Boeing awarded $29.5M for H-47 blade logistics, a sole-source contract for critical helicopter parts

Contract Overview

Contract Amount: $29,525,905 ($29.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-10-01

End Date: 2022-09-30

Contract Duration: 364 days

Daily Burn Rate: $81.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PERFORMANCE BASED LOGISTICS SUPPORT FOR THE H-47 FORWARD AND AFT BLADES AND ASSOCIATED CONTAINERS

Place of Performance

Location: PHILADELPHIA, PHILADELPHIA County, PENNSYLVANIA, 19142

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $29.5 million to THE BOEING COMPANY for work described as: PERFORMANCE BASED LOGISTICS SUPPORT FOR THE H-47 FORWARD AND AFT BLADES AND ASSOCIATED CONTAINERS Key points: 1. This contract focuses on performance-based logistics for H-47 helicopter components, indicating a need for specialized support. 2. The sole-source nature of this award warrants scrutiny regarding price reasonableness and potential for competition in the future. 3. As a sole-source award, there's a heightened risk of inflated costs without competitive pressure. 4. The contract duration of one year suggests a short-term need or a bridge to a more comprehensive solution. 5. The fixed-price contract type provides cost certainty for the government, but the absence of competition may limit savings. 6. The specific components (forward and aft blades) are critical for H-47 helicopter operational readiness.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The award amount of $29.5 million for a one-year period for specialized logistics support for H-47 helicopter blades appears significant. Without comparable contracts or market data for similar performance-based logistics for such critical components, it's difficult to definitively assess if the pricing is optimal. The government should ensure robust internal cost analysis was performed to justify the price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This typically occurs when a specific capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive bidding. Without multiple offers, there is less assurance that the government secured the best possible price for these critical helicopter parts.

Public Impact

The primary beneficiaries are the U.S. Army, ensuring the operational readiness of its H-47 Chinook helicopters. The services delivered include performance-based logistics support for forward and aft blades and associated containers. The geographic impact is primarily within the operational theaters where H-47 helicopters are deployed, with logistical support potentially managed from various locations. Workforce implications include specialized technicians and logistics personnel required for the maintenance and support of these critical helicopter components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Lack of transparency in the justification for sole-sourcing could hide inefficiencies.
Dependence on a single contractor for critical components poses supply chain risks.
Performance-based logistics can be complex to manage and oversee effectively.

Positive Signals

Focus on performance-based logistics suggests a commitment to ensuring operational readiness.
Contracting with the original equipment manufacturer (Boeing) can ensure specialized knowledge and quality.
Fixed-price contract provides cost predictability for the government.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for critical components like helicopter blades often involve specialized manufacturing processes and extensive testing, leading to a limited number of qualified suppliers. The market for such specialized aviation parts is substantial, driven by the ongoing need for military aircraft sustainment and upgrades. This contract fits within the broader category of aircraft parts manufacturing and maintenance support.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large prime contractor, The Boeing Company, there are limited direct opportunities for small businesses within this specific contract's structure. However, Boeing may engage small businesses as subcontractors for certain components or services, though this is not explicitly detailed in the provided data. The overall impact on the small business ecosystem for this particular award is likely minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be tied to the performance-based aspects of the contract, ensuring that the required logistics support is delivered effectively. Transparency might be limited due to the sole-source nature, but contract awards are generally published. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

H-47 Chinook Helicopter Sustainment
Aviation Component Manufacturing
Defense Logistics Support Services
Performance-Based Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Lack of competition
Potential for price escalation
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.5 million to THE BOEING COMPANY. PERFORMANCE BASED LOGISTICS SUPPORT FOR THE H-47 FORWARD AND AFT BLADES AND ASSOCIATED CONTAINERS

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 $29.5 million.

What is the period of performance?

Start: 2021-10-01. End: 2022-09-30.

What is the historical spending pattern for performance-based logistics support for H-47 forward and aft blades?

Analyzing historical spending for this specific support is crucial for context. Without access to detailed historical contract data for H-47 blade logistics, it's difficult to establish a precise spending pattern. However, the U.S. Army consistently invests in maintaining its fleet of H-47 Chinook helicopters, which are vital for transport and heavy-lift operations. Spending on critical components like blades and their associated logistics is likely a recurring expenditure. The current $29.5 million award for a one-year period should be compared against previous years' expenditures for similar services, if available, to identify any significant increases or decreases. Factors such as inflation, changes in operational tempo, or the introduction of new support strategies could influence historical spending trends.

How does the pricing of this contract compare to similar sole-source contracts for helicopter components?

Directly comparing the pricing of this $29.5 million sole-source contract for H-47 blades to similar sole-source contracts is challenging without access to proprietary pricing data for comparable items. Sole-source awards inherently lack the price transparency that competition provides. However, general benchmarks for performance-based logistics (PBL) contracts in the aerospace and defense sector suggest that PBL can offer long-term value by incentivizing contractor efficiency and availability. The key is whether the negotiated price reflects a fair and reasonable cost for the specialized support provided, considering the lack of competitive pressure. A thorough review of the contractor's cost proposal and independent government cost estimates would be necessary to assess reasonableness.

What are the specific performance metrics and Key Performance Indicators (KPIs) for this contract?

The provided data indicates this is a 'Performance Based Logistics Support' contract, suggesting that specific performance metrics and KPIs are integral to its structure. While the exact KPIs are not detailed here, typical metrics for such contracts often include aircraft availability rates, component reliability (e.g., Mean Time Between Failures - MTBF), on-time delivery of parts, repair turnaround times, and inventory management efficiency. The 'PA' contract status likely relates to the type of contract or its administration, but doesn't specify the performance standards. The government's payment would likely be tied to the achievement of these predefined performance targets, ensuring that the contractor is incentivized to maintain high levels of support for the H-47 blades.

What is the track record of The Boeing Company in providing performance-based logistics for military aircraft?

The Boeing Company has a long and extensive track record of providing performance-based logistics (PBL) and sustainment services for various military aircraft platforms, including the H-47 Chinook itself, as well as other rotorcraft and fixed-wing aircraft. Boeing is a major defense contractor with significant experience in managing complex supply chains, MRO (Maintenance, Repair, and Overhaul) operations, and ensuring aircraft readiness. Their PBL programs are often designed to improve system availability and reduce lifecycle costs for the U.S. military and international partners. While specific performance details for past PBL contracts are often proprietary, Boeing's continued success in securing such long-term sustainment contracts indicates a generally positive performance history in this domain.

What are the risks associated with relying on a sole-source provider for critical helicopter components like H-47 blades?

Relying on a sole-source provider like Boeing for critical H-47 helicopter blades presents several risks. Firstly, there's the risk of price escalation, as the absence of competition removes the incentive for the contractor to offer the lowest possible price. Secondly, there's a potential for reduced innovation and responsiveness, as the contractor may face less pressure to improve processes or adapt quickly to changing needs. Thirdly, supply chain vulnerability increases; if Boeing experiences production issues, natural disasters, or other disruptions, the availability of these critical parts could be severely impacted, potentially grounding H-47 fleets. Finally, there's a long-term strategic risk of becoming overly dependent on a single supplier for essential components.

What is the estimated market size for H-47 helicopter parts and associated logistics support?

Estimating the precise market size for H-47 helicopter parts and associated logistics support is complex, as it involves a niche segment within the broader aerospace and defense market. The H-47 Chinook is a heavy-lift helicopter operated by the U.S. Army and several international allies. The market size is driven by the number of active H-47 airframes, their operational tempo, planned service life extensions, and modernization programs. Given the critical nature of components like blades and the need for continuous sustainment, the annual market for parts and logistics support for the global H-47 fleet likely runs into hundreds of millions of dollars. This includes not only the initial procurement of parts but also maintenance, repair, overhaul, and integrated logistics services over the aircraft's lifespan.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ROUTE 291 & 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: $29,525,905

Exercised Options: $29,525,905

Current Obligation: $29,525,905

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $567,373

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ18D0111

IDV Type: IDC

Timeline