging to determine if this amount represents an increase or decrease compared to previous support arrangements or if it aligns with market expectations for such specialized aviation components.

What are the primary risks associated with a sole-source award for critical helicopter components?

The primary risks associated with a sole-source award for critical helicopter components like H-47 blades include inflated pricing due to the lack of competitive pressure, potential for reduced innovation as there's less incentive to find more cost-effective solutions, and a heightened dependence on a single supplier. This dependence can create vulnerabilities in the supply chain, making the program susceptible to disruptions if the sole provider faces production issues, financial difficulties, or changes in its business strategy. Furthermore, the government has limited leverage to negotiate favorable terms or pricing, potentially leading to higher overall program costs and a less efficient use of taxpayer funds.

How effective is performance-based logistics in ensuring value for money on aging aircraft sustainment?

Performance-based logistics (PBL) can be highly effective in ensuring value for money on aging aircraft sustainment, provided the contract is structured correctly. By shifting the focus from the mere provision of parts or services to achieving specific outcomes (e.g., aircraft availability, mission readiness), PBL incentivizes the contractor to manage the entire support chain efficiently. For aging fleets, where parts availability and obsolescence can be major challenges, PBL can encourage proactive maintenance, inventory management, and even component redesign or upgrades. However, effectiveness is contingent on clearly defined, measurable, and achievable performance metrics, robust government oversight to ensure compliance, and a willingness from both parties to collaborate towards shared sustainment goals.

What is the typical market size and competitive landscape for H-47 component logistics support?

The market for H-47 component logistics support is highly specialized and largely dominated by the original equipment manufacturer (OEM), The Boeing Company, due to proprietary data, design rights, and established support infrastructure. While third-party repair stations and parts distributors may exist, they often operate under licenses or supply agreements that may still involve the OEM. The competitive landscape is therefore limited, particularly for comprehensive performance-based logistics solutions that require deep system integration and OEM-level knowledge. This limited competition often necessitates sole-source or limited-source contracting for full-spectrum support, making robust government negotiation and oversight critical.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $33,470,395

Exercised Options: $33,470,395

Current Obligation: $33,470,395

Subaward Activity

Number of Subawards: 176

Total Subaward Amount: $8,112,337

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ18D0111

IDV Type: IDC

Timeline