Boeing awarded $536.5M for 17 CH-47F aircraft, a sole-source contract for critical aviation manufacturing

Contract Overview

Contract Amount: $536,477,855 ($536.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-11-30

End Date: 2024-12-31

Contract Duration: 2,223 days

Daily Burn Rate: $241.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TO AWARD SEVENTEEN (17) CH-47F MULTI-YEAR II CONFIGURED AIRCRAFT.

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $536.5 million to THE BOEING COMPANY for work described as: TO AWARD SEVENTEEN (17) CH-47F MULTI-YEAR II CONFIGURED AIRCRAFT. Key points: 1. Contract awarded to a single, established manufacturer, indicating specialized production capabilities. 2. Significant investment in aviation manufacturing, supporting a key defense industrial base sector. 3. Long-term contract duration suggests a sustained need for these aircraft. 4. Focus on a specific aircraft model highlights specialized military requirements. 5. Delivery order structure implies phased procurement and delivery over several years.

Value Assessment

Rating: fair

The contract value of $536.5 million for 17 CH-47F aircraft is substantial. Without specific cost breakdowns or comparisons to previous multi-year procurements of the same aircraft, a precise value-for-money assessment is challenging. However, multi-year contracts often aim for better pricing through long-term commitment, which could offer some cost savings compared to annual procurements. The firm-fixed-price nature provides cost certainty to the government.

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 the Army determined Boeing to be the only source capable of meeting the requirement, likely due to the specialized nature of the CH-47F aircraft and its existing production line. The lack of competition means there was no direct price negotiation against other potential suppliers, which could lead to higher costs than a competitive process.

Taxpayer Impact: The sole-source award limits opportunities for competitive bidding, potentially resulting in less favorable pricing for taxpayers compared to a fully competed contract.

Public Impact

The U.S. Army benefits from the acquisition of 17 critical CH-47F Chinook helicopters, essential for troop transport and heavy-lift operations. This contract supports the continued modernization and operational readiness of the Army's aviation fleet. The contract's duration and value contribute to the stability of the aerospace manufacturing workforce, particularly at Boeing's facilities. The delivery of these aircraft will enhance the Army's logistical capabilities and operational flexibility in various theaters.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of competition may reduce incentives for innovation or efficiency improvements from alternative suppliers.
Long-term commitment without competitive re-evaluation could mask potential cost overruns or inefficiencies over the contract's life.

Positive Signals

Multi-year procurement can offer cost savings through economies of scale and stable production planning.
Firm-fixed-price contract provides budget certainty for the government.
Award to a single, established manufacturer ensures continuity and leverages existing expertise for a critical defense asset.

Sector Analysis

The CH-47F Chinook is a heavy-lift, tandem rotor helicopter manufactured by Boeing. This contract falls within the broader aerospace and defense manufacturing sector, a significant segment of the U.S. industrial base. The market for such specialized military aircraft is highly concentrated, with a limited number of prime contractors capable of producing these complex systems. Spending on military aircraft is a substantial portion of the Department of Defense budget, reflecting the critical role of air power in modern warfare.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited to subcontracting opportunities. The prime contractor, Boeing, is expected to manage its supply chain, which may involve engaging small businesses for components or services, but this is not explicitly detailed in the award information.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The Defense Contract Management Agency (DCMA) would likely provide contract administration and oversight. Transparency is provided through contract award databases like FPDS. Inspector General (IG) investigations could be initiated if any fraud, waste, or abuse is suspected, but specific IG jurisdiction is not detailed in the award notice.

Related Government Programs

CH-47 Chinook Helicopter Program
Army Aviation Modernization Programs
Heavy-Lift Aircraft Procurement
Defense Manufacturing Industrial Base Support

Risk Flags

Sole-source award
Lack of competitive pricing benchmark
Long-term commitment without re-competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $536.5 million to THE BOEING COMPANY. TO AWARD SEVENTEEN (17) CH-47F MULTI-YEAR II CONFIGURED 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 $536.5 million.

What is the period of performance?

Start: 2018-11-30. End: 2024-12-31.

What is the historical spending trend for the CH-47F aircraft program?

Historical spending data for the CH-47F program reveals a consistent and significant investment by the Department of the Army over several years. Prior to this multi-year II award, the Army procured CH-47F aircraft through various contracts, including initial production runs and subsequent sustainment and modernization efforts. For instance, earlier multi-year contracts and individual delivery orders have cumulatively amounted to billions of dollars. The program has seen steady funding to maintain and expand the fleet, reflecting its critical role. Analyzing past spending patterns shows a commitment to this platform, with annual outlays fluctuating based on production schedules, congressional appropriations, and specific fleet requirements. This current $536.5 million award for 17 aircraft represents a continuation of this established procurement trajectory, aiming to achieve better pricing and production stability through a multi-year commitment.

How does the per-unit cost of these CH-47F aircraft compare to previous acquisitions or similar platforms?

Determining the precise per-unit cost for this specific $536.5 million award for 17 CH-47F aircraft is challenging without a detailed breakdown of the contract's pricing structure, which is not publicly available. However, historical data suggests that the unit cost for CH-47F aircraft has typically ranged from approximately $30 million to over $40 million, depending on the specific configuration, year of procurement, and contract type. Multi-year contracts, like this one, are often negotiated to achieve economies of scale and potentially lower the per-unit cost compared to individual annual procurements. Without direct comparative data for this exact award or a clear benchmark from similar sole-source, multi-year deals for comparable heavy-lift helicopters, a definitive comparison is difficult. Factors such as inflation, specific technological upgrades, and sustainment elements included in the price also influence the per-unit cost.

What are the primary risks associated with a sole-source award for such a critical defense asset?

The primary risks associated with a sole-source award for critical defense assets like the CH-47F aircraft revolve around cost and competition. Without competitive bidding, there is a reduced incentive for the sole provider, The Boeing Company, to offer the most competitive pricing, potentially leading to higher costs for the government and taxpayers. Furthermore, the lack of competition can limit opportunities for innovation from alternative suppliers or for the government to explore different technological solutions. Dependence on a single source also creates a strategic risk; any production disruptions, quality issues, or significant price increases by the sole provider could have a substantial impact on the Army's operational readiness and budget. Ensuring robust oversight and negotiation strategies becomes paramount to mitigate these risks.

What is the expected impact of this contract on the CH-47F program's long-term sustainment and modernization?

This multi-year award for 17 CH-47F aircraft is expected to have a positive impact on the program's long-term sustainment and modernization. By securing a long-term production commitment, the contract helps ensure the continued availability of spare parts, technical support, and skilled labor necessary for the ongoing sustainment of the existing CH-47F fleet. Furthermore, multi-year procurements often include provisions or lay the groundwork for incorporating upgrades and modernization efforts into the production line. This allows for a more integrated approach to evolving the aircraft's capabilities over its service life, rather than treating sustainment and modernization as separate, potentially disjointed efforts. It provides a stable foundation for future upgrades and ensures the fleet remains operationally relevant.

How does the 'Delivery Order' (DO) contract type affect the overall value and delivery schedule?

The contract is structured as a 'Delivery Order' (DO) against a basic ordering agreement or, in this case, likely a multi-year contract vehicle. This means the total value of $536.5 million represents the ceiling amount authorized for the purchase of 17 aircraft over the contract period (2018-2024). Actual spending and delivery will occur through individual delivery orders issued as needed by the Department of the Army. This structure provides flexibility for the government to adjust quantities and delivery schedules based on evolving requirements and funding availability, while the prime contractor, Boeing, commits to fulfilling orders up to the specified ceiling. The firm-fixed-price nature of these delivery orders provides cost certainty for each specific acquisition, but the overall value is realized as orders are placed and fulfilled.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 100 S 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: $536,477,855

Exercised Options: $536,477,855

Current Obligation: $536,477,855

Subaward Activity

Number of Subawards: 511

Total Subaward Amount: $618,181,946

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ18D0082

IDV Type: IDC

Timeline