DoD's $2.28B Boeing Aircraft Sustainment Contract Lacks Competition, Raises Value Concerns

Contract Overview

Contract Amount: $2,285,494,120 ($2.3B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2012-10-01

End Date: 2020-01-31

Contract Duration: 2,678 days

Daily Burn Rate: $853.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AIRCRAFT SUSTAINMENT

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $2.29 billion to THE BOEING COMPANY for work described as: AIRCRAFT SUSTAINMENT Key points: 1. Significant spending on aircraft sustainment by the Department of Defense. 2. Sole reliance on The Boeing Company for this critical defense need. 3. Potential for inflated costs due to lack of competitive bidding. 4. The defense sector often faces complex sustainment challenges.

Value Assessment

Rating: questionable

The contract's value is substantial, but without competitive benchmarking, it's difficult to assess if the pricing is optimal. The lack of competition suggests potential overpayment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other vendors were considered. This significantly limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The absence of competition likely results in higher expenditures than a competitively bid contract would yield, impacting the efficient use of taxpayer funds.

Public Impact

Taxpayers may be overpaying for aircraft sustainment services due to the lack of competition. The long duration of the contract (2012-2020) suggests a sustained period of potentially non-competitive pricing. Dependence on a single vendor can create risks if that vendor faces production issues or price hikes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Positive Signals

Critical sustainment for defense assets
Established vendor relationship

Sector Analysis

This contract falls within the defense sector, specifically aircraft manufacturing and sustainment. Spending in this area is crucial for national security but often involves complex, specialized services where competition can be challenging.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was awarded directly to a large prime contractor on a sole-source basis.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure the Department of Defense received fair pricing and that the necessity for sole-sourcing was adequately justified.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Long contract duration
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.29 billion to THE BOEING COMPANY. AIRCRAFT SUSTAINMENT

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 $2.29 billion.

What is the period of performance?

Start: 2012-10-01. End: 2020-01-31.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies ever considered?

The provided data indicates the contract was 'NOT COMPETED,' suggesting a sole-source award. A thorough review would be needed to understand the specific justification, such as unique capabilities or urgent need. Without this, it's impossible to determine if competitive alternatives were overlooked, potentially impacting value for money.

How does the per-unit cost of sustainment for these aircraft compare to similar platforms or historical data, given the lack of competition?

Benchmarking the per-unit cost is challenging without competitive bids. If available, comparing sustainment costs for similar aircraft within the DoD or industry averages could reveal potential overpricing. The absence of competition inherently limits the ability to establish a reliable cost benchmark, raising concerns about efficiency.

What are the long-term risks associated with relying solely on The Boeing Company for sustainment of these specific aircraft?

Long-term risks include potential price escalation without competitive pressure, reduced innovation, and vulnerability to supply chain disruptions affecting only Boeing. Dependence on a single provider can also limit flexibility in adopting new technologies or maintenance strategies, potentially impacting operational readiness and increasing long-term costs.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 14441 ASTRONAUTICS LN, HUNTINGTON BEACH, CA, 92647

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: $3,574,060,538

Exercised Options: $2,350,932,116

Current Obligation: $2,285,494,120

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852612D0001

IDV Type: IDC

Timeline