Boeing awarded $380.7M for CH-47F aircraft spares, with a 1,256-day duration

Contract Overview

Contract Amount: $380,683,698 ($380.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2004-09-24

End Date: 2008-03-03

Contract Duration: 1,256 days

Daily Burn Rate: $303.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 200412!005391!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04G0023 !A!N! !N!0002 ! !20040924!20071130!172316432!172316432!009256819!N!THE BOEING COMPANY !ROUTE 291 & STEWART AVE !RIDLEY PARK !PA!19078!64832!045!42!RIDLEY PARK !DELAWARE !PENN !+000029068132!N!N!000000000000!1520!AIRCRAFT ROTARY WING !A1A!AIRFRAMES AND SPARES !278 !CH-47F !336411!E! !4! ! ! ! ! !99990909!B! ! !A! !D!N!L!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!A!N! ! ! ! ! ! !0001! !

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $380.7 million to THE BOEING COMPANY for work described as: 200412!005391!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04G0023 !A!N! !N!0002 ! !20040924!20071130!172316432!172316432!009256819!N!THE BOEING COMPANY !ROUTE 291 & STEWART AVE !RIDLEY PARK !PA!19078!64832!045!42!RIDLEY PARK !DELA… Key points: 1. Contract awarded for critical aircraft spares, indicating ongoing sustainment needs. 2. The fixed-price incentive contract type suggests a focus on cost control while incentivizing performance. 3. A long contract duration of over three years implies a significant, long-term requirement. 4. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies. 5. The contract falls under aircraft airframes and spares, a key segment of defense aviation. 6. The award to a single, large prime contractor highlights the concentration in this specialized market.

Value Assessment

Rating: fair

The total award amount of $380.7 million for aircraft spares over 1,256 days appears substantial. Benchmarking against similar contracts for CH-47F components is necessary to determine true value for money. The fixed-price incentive structure aims to manage costs, but the lack of competition limits direct price comparison and could lead to less favorable pricing than a fully competed contract. Further analysis of the specific spares procured and their unit costs relative to market rates would be beneficial.

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 approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means there was no opportunity for other qualified companies to bid, potentially limiting price discovery and innovation. This raises questions about whether the government secured the best possible pricing and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, it is harder to ensure that the price reflects the lowest reasonable cost for these essential aircraft spares.

Public Impact

The primary beneficiaries are the U.S. Army aviation units operating the CH-47F Chinook helicopters, ensuring operational readiness. The contract delivers essential airframes and spares, crucial for maintaining the airworthiness and functionality of the fleet. The geographic impact is national, supporting Army aviation assets across various installations. Workforce implications include continued employment for personnel at Boeing facilities involved in manufacturing and logistics for these spares.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Fixed-price incentive contracts can be complex to manage and may not always yield the lowest price.
Long-term sustainment contracts require robust oversight to ensure continued value.
Reliance on a single prime contractor for critical spares can create supply chain vulnerabilities.

Positive Signals

Award to a known, experienced contractor (Boeing) for a critical platform (CH-47F).
Fixed-price incentive contract structure aims to align contractor and government interests.
Contract duration suggests a stable, predictable supply chain for essential components.
The contract supports the sustainment of a vital military asset, ensuring operational capability.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and sustainment. The market for specialized military aircraft components like those for the CH-47F is often concentrated among a few large, established prime contractors. Spending on aircraft spares and maintenance is a significant portion of defense budgets, essential for maintaining fleet readiness. Comparable spending benchmarks would involve analyzing other sustainment contracts for similar heavy-lift helicopters.

Small Business Impact

This contract does not appear to have a small business set-aside component. As a sole-source award to a large prime contractor, the primary focus is on the direct award. However, the prime contractor, Boeing, is expected to utilize small businesses in its supply chain for components and services, though specific subcontracting goals are not detailed in this summary data. The impact on the small business ecosystem depends on Boeing's subcontracting practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The fixed-price incentive structure requires careful monitoring of cost and performance metrics. Transparency is facilitated through contract databases, but the sole-source nature limits public insight into the negotiation process. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

CH-47 Chinook Helicopter Program
Aviation Logistics Support
Aircraft Parts and Components
Defense Sustainment Contracts
Heavy-Lift Helicopter Operations

Risk Flags

Sole-source award
Potential for cost overruns without competition
Long contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $380.7 million to THE BOEING COMPANY. 200412!005391!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04G0023 !A!N! !N!0002 ! !20040924!20071130!172316432!172316432!009256819!N!THE BOEING COMPANY !ROUTE 291 & STEWART AVE !RIDLEY PARK !PA!19078!64832!045!42!RIDLEY PARK !DELAWARE !PENN !+000029068132!N!N!000000000000!1520!AIRCRAFT ROTARY WING !A1A!AIRFRAMES AND SPARES !278 !CH-47F !336411!E! !4! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $380.7 million.

What is the period of performance?

Start: 2004-09-24. End: 2008-03-03.

What is the historical spending trend for CH-47F aircraft spares with The Boeing Company?

Analyzing historical spending data for CH-47F aircraft spares with The Boeing Company is crucial for understanding long-term investment and identifying potential cost escalations. While this specific contract represents a significant award of $380.7 million, a comprehensive review would involve examining all prior contracts, delivery orders, and modifications issued to Boeing for these components. This includes looking at the total obligated amounts, contract types (e.g., fixed-price, cost-plus), and the duration of previous agreements. Trends in spending can reveal whether the government's investment in CH-47F sustainment has been increasing, decreasing, or remaining stable over time. Furthermore, comparing the average annual spending across different contract periods can highlight shifts in demand, pricing strategies, or the introduction of new aircraft configurations that require different spare parts. Understanding these historical patterns provides context for the current award and helps in forecasting future budgetary needs for CH-47F sustainment.

How does the per-unit cost of critical spares under this contract compare to industry benchmarks or previous contracts?

A key aspect of assessing value for money is comparing the per-unit cost of critical spares under this $380.7 million contract against established benchmarks. Since this is a sole-source award, direct price comparison with competing offers is impossible. Therefore, the analysis must rely on alternative methods. This could involve benchmarking against prices paid for the same or similar components in previous contracts awarded to Boeing or other suppliers, adjusting for inflation and contract type differences. Industry-standard pricing databases or market research reports can also provide reference points for the fair market value of specific aircraft parts. If detailed unit cost data is available, it should be scrutinized for reasonableness, especially considering the fixed-price incentive structure. Significant deviations from historical or market prices, particularly without clear justification (like technological advancements or material cost increases), could indicate potential overpricing and warrant further investigation into the negotiation process and cost elements.

What are the specific performance metrics and incentives included in this fixed-price incentive contract?

The 'fixed-price incentive' (FPI) contract type implies that the final price is determined by the contractor's performance against agreed-upon targets, with incentives for exceeding expectations and penalties for falling short. For this $380.7 million award concerning CH-47F aircraft spares, understanding the specific performance metrics is vital. These metrics likely relate to delivery schedules, quality standards (e.g., defect rates), and potentially technical performance specifications for the spares. The incentive structure would define how deviations from the target cost and schedule impact the final price paid to The Boeing Company. For instance, achieving early delivery or exceeding quality thresholds might result in a higher profit margin for Boeing, while delays or quality issues could reduce it. A thorough analysis would require access to the contract's details, including the target cost, ceiling price, share ratio between the government and contractor, and the specific performance objectives. This information is crucial for evaluating the effectiveness of the incentive scheme in driving desired outcomes and ensuring taxpayer value.

What is the track record of The Boeing Company in delivering aircraft spares and fulfilling similar defense contracts?

The Boeing Company has an extensive and long-standing track record in delivering aircraft, including complex platforms like the CH-47 Chinook, and their associated spare parts to the U.S. military. As a major defense contractor, Boeing has fulfilled numerous contracts of varying types and values across different branches of the armed forces. Its performance history on similar sustainment and spares contracts provides valuable context for this $380.7 million award. Key aspects to consider include Boeing's historical on-time delivery rates, quality performance (e.g., defect rates, warranty claims), responsiveness to contract modifications, and overall cost management on past agreements. While Boeing is generally recognized for its capabilities, specific contract performance can vary. Analyzing past performance data, including any past performance reviews or contractor capability assessments, helps in evaluating the risk associated with this sole-source award and provides a basis for confidence in their ability to meet the requirements of this specific contract.

What are the potential risks associated with the sole-source nature of this contract award?

The sole-source nature of this $380.7 million contract award to The Boeing Company presents several potential risks. Primarily, the lack of competition means the government did not benefit from the price reductions and improved terms that typically arise from a competitive bidding process. This could lead to higher costs for the taxpayer than might otherwise be achievable. Furthermore, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single supplier, potentially stifling innovation and reducing flexibility in the supply chain. There's also a risk that without competitive pressure, the contractor may have less incentive to proactively seek cost efficiencies or improve service levels beyond the minimum contractual requirements. Ensuring robust oversight and negotiation is critical to mitigate these risks and confirm that the government is receiving fair value, despite the absence of a competitive environment.

How does this contract fit into the broader strategy for maintaining the CH-47F fleet's operational readiness?

This $380.7 million contract for CH-47F aircraft spares is integral to the U.S. Army's broader strategy for maintaining the operational readiness and longevity of its Chinook helicopter fleet. The CH-47F is a critical asset for heavy-lift transport missions, troop movement, and logistical support in various operational environments. Ensuring a steady and reliable supply of airframes and spares is paramount to minimizing aircraft downtime, reducing maintenance costs, and maximizing fleet availability. This contract, with its substantial value and multi-year duration, signals a commitment to the long-term sustainment of the CH-47F. It supports the Army's objective of having a fully mission-capable fleet ready to deploy when needed. The specific types of spares procured will dictate which components are prioritized for replacement or repair, directly impacting the types of maintenance activities that can be performed and the overall health of the helicopter fleet.

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

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: ROUTE 291 & STEWART AVE, RIDLEY PARK, PA, 19078

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ04G0023

IDV Type: IDC

Timeline