Boeing awarded $136M for AH-6 aircraft support, with potential for long-term sustainment

Contract Overview

Contract Amount: $135,989,029 ($136.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-09-25

End Date: 2026-05-30

Contract Duration: 2,073 days

Daily Burn Rate: $65.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UNDEFINITIZED CONTRACT ACTION FOR NON-RECURRING ENGINEERING AND LONG LEAD ITEMS IN SUPPORT OF THE STATEMENT OF WORK FOR EIGHT AH-6 AIRCRAFT FOR THE ROYAL THAILAND ARMY.

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $136.0 million to THE BOEING COMPANY for work described as: UNDEFINITIZED CONTRACT ACTION FOR NON-RECURRING ENGINEERING AND LONG LEAD ITEMS IN SUPPORT OF THE STATEMENT OF WORK FOR EIGHT AH-6 AIRCRAFT FOR THE ROYAL THAILAND ARMY. Key points: 1. Contract focuses on initial engineering and long-lead items, suggesting future sustainment needs. 2. Sole-source award raises questions about price competitiveness and taxpayer value. 3. Significant duration of the contract (over 5 years) indicates a long-term commitment. 4. The contract is for aircraft manufacturing support, a critical but specialized sector. 5. The award is for foreign military sales, meaning US taxpayer funds are not directly involved, but it impacts US defense industrial base capacity.

Value Assessment

Rating: fair

The contract value of $136 million for non-recurring engineering and long-lead items for eight AH-6 aircraft appears substantial. Benchmarking this against similar sole-source procurements for specialized aircraft components is challenging due to the unique nature of the request. However, the absence of competition inherently limits the ability to assess optimal pricing and value for money. Further analysis would require understanding the specific engineering requirements and the market for these specialized components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one bidder, The Boeing Company, was deemed capable of fulfilling the requirement. This approach is often used for highly specialized or proprietary systems where competition is not feasible. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: While this is a foreign military sale and not directly funded by US taxpayers, sole-source awards can still impact the defense industrial base by potentially allowing contractors to command higher prices for specialized components, which could indirectly affect future US defense procurement costs.

Public Impact

The Royal Thai Army is the primary beneficiary, receiving support for eight AH-6 aircraft. Services include non-recurring engineering and procurement of long-lead items essential for aircraft readiness. The contract supports the US defense industrial base by providing work for The Boeing Company. The geographic impact is primarily within the United States, where the engineering and manufacturing activities will take place.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Long contract duration may not fully account for evolving technological needs or market price fluctuations.
Lack of transparency in the sole-source justification could obscure potential inefficiencies.

Positive Signals

Addresses critical needs for a foreign partner, strengthening international defense relationships.
Supports a key US defense contractor, maintaining domestic manufacturing capabilities.
Focus on long-lead items ensures timely delivery of essential aircraft components.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of the broader aerospace and defense industry. The market for specialized military aircraft and their associated support services is highly concentrated, often dominated by a few large prime contractors like Boeing. The value of this contract, while significant, represents a portion of the overall global defense spending on rotary-wing aircraft and associated support, which can run into billions annually.

Small Business Impact

This contract does not appear to involve small business set-asides, as it is a sole-source award to a large prime contractor, The Boeing Company. There is no explicit information regarding subcontracting plans for small businesses within this specific award action. The impact on the small business ecosystem is likely indirect, potentially through Boeing's broader supply chain, but not directly driven by this contract's structure.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. As a foreign military sale, there are additional layers of oversight involving both the US government and the recipient nation (Royal Thai Army). Transparency regarding the specific justification for the sole-source award and the detailed breakdown of costs would be key to assessing accountability and value.

Related Government Programs

Foreign Military Sales Program
Rotary-Wing Aircraft Procurement
Defense Logistics and Sustainment
Aircraft Manufacturing Contracts

Risk Flags

Sole-source award
Long contract duration
Foreign military sale

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $136.0 million to THE BOEING COMPANY. UNDEFINITIZED CONTRACT ACTION FOR NON-RECURRING ENGINEERING AND LONG LEAD ITEMS IN SUPPORT OF THE STATEMENT OF WORK FOR EIGHT AH-6 AIRCRAFT FOR THE ROYAL THAILAND ARMY.

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 $136.0 million.

What is the period of performance?

Start: 2020-09-25. End: 2026-05-30.

What is the specific justification for awarding this contract on a sole-source basis to The Boeing Company?

The provided data indicates the contract is for 'NON-RECURRING ENGINEERING AND LONG LEAD ITEMS IN SUPPORT OF THE STATEMENT OF WORK FOR EIGHT AH-6 AIRCRAFT FOR THE ROYAL THAILAND ARMY.' Sole-source awards are typically justified when only one responsible source is available or when a compelling justification exists, such as unique technical capabilities, proprietary data, or urgent requirements that preclude full and open competition. For specialized aircraft like the AH-6, especially concerning unique engineering or long-lead components, it's plausible that Boeing possesses the exclusive knowledge, tooling, or manufacturing rights. A detailed justification document, usually available through official channels like SAM.gov's contract award notices, would provide the specific rationale, citing regulations like the Federal Acquisition Regulation (FAR) Part 6.

How does the $136 million contract value compare to similar sole-source procurements for aircraft support services?

Directly comparing the $136 million value of this sole-source contract for non-recurring engineering and long-lead items to similar procurements is challenging without more specific details on the scope of work and the type of aircraft. Sole-source awards inherently lack a competitive benchmark, making 'value for money' assessments difficult. However, the value suggests a significant undertaking, likely involving complex design, testing, and specialized component manufacturing. For context, major aircraft programs can involve billions in development and production. This $136 million figure for initial support phases indicates a substantial investment, but its 'fairness' can only be truly assessed against detailed cost breakdowns and industry standards for similar specialized engineering efforts, which are not publicly available in this summary.

What are the primary risks associated with this sole-source contract, and how are they mitigated?

The primary risk with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, The Boeing Company may not have the same incentive to offer the lowest possible price. Another risk is the potential for scope creep or inefficiencies, as oversight might be less rigorous compared to a competitively bid contract. Mitigation strategies typically involve robust government oversight, detailed contract clauses, performance metrics, and potentially independent cost analyses. For foreign military sales, the recipient nation also plays a role in ensuring the value received meets their requirements. The long duration (over 5 years) also presents a risk of technological obsolescence or changing requirements that may not be adequately addressed in the initial contract.

What is the expected impact of this contract on the US defense industrial base and The Boeing Company?

This contract is expected to have a positive impact on The Boeing Company by providing a significant revenue stream and workload for its defense division. It reinforces Boeing's position as a key supplier for specialized military aircraft and support services. For the broader US defense industrial base, the contract supports domestic manufacturing capabilities, particularly in the aerospace sector. It ensures the continued production of critical components and the utilization of skilled labor within the US. As a foreign military sale, it also strengthens alliances and interoperability with key partners, indirectly benefiting US national security interests by equipping allies with advanced capabilities.

Given the contract's duration and sole-source nature, what are the implications for future spending on AH-6 aircraft sustainment?

The current contract, focused on non-recurring engineering and long-lead items, strongly suggests that this is the initial phase of a larger, long-term sustainment effort for the Royal Thai Army's AH-6 aircraft. The significant duration (ending in May 2026) and the nature of the work imply that follow-on contracts for ongoing maintenance, spare parts, upgrades, and operational support are highly probable. The sole-source award for this initial phase may set a precedent, potentially leading to future sole-source or limited-competition contracts for sustainment, depending on the proprietary nature of the aircraft and its systems. This could result in higher sustainment costs for the Royal Thai Army over the life cycle of the aircraft compared to a scenario with robust competition.

Industry Classification

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

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ20R0141

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5000 E MCDOWELL RD, 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: $151,917,692

Exercised Options: $135,989,029

Current Obligation: $135,989,029

Subaward Activity

Number of Subawards: 61

Total Subaward Amount: $23,377,217

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline