Boeing awarded $77.8M for Apache airframe support, with potential for significant future growth

Contract Overview

Contract Amount: $77,833,813 ($77.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-02-26

End Date: 2033-12-31

Contract Duration: 5,057 days

Daily Burn Rate: $15.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AH-64E APACHE AIRFRAME POST PRODUCTION SUPPORT SERVICES (PPSS) FOR SAUDI ARABIA MINISTRY OF NATIONAL GUARD (MNG) FLEET.

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $77.8 million to THE BOEING COMPANY for work described as: AH-64E APACHE AIRFRAME POST PRODUCTION SUPPORT SERVICES (PPSS) FOR SAUDI ARABIA MINISTRY OF NATIONAL GUARD (MNG) FLEET. Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. Long-term contract duration suggests a sustained need for these specialized services. 3. Focus on post-production support indicates a mature fleet requiring ongoing maintenance. 4. Limited competition may lead to higher costs for the Saudi Arabian National Guard. 5. Geographic location of contractor in Arizona may impact logistics and oversight. 6. Firm Fixed Price contract type offers cost certainty but limits flexibility.

Value Assessment

Rating: fair

The contract value of $77.8 million for post-production support services for the AH-64E Apache airframe is substantial. However, without comparable contract data for similar support services for this specific platform or to other international Apache operators, a precise value-for-money assessment is difficult. The firm fixed-price structure provides cost predictability for the Saudi Arabian National Guard, but the lack of competition means there's no benchmark to ensure the pricing is optimal compared to what a competitive environment might yield. The long duration of the contract (ending in 2033) suggests a significant, ongoing requirement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The data indicates it was 'NOT AVAILABLE FOR COMPETITION.' This approach is typically used when a single contractor possesses unique capabilities or when urgency dictates a rapid award. However, the absence of a competitive bidding process means that the Saudi Arabian National Guard did not benefit from potential price reductions or innovative solutions that multiple bidders might have offered.

Taxpayer Impact: Taxpayers are not directly funding this contract as it appears to be for a foreign military sale. However, the lack of competition means the Saudi Arabian National Guard may be paying a premium for these services, which could impact their overall defense budget and readiness.

Public Impact

The primary beneficiaries are the Saudi Arabian National Guard (MNG), who will receive essential support services for their AH-64E Apache helicopter fleet. The services delivered include post-production support for the airframes, ensuring operational readiness and longevity of the aircraft. The geographic impact is primarily within Saudi Arabia, where the MNG operates its fleet. Workforce implications may include specialized technical support personnel provided by the contractor, potentially in Arizona, and maintenance personnel within the MNG.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs.
Long contract duration (through 2033) could lock in potentially suboptimal pricing for an extended period.
Lack of transparency in the sole-source justification makes it difficult to assess necessity.
Potential for scope creep or change orders over the long term without competitive pressure.

Positive Signals

Contract awarded to The Boeing Company, a known and experienced provider of Apache support.
Firm Fixed Price contract provides budget certainty for the duration of the award.
Long-term nature of the contract suggests a stable and predictable support environment for the MNG's fleet.
Post-production support is critical for maintaining the operational readiness of advanced military platforms.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on support services for rotary-wing aircraft. The market for military aircraft support is often characterized by long-term relationships between manufacturers and end-users, with specialized knowledge and proprietary data creating high barriers to entry. Global spending on military helicopter support services is significant, driven by the need to maintain aging fleets and integrate new technologies. Boeing, as the original equipment manufacturer for the Apache, is a dominant player in this niche.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded directly to The Boeing Company. There is no indication of subcontracting opportunities for small businesses within the provided data. The focus is on a large prime contractor providing specialized support for a major defense platform.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the Saudi Arabian National Guard's procurement and technical authorities, given it is a foreign military sale. The Department of Defense's role might be limited to facilitating the sale and ensuring compliance with U.S. export regulations. Transparency is limited due to the sole-source nature of the award, and specific accountability measures would be detailed in the contract itself, which is not publicly available.

Related Government Programs

Foreign Military Sales (FMS)
Apache Helicopter Sustainment Programs
Aerospace Engineering Services
Defense Logistics Support

Risk Flags

Sole-source award
Long-term contract duration
Foreign military sale support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.8 million to THE BOEING COMPANY. AH-64E APACHE AIRFRAME POST PRODUCTION SUPPORT SERVICES (PPSS) FOR SAUDI ARABIA MINISTRY OF NATIONAL GUARD (MNG) 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 $77.8 million.

What is the period of performance?

Start: 2020-02-26. End: 2033-12-31.

What is the historical spending pattern for AH-64E Apache airframe support services, both domestically and internationally?

Historical spending on AH-64E Apache airframe support services is substantial, reflecting the platform's critical role in numerous air forces. While specific figures for international sales like this one are often part of Foreign Military Sales (FMS) packages and not always publicly itemized in detail, the U.S. Army alone spends billions on Apache sustainment over the life cycle of its fleet. This includes costs for depot maintenance, component repair, spare parts, and engineering support. International customers, such as Saudi Arabia, procure similar support through FMS agreements, which bundle acquisition, training, and sustainment. The total cost is influenced by fleet size, operational tempo, and the specific support elements included. Boeing, as the OEM, is the primary provider, and their pricing structures are generally consistent across major customers, though FMS pricing can include administrative fees and specific government-to-government cost considerations.

How does the pricing of this contract compare to similar post-production support contracts for other advanced military aircraft?

Direct comparison of this $77.8 million contract for AH-64E Apache airframe support to similar post-production contracts for other advanced military aircraft is challenging without access to detailed pricing structures and service level agreements for those comparable contracts. However, the cost of sustaining complex platforms like the Apache is inherently high due to the advanced technology, specialized maintenance requirements, and the need for highly skilled personnel. Contracts for support of aircraft like the F-35, F-22, or other advanced rotary-wing platforms (e.g., CH-47 Chinook) also represent significant long-term investments. Factors influencing price include the number of airframes supported, the scope of services (e.g., scheduled maintenance, unscheduled repairs, component overhaul, technical data), the duration of the contract, and the level of contractor logistics support. Given the sole-source nature of this award, it's difficult to ascertain if the pricing is benchmarked against competitive market rates.

What are the specific risks associated with a sole-source award for long-term defense support services?

The primary risk associated with a sole-source award for long-term defense support services is the potential for inflated costs due to a lack of competition. Without competing bids, the contractor has less incentive to offer the most competitive pricing, potentially leading to the procuring entity paying a premium. Another significant risk is reduced innovation; a sole-source provider may be less motivated to introduce cost-saving efficiencies or technological advancements if they are guaranteed the business regardless. Furthermore, over the long term of the contract, the absence of competitive pressure can lead to complacency in service delivery or a lack of responsiveness to evolving needs. Dependence on a single supplier also creates a vulnerability if that supplier faces financial difficulties, operational disruptions, or decides to exit the market.

What is The Boeing Company's track record in providing post-production support for the AH-64 Apache platform?

The Boeing Company has an extensive and well-established track record in providing post-production support for the AH-64 Apache platform, dating back to its initial fielding. As the original equipment manufacturer (OEM), Boeing possesses the most comprehensive knowledge of the aircraft's design, systems, and maintenance requirements. They are responsible for providing a wide range of sustainment services, including technical publications, field support, spare parts, component repair, and engineering services to ensure the continued operational readiness of Apache fleets globally. Their long-standing relationship with the U.S. Army and numerous international operators of the Apache attests to their capability and reliability in delivering these critical support functions over decades. This contract represents a continuation of that established support relationship.

What are the potential implications of this contract on the future development or upgrades of the AH-64E Apache?

This contract focuses on 'post-production support services for the AH-64E Apache airframe,' which primarily entails maintaining the existing fleet in operational condition. While it doesn't directly fund new development or major upgrades, the ongoing support relationship is crucial for the platform's longevity and future evolution. The data and operational feedback gathered through this support contract can inform Boeing and the Saudi Arabian National Guard about performance trends, reliability issues, and potential areas for improvement. This information is vital for future upgrade decisions, such as incorporating new sensors, improved weaponry, or enhanced survivability features. A stable support infrastructure, like the one established by this contract, often serves as the foundation upon which future modernization efforts are built, ensuring that upgrades can be effectively integrated and maintained.

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

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: $77,833,813

Exercised Options: $77,833,813

Current Obligation: $77,833,813

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $2,511,420

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ20D0005

IDV Type: IDC

Timeline