DoD's $320M Boeing Aircraft Contract: A Sole-Source Award with Long-Term Delivery

Contract Overview

Contract Amount: $320,255,599 ($320.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2005-06-13

End Date: 2012-03-24

Contract Duration: 2,476 days

Daily Burn Rate: $129.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $320.3 million to THE BOEING COMPANY for work described as: Key points: 1. This contract represents a significant investment in aircraft manufacturing, highlighting the reliance on established prime contractors for complex defense needs. 2. The sole-source nature of this award warrants scrutiny regarding potential impacts on pricing and the availability of competitive alternatives. 3. Performance metrics and delivery order history will be crucial in assessing the overall value and effectiveness of this long-term agreement. 4. The extended duration suggests a strategic, multi-year commitment to specific aircraft platforms or sustainment services. 5. Understanding the specific aircraft and services procured is key to benchmarking this spending against similar defense acquisitions.

Value Assessment

Rating: fair

Benchmarking the value of this $320 million contract is challenging without specific details on the aircraft or services procured. As a sole-source award, direct price comparisons to similar competitive contracts are not feasible. The Cost Plus Incentive Fee (CPIF) structure suggests an attempt to control costs by incentivizing the contractor to meet performance targets while managing expenses. However, the long duration and lack of competition raise questions about whether the government achieved the best possible value.

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 among multiple potential suppliers. This approach is typically used when only one contractor possesses the necessary capabilities, technology, or when urgency dictates a rapid award. The lack of competition means that price discovery through market forces was limited, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the lowest possible price, and the government has fewer options to negotiate from.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical aircraft manufacturing services. This contract supports the production or sustainment of specific aircraft platforms essential for national security operations. The geographic impact is likely concentrated around Boeing's manufacturing facilities and associated supply chains. This contract supports a significant number of jobs within the aerospace manufacturing sector, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Long contract duration (2476 days) increases exposure to cost overruns and changing requirements.
Cost Plus Incentive Fee (CPIF) contract type can lead to cost growth if not managed tightly.
Lack of specific details on aircraft type and services makes independent value assessment difficult.

Positive Signals

Awarded to a major defense contractor (The Boeing Company) with extensive experience in aircraft manufacturing.
CPIF contract structure includes incentives, aiming to align contractor performance with government objectives.
Long duration suggests a strategic, long-term need for the procured goods or services.
Contract is managed by the Defense Contract Management Agency, indicating established oversight processes.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government procurement. This contract falls within the Aircraft Manufacturing sub-sector, a critical component of the defense industrial base. Spending in this area is often driven by national security imperatives, long development cycles, and the need for specialized capabilities. Comparable spending benchmarks would typically involve other large-scale aircraft procurement or sustainment contracts within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by `sb: false`. The prime contractor, The Boeing Company, is a large aerospace firm. While large prime contracts often include subcontracting plans to engage small businesses, the details of such plans are not provided here. The absence of a direct set-aside means that opportunities for small businesses would likely be through subcontracts awarded by Boeing, rather than direct prime contract awards.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Incentive Fee (CPIF) structure implies specific performance metrics and cost targets that are monitored. Transparency regarding the specific deliverables, cost breakdowns, and performance reviews would be necessary for a full assessment of accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Procurement, Air Force
Combat Aircraft Manufacturing
Defense Logistics Agency - Aircraft Parts

Risk Flags

Sole-source award limits price competition.
Long contract duration increases risk exposure.
CPIF contract type requires careful cost monitoring.
Lack of specific service/product details hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $320.3 million to THE BOEING COMPANY. See the official description on USAspending.

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 $320.3 million.

What is the period of performance?

Start: 2005-06-13. End: 2012-03-24.

What specific aircraft or services are covered under this $320 million contract?

The provided data indicates the contract is for 'Aircraft Manufacturing' (nd: 336411) and awarded to 'THE BOEING COMPANY' (co). However, the specific type of aircraft (e.g., fighter jet, transport plane, helicopter) or the nature of the services (e.g., new production, modification, sustainment, training) are not detailed in the abbreviated data. This lack of specificity makes it difficult to assess the contract's precise purpose and value. Further investigation into the contract's details, potentially through the Federal Procurement Data System (FPDS) or agency solicitations, would be required to identify the exact platforms or services involved.

How does the Cost Plus Incentive Fee (CPIF) structure typically function in defense contracts?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and also receives a fee that is adjusted based on performance relative to a target. The government and contractor agree on a target cost, a target fee, and a fee-sharing arrangement for savings or overruns. If the final cost is below the target cost, both parties share in the savings, with the contractor receiving a higher fee. Conversely, if the final cost exceeds the target cost, both share in the overrun, and the contractor's fee is reduced. This structure aims to incentivize the contractor to control costs while meeting performance objectives, balancing risk and reward.

What are the implications of a sole-source award for taxpayer value?

Sole-source awards, by definition, bypass the competitive bidding process. This means that the government does not benefit from the price reductions and innovation that typically arise when multiple companies vie for a contract. Without competition, there is less pressure on the contractor to offer the lowest possible price, potentially leading to higher costs for taxpayers. While sole-source awards are sometimes necessary due to unique capabilities or urgent needs, they require rigorous justification and careful negotiation to ensure the government is not overpaying and is receiving the best value achievable under the circumstances.

What is the significance of the contract duration (2476 days)?

A contract duration of 2476 days, approximately 6.8 years, indicates a long-term commitment by the Department of Defense for the specified aircraft manufacturing or related services. Such extended periods often reflect the lifecycle of complex defense systems, including development, production, and sustainment phases. Long durations can provide contractors with stability and allow for economies of scale. However, they also expose the government to risks associated with potential cost increases over time, evolving technological requirements, and the possibility of contractor underperformance persisting for an extended period without easy recourse.

How does the 'Aircraft Manufacturing' (NAICS 336411) sector typically perform in terms of contract value and competition?

The Aircraft Manufacturing sector (NAICS 336411) is a high-value, technology-intensive industry dominated by a few large prime contractors, such as Boeing and Lockheed Martin. Contracts within this sector are often substantial, running into hundreds of millions or billions of dollars, due to the complexity and cost of producing advanced aircraft. Competition can be limited, especially for specific platforms or upgrades, often leading to sole-source or limited-competition awards. When competition does occur, it is typically fierce among the major players. The sector is heavily influenced by government defense spending priorities and technological advancements.

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: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 2600 WESTMINSTER AVE, SEAL BEACH, CA, 90740

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $329,236,424

Exercised Options: $329,236,424

Current Obligation: $320,255,599

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365701D2050

IDV Type: IDC

Timeline