DoD's $631.7M Apache PBL IV contract to Boeing raises questions on value and competition
Contract Overview
Contract Amount: $631,704,408 ($631.7M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2019-04-26
End Date: 2026-12-31
Contract Duration: 2,806 days
Daily Burn Rate: $225.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: APACHE PERFORMANCE BASED LOGISTICS(PBL) IV SERVICES OF AIRFRAME COMPONENTS FOR THE UNITED STATES GOVERNMENT'S AH-64 APACHE FLEET
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $631.7 million to THE BOEING COMPANY for work described as: APACHE PERFORMANCE BASED LOGISTICS(PBL) IV SERVICES OF AIRFRAME COMPONENTS FOR THE UNITED STATES GOVERNMENT'S AH-64 APACHE FLEET Key points: 1. Contract awarded to a single source without competition, potentially limiting price discovery. 2. Performance-based logistics aims for efficiency, but specific value-for-money metrics are unclear. 3. Long-term contract duration (2019-2026) suggests a need for ongoing support, but risks of price escalation exist. 4. Sole-source award to incumbent raises concerns about contractor lock-in and potential lack of innovation. 5. Focus on airframe components highlights critical sustainment needs for the Apache fleet. 6. Geographic concentration in Arizona for performance may impact regional economic benefits.
Value Assessment
Rating: questionable
Benchmarking the value of this sole-source contract is challenging without competitive data. The firm-fixed-price structure provides some cost certainty, but the absence of competition means there's no direct comparison to market rates or alternative providers. The total value of $631.7 million over its period suggests significant investment in sustainment. Without transparency into the pricing breakdown and cost drivers, assessing true value-for-money is difficult. It's crucial to understand if the pricing reflects efficient operations or the premium often associated with non-competitive awards.
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 solicit bids from multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, proprietary technology, or when urgency dictates. The lack of competition means there were no other bidders to compare against, potentially leading to higher prices than if a competitive process had been employed. This limits the government's ability to leverage market forces for optimal pricing and service.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competing offers, there is less pressure on the contractor to offer the lowest possible price, potentially resulting in less efficient use of public funds.
Public Impact
The primary beneficiaries are the U.S. Army aviation units operating the AH-64 Apache helicopter fleet, ensuring operational readiness. Services delivered include performance-based logistics for airframe components, focusing on sustainment and availability. Geographic impact is concentrated in Arizona, where the contract performance is located. Workforce implications include the potential for sustained employment within the contractor's facilities in Arizona.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and potentially increases costs for taxpayers.
- Lack of transparency in cost breakdown makes value-for-money assessment difficult.
- Long contract duration could lead to price escalation if not managed effectively.
- Dependence on a single contractor creates a risk of vendor lock-in.
- Performance metrics and their impact on contractor incentives are not detailed.
Positive Signals
- Performance-based logistics (PBL) approach incentivizes contractor to meet availability and performance targets.
- Firm-fixed-price contract provides cost certainty for a significant portion of the contract value.
- Focus on sustainment ensures critical fleet readiness for the AH-64 Apache.
- Long-term nature of the contract suggests a stable and predictable support environment.
Sector Analysis
The aerospace and defense industry is characterized by high barriers to entry, complex supply chains, and significant R&D investment. Contracts for aircraft component sustainment, especially for legacy platforms like the Apache, are critical for maintaining military readiness. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a niche but vital segment supporting the broader defense industrial base. Comparable spending benchmarks for similar PBL contracts for major weapon systems can vary widely based on system complexity, fleet size, and contract structure, but large dollar values are common for sustainment efforts.
Small Business Impact
This contract does not appear to include specific small business set-aside provisions, as indicated by 'ss': false and 'sb': false. The primary awardee is The Boeing Company, a large defense contractor. While Boeing may utilize small businesses in its supply chain, the direct contract award does not prioritize small business participation. This means opportunities for direct subcontracting with small businesses under this specific contract may be limited, potentially impacting the small business ecosystem that supports defense manufacturing.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The firm-fixed-price nature provides some cost control, but the sole-source award necessitates rigorous performance monitoring to ensure the contractor meets agreed-upon logistics and availability targets. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.
Related Government Programs
- Apache AH-64 Helicopter Program
- Department of the Army Aviation Sustainment Contracts
- Performance-Based Logistics (PBL) Contracts
- Defense Logistics Agency (DLA) Support Contracts
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Potential for price premium
- Limited transparency on cost drivers
- Long-term contract duration
Tags
defense, department-of-defense, department-of-the-army, apache-helicopter, performance-based-logistics, sole-source, definitive-contract, firm-fixed-price, aircraft-parts, sustainment, arizona, boeing
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $631.7 million to THE BOEING COMPANY. APACHE PERFORMANCE BASED LOGISTICS(PBL) IV SERVICES OF AIRFRAME COMPONENTS FOR THE UNITED STATES GOVERNMENT'S AH-64 APACHE FLEET
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 $631.7 million.
What is the period of performance?
Start: 2019-04-26. End: 2026-12-31.
What is the historical spending trend for Apache PBL services?
Historical spending data for Apache Performance-Based Logistics (PBL) services prior to this APACHE PERFORMANCE BASED LOGISTICS(PBL) IV contract would provide crucial context. Without access to specific historical contract values and durations for PBL I, II, and III, it's difficult to establish a clear spending trend. However, the substantial value of the current $631.7 million contract suggests a consistent and significant investment in maintaining the Apache fleet's operational readiness through PBL. If previous PBL phases were also sole-sourced and awarded to Boeing, it would indicate a long-standing relationship and potentially increasing costs over time, warranting closer scrutiny of the value proposition in each iteration.
How does the pricing of this contract compare to similar sole-source sustainment contracts for other major weapon systems?
Directly comparing the pricing of this $631.7 million Apache PBL IV contract to other sole-source sustainment contracts is challenging without detailed cost breakdowns and specific performance metrics for those other contracts. However, sole-source awards, by their nature, often carry a premium compared to competitively procured contracts. The value of this contract suggests a significant investment in ensuring the availability of critical airframe components for the AH-64 fleet. To assess its relative value, one would need to benchmark it against sustainment contracts for comparable platforms (e.g., other attack or utility helicopters) that were also sole-sourced, looking at factors like cost per flight hour, component replacement rates, and overall system availability achieved relative to cost.
What are the specific performance metrics and Key Performance Indicators (KPIs) tied to this contract, and how are they measured?
The provided data indicates this is a 'Performance-Based Logistics (PBL)' contract, which inherently means it should be tied to specific performance metrics and KPIs. However, the raw data does not detail these metrics. Typically, for aircraft component PBL, KPIs might include aircraft availability rates, mean time between failures (MTBF) for critical components, supply chain responsiveness, and turnaround times for repairs. The effectiveness of the contract hinges on these metrics being clearly defined, measurable, achievable, relevant, and time-bound (SMART). Without knowing these specific KPIs and the methodology for measuring contractor performance against them, it's impossible to fully assess whether the government is receiving optimal value and if the contractor is adequately incentivized to deliver high-quality sustainment services.
What is the contractor's track record with performance-based logistics contracts, particularly for the Apache platform?
The Boeing Company has a long-standing relationship with the U.S. Army and is the original equipment manufacturer (OEM) for the AH-64 Apache. As such, they likely have extensive experience managing sustainment and logistics support for this platform. Their track record with Performance-Based Logistics (PBL) contracts, in general, would be a key factor in the government's decision to award this sole-source contract. A positive history of meeting or exceeding performance metrics, managing costs effectively, and demonstrating innovation in sustainment would support the justification for a sole-source award. Conversely, any past issues with PBL execution, cost overruns, or failure to meet availability targets on similar contracts would raise concerns about the current award's potential risks.
What are the potential risks associated with the sole-source nature of this contract, and what mitigation strategies are in place?
The primary risk of a sole-source contract is the potential for inflated pricing due to a lack of competition, reduced incentive for innovation, and contractor lock-in. For this $631.7 million Apache PBL IV contract, the government is reliant on Boeing's pricing and performance without the leverage of competitive bids. Mitigation strategies typically involve robust government oversight, detailed performance metrics, clear contract terms, and potentially incorporating mechanisms for future competition or price reviews. The government must actively manage the relationship and ensure that Boeing is delivering maximum value and efficiency. Without competitive pressure, the onus is on the Army to rigorously validate costs and performance throughout the contract's duration.
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
Solicitation ID: W58RGZ19R0092
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: $663,401,809
Exercised Options: $631,704,408
Current Obligation: $631,704,408
Actual Outlays: $106,584,655
Subaward Activity
Number of Subawards: 700
Total Subaward Amount: $217,021,881
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2019-04-26
Current End Date: 2026-12-31
Potential End Date: 2026-12-31 12:12:00
Last Modified: 2026-01-08
More Contracts from THE Boeing Company
- KC-X Modernization Program — $32.0B (Department of Defense)
- International Space Station — $22.4B (National Aeronautics and Space Administration)
- 200112!000108!9700!ZD60 !ballistic Missile Defense ORG. !HQ000601C0001 !A!N!*!N! !20001222!20080930!848025649!848025649!009256819!n!the Boeing Company !3370 E Miraloma AVE !anaheim !ca!92806!37000!089!01!huntsville !madison !alabama !+000383571022!n!n!000000000000!ad93!rdte/Other Defense-Adv Tech DEV !S1 !services !1caa!ballistic Missile Defense SYS !541710!*!*!3! ! ! !*!*!*!B!*!*!A! !A !U!R!2!001!B! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! — $18.8B (Department of Defense)
- USN P-8A FRP II Long Lead Material — $18.1B (Department of Defense)
- 200512!010860!2100!w56hzv!tacom - Warren !w56hzv05c0724 !A!N! !Y! ! !20050923!20141231!016544780!016544780!009256819!n!the Boeing Company !J S Mcdonnell Blvd !saint Louis !mo!63166!65000!510!29!st. Louis !ST. Louis (city) !missouri !+000219245691!n!n!000000000000!az15!rdte/Other Research&development-Eng/Manuf Devel !S1 !services !301 !FCS !541330!E! !1! ! ! ! ! !20200930!B! ! !A! !d!u!u!1!001!n!1a!z!y!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! TAS::21 2040::TAS — $12.7B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)