DoD's $39M Boeing contract for aircraft parts saw significant cost growth over its 4-year duration

Contract Overview

Contract Amount: $39,093,488 ($39.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2007-09-27

End Date: 2011-11-30

Contract Duration: 1,525 days

Daily Burn Rate: $25.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: OBLIGATE FUNDS

Place of Performance

Location: WICHITA, SEDGWICK County, KANSAS, 67210, UNITED STATES OF AMERICA

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $39.1 million to THE BOEING COMPANY for work described as: OBLIGATE FUNDS Key points: 1. The contract experienced substantial cost increases from its initial award, indicating potential issues with initial cost estimation or scope creep. 2. As a sole-source award, the lack of competition likely limited price discovery and potentially led to higher costs for taxpayers. 3. The 'Other Aircraft Parts' category suggests a broad scope, which can sometimes lead to unforeseen complexities and cost overruns. 4. The contract's duration of over four years allowed ample time for cost escalation, necessitating close monitoring of performance and spending. 5. The use of a Cost Plus Incentive Fee (CPIF) contract type suggests an attempt to incentivize performance, but the overall cost outcome needs further scrutiny. 6. The award to a single, large defense contractor like Boeing, while common in this sector, highlights the importance of robust oversight for sole-source agreements.

Value Assessment

Rating: questionable

The total obligated amount of $39 million over approximately four years for aircraft parts is difficult to benchmark without specific part details. However, the contract's duration and the fact that it was a sole-source award raise concerns about potential overpricing. The Cost Plus Incentive Fee structure, while designed to control costs, did not prevent significant spending. Further analysis would require comparing the unit costs of specific parts to market rates or similar contracts, which is not possible with the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one vendor can provide the required goods or services. While sometimes justified for specialized defense needs, it significantly reduces the opportunity for competitive bidding, which can lead to less favorable pricing for the government. The lack of multiple bidders means there was no direct price comparison to drive down costs.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall spending for the same goods or services compared to a competed contract.

Public Impact

The primary beneficiaries are the Department of Defense (DoD) and its aviation units, receiving essential aircraft parts. The contract supports the maintenance and operational readiness of military aircraft. The geographic impact is primarily centered around the contractor's facilities in Kansas, where the contract was managed. The contract likely supports a workforce involved in the manufacturing and supply chain of aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to sole-source nature and extended duration.
Lack of transparency in pricing due to limited competition.
Risk of vendor lock-in for specialized aircraft parts.
Difficulty in assessing true value-for-money without competitive benchmarks.

Positive Signals

Award to a major defense contractor with established experience.
Use of an incentive fee structure to potentially align contractor and government interests.
Contract managed by a specialized defense contracting agency (DCMA).

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a critical component of the broader aerospace and defense industry. This industry is characterized by high technological sophistication, long product lifecycles, and significant government procurement. Spending in this sector is often driven by national security requirements and the need for specialized, high-reliability components. Benchmarking requires comparison to similar sole-source awards for aircraft components within the DoD, which are often unique and difficult to find direct parallels for.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the sole-source nature and the prime contractor being The Boeing Company, it is unlikely that significant subcontracting opportunities for small businesses were mandated or prioritized within this specific award. The focus would likely be on Boeing's internal capabilities or established large-subcontractor relationships.

Oversight & Accountability

Oversight for this contract would fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Incentive Fee structure implies performance metrics that DCMA would monitor. However, the sole-source nature necessitates a higher degree of scrutiny regarding cost reasonableness and performance justification to ensure accountability and transparency for taxpayer funds.

Related Government Programs

DoD Aircraft Procurement
Defense Logistics Agency (DLA) Parts Procurement
Air Force Sustainment Contracts
Navy Aviation Maintenance Contracts

Risk Flags

Sole-source award lacks competition, potentially increasing costs.
Extended contract duration increases risk of cost escalation.
Cost Plus Incentive Fee contracts require careful monitoring to ensure value.
Lack of specific part details hinders precise value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.1 million to THE BOEING COMPANY. OBLIGATE FUNDS

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 $39.1 million.

What is the period of performance?

Start: 2007-09-27. End: 2011-11-30.

What was the initial estimated cost of the contract, and how did the final obligated amount compare?

The provided data does not include the initial estimated cost. It only shows the total obligated amount of $39,093,488.11. Without the initial estimate, it is impossible to quantify the cost growth or variance. This information is crucial for understanding the contract's financial trajectory and identifying potential issues with initial budgeting or scope definition. Further investigation into contract modification history would be needed to ascertain the initial estimate and track subsequent changes.

What specific aircraft parts or auxiliary equipment were procured under this contract?

The National Defense Industrial Association (NDIA) NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' is broad and does not specify the exact components. This category can encompass a wide range of items, from simple fasteners to complex electronic systems or structural components. The lack of specificity makes it challenging to assess the technical requirements, potential obsolescence risks, or the criticality of these parts to specific aircraft platforms. Understanding the precise nature of the parts is essential for evaluating their necessity and market value.

What were the key performance metrics and incentive targets for the Cost Plus Incentive Fee (CPIF) structure?

The provided data indicates the contract type was 'COST PLUS INCENTIVE FEE' (CPIF), but it does not detail the specific performance metrics, targets, or the incentive fee structure. CPIF contracts aim to motivate contractors by sharing cost savings or rewarding performance above target. To assess the effectiveness of this contract, one would need to know what metrics (e.g., delivery schedule, quality standards, technical performance) were established, what the target costs or performance levels were, and how the incentive fees were calculated and applied based on actual performance. Without this, it's difficult to judge if the government achieved optimal value or if the incentives were appropriately structured.

What is the typical market price or benchmark for similar aircraft parts procured through competitive means?

Benchmarking the price of 'Other Aircraft Parts and Auxiliary Equipment' is highly dependent on the specific item. For common, standardized parts, competitive markets might offer lower prices. However, for specialized, proprietary, or low-volume components unique to specific military platforms, direct market comparisons are often difficult. Given this was a sole-source award to Boeing, it suggests the parts may be proprietary or require specific manufacturing expertise tied to their platforms. A thorough benchmark would require identifying comparable parts, their specifications, and then researching pricing from multiple suppliers or through government databases of previously competed similar items, which is beyond the scope of the provided data.

What is the track record of The Boeing Company in fulfilling similar sole-source defense contracts, particularly regarding cost control?

The Boeing Company is a major, long-established defense contractor with extensive experience in producing aircraft and related components. Historically, like many large defense firms, Boeing has been involved in contracts that have faced scrutiny for cost overruns or schedule delays, particularly on complex, sole-source programs. However, they also have a track record of delivering critical defense systems. Assessing their performance on this specific contract requires examining contract modification history, performance reviews, and any associated audits or investigations related to cost control and delivery. General performance trends for large contractors can be mixed, necessitating a detailed look at individual contract execution.

How does the obligated amount of $39 million compare to overall DoD spending on aircraft parts in the relevant fiscal years?

The $39 million obligated amount for this specific contract represents a small fraction of the Department of Defense's overall annual spending on aircraft parts and maintenance. DoD's total budget runs into hundreds of billions of dollars, with significant portions allocated to aviation systems. While $39 million is substantial for a single contract, it is not an outlier in the context of the vast defense procurement landscape. To provide a meaningful comparison, one would need to analyze DoD's historical spending trends for the 'Aircraft Parts and Auxiliary Equipment Manufacturing' sector (NAICS 336413) across the contract's duration (2007-2011) and compare this contract's value as a percentage of that total.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 4615 SOUTH OLIVER, WICHITA, KS, 67210

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $39,093,488

Exercised Options: $39,093,488

Current Obligation: $39,093,488

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA810606D0001

IDV Type: IDC

Timeline