DoD awards $633.7M for 4 Boeing C-17 aircraft to Australia, raising competition concerns
Contract Overview
Contract Amount: $633,721,685 ($633.7M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2006-07-28
End Date: 2008-02-21
Contract Duration: 573 days
Daily Burn Rate: $1.1M/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: TAS::97 8242 000::TAS ACQUISITION OF 4 C-17 AIRCRAFT FOR AUSTRALIAN GOVERNMENT
Place of Performance
Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90807
Plain-Language Summary
Department of Defense obligated $633.7 million to THE BOEING COMPANY for work described as: TAS::97 8242 000::TAS ACQUISITION OF 4 C-17 AIRCRAFT FOR AUSTRALIAN GOVERNMENT Key points: 1. Significant expenditure on specialized military aircraft for a foreign ally. 2. Sole reliance on Boeing for C-17 production limits market options. 3. Potential for higher costs due to lack of competitive bidding. 4. Aircraft manufacturing sector dominated by a few large players.
Value Assessment
Rating: fair
The contract value of $633.7 million for four C-17 aircraft appears substantial. Benchmarking against similar foreign military sales of aircraft is difficult without more data, but the lack of competition suggests potential for overpricing.
Cost Per Unit: $158,430,421
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to The Boeing Company. This limits price discovery and negotiation leverage for the government, potentially leading to higher costs than if competition were present.
Taxpayer Impact: Taxpayer funds are used for this foreign military sale, and the lack of competition means less assurance of getting the best possible price for the U.S. government and its ally.
Public Impact
Supports U.S. foreign policy and defense cooperation with Australia. Ensures interoperability of air transport capabilities between allied forces. Impacts the global aerospace market and Boeing's production schedules.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition.
- High contract value.
- Foreign military sale may obscure domestic cost comparisons.
Positive Signals
- Supports key U.S. ally.
- Acquisition of critical military transport capability.
Sector Analysis
The aircraft manufacturing sector, particularly for large military transport planes like the C-17, is highly concentrated. Boeing is a dominant player, and the U.S. government often procures such specialized assets through limited or sole-source contracts due to unique capabilities and high development costs.
Small Business Impact
This contract primarily involves large-scale aircraft manufacturing, which is typically dominated by major aerospace corporations. Small businesses are unlikely to be direct prime contractors for this type of acquisition, though they may participate as subcontractors to Boeing.
Oversight & Accountability
Oversight would focus on ensuring the contract terms are met, the aircraft are delivered as specified, and that the pricing, despite being sole-source, is reasonable and justified through documented cost analysis by the Department of Defense.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award
- Lack of competitive pricing
- High contract value
- Foreign military sale complexity
Tags
aircraft-manufacturing, department-of-defense, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $633.7 million to THE BOEING COMPANY. TAS::97 8242 000::TAS ACQUISITION OF 4 C-17 AIRCRAFT FOR AUSTRALIAN GOVERNMENT
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 Air Force).
What is the total obligated amount?
The obligated amount is $633.7 million.
What is the period of performance?
Start: 2006-07-28. End: 2008-02-21.
What was the justification for the sole-source award, and was a market survey conducted to confirm no other viable sources existed?
Sole-source awards typically require a justification, such as unique capabilities, proprietary technology, or lack of alternatives. A market survey is usually part of this process to demonstrate that no other responsible sources can meet the government's needs. Without this justification, the award raises concerns about potential cost savings missed.
How does the per-unit cost of these C-17s compare to previous domestic sales or other foreign military sales of similar aircraft?
Comparing the per-unit cost of $158.4 million requires access to historical pricing data for C-17s, both domestically and for other FMS cases. Given the sole-source nature and the specific configuration for Australia, direct comparisons might be challenging. However, any significant deviation from established benchmarks would warrant further investigation into cost drivers.
What are the long-term implications for U.S. defense industrial base readiness if key platforms like the C-17 are exclusively produced by one supplier?
Exclusive reliance on a single supplier for critical platforms like the C-17 can create vulnerabilities in the defense industrial base. It could lead to reduced competition, potential price increases, and a lack of surge capacity if demand increases unexpectedly. Maintaining multiple sources or ensuring robust government oversight of the sole supplier becomes crucial for long-term readiness.
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: 2401 E WARDLOW RD, LONG BEACH, CA, 90807
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $633,701,085
Exercised Options: $633,701,085
Current Obligation: $633,721,685
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: FA861406D2006
IDV Type: IDC
Timeline
Start Date: 2006-07-28
Current End Date: 2008-02-21
Potential End Date: 2008-02-21 00:00:00
Last Modified: 2018-11-19
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