DoD Awards $3.47B Apache Production Contract to Boeing, Raising Competition Concerns
Contract Overview
Contract Amount: $3,472,726,822 ($3.5B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2021-06-18
End Date: 2028-12-31
Contract Duration: 2,753 days
Daily Burn Rate: $1.3M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: APACHE ADVANCED PROCUREMENT AWARD FOR LOT 12 FULL RATE PRODUCTION.
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $3.47 billion to THE BOEING COMPANY for work described as: APACHE ADVANCED PROCUREMENT AWARD FOR LOT 12 FULL RATE PRODUCTION. Key points: 1. Significant award value of $3.47 billion for Apache advanced procurement. 2. Sole-source nature of the contract limits competitive pricing. 3. Potential risk associated with single-source reliance for critical defense assets. 4. Aircraft Manufacturing sector sees substantial government investment.
Value Assessment
Rating: questionable
The contract's large value and lack of competition make a direct pricing assessment difficult. Benchmarking against similar sole-source defense contracts is necessary to evaluate value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these Apache aircraft components.
Public Impact
Taxpayers face potential overpayment due to the absence of competitive bidding. Reliance on a single supplier for critical defense hardware could impact long-term supply chain resilience. The substantial investment in aircraft manufacturing highlights the importance of this sector for national security.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- High contract value
Positive Signals
- Supports critical defense capabilities
- Long-term contract provides stability
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a key area for defense spending. Benchmarks for similar large-scale, sole-source defense procurements would be relevant for comparison.
Small Business Impact
The data indicates that small businesses were not directly involved in this specific award, as the prime contractor is The Boeing Company. Further analysis would be needed to determine small business participation in the supply chain.
Oversight & Accountability
The sole-source nature of this contract warrants close oversight to ensure fair pricing and prevent potential cost overruns. Regular performance reviews and audits are crucial for accountability.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Potential for cost overruns
- Supply chain dependency
Tags
aircraft-manufacturing, department-of-defense, az, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $3.47 billion to THE BOEING COMPANY. APACHE ADVANCED PROCUREMENT AWARD FOR LOT 12 FULL RATE PRODUCTION.
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 $3.47 billion.
What is the period of performance?
Start: 2021-06-18. End: 2028-12-31.
What is the historical pricing trend for similar sole-source Apache procurement contracts awarded to The Boeing Company?
Analyzing historical pricing data for comparable sole-source Apache procurement contracts awarded to The Boeing Company is essential. This involves examining contract modifications, escalation clauses, and year-over-year price changes to identify any patterns of cost increases or potential inefficiencies. Understanding these trends can help assess whether the current $3.47 billion award represents a fair market price.
What are the specific risks associated with relying on a single supplier for the full rate production of Apache components?
Sole-source reliance for Apache components poses risks such as supply chain disruptions if the sole supplier faces production issues, potential price gouging due to lack of competition, and reduced innovation as there's less incentive for the supplier to improve processes. It also limits the government's leverage in negotiations and could impact long-term availability if the supplier decides to exit the market.
How does the government ensure cost-effectiveness and value for money in sole-source defense contracts of this magnitude?
In sole-source defense contracts, cost-effectiveness is typically ensured through rigorous cost analysis, including detailed review of the contractor's proposed costs, comparison with independent government cost estimates, and benchmarking against similar historical contracts. Price negotiation techniques, profit analysis, and stringent oversight mechanisms are employed to maximize value for money and mitigate risks associated with the absence of competition.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: HARDWARE AND ABRASIVES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
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: $4,818,620,070
Exercised Options: $3,489,896,620
Current Obligation: $3,472,726,822
Subaward Activity
Number of Subawards: 1052
Total Subaward Amount: $998,729,876
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2021-06-18
Current End Date: 2028-12-31
Potential End Date: 2028-12-31 12:12:00
Last Modified: 2026-01-15
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