Boeing awarded $287M contract for aircraft manufacturing, raising questions about competition and value

Contract Overview

Contract Amount: $287,133,877 ($287.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2011-06-29

End Date: 2017-04-30

Contract Duration: 2,132 days

Daily Burn Rate: $134.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACATII, IBS, UCA LOT 1

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $287.1 million to THE BOEING COMPANY for work described as: ACATII, IBS, UCA LOT 1 Key points: 1. Contract awarded via a sole-source justification, limiting competitive pressure. 2. Pricing appears to be at fair market value, but lacks robust benchmarking. 3. Performance history indicates a stable, albeit long, contract duration. 4. The contract falls within the broader defense aircraft manufacturing sector. 5. No specific small business set-aside was identified for this award. 6. Oversight is managed by the Defense Contract Management Agency, with standard reporting.

Value Assessment

Rating: fair

The total award amount of $287 million for aircraft manufacturing is substantial. While the contract type is Firm Fixed Price, which typically offers cost certainty, the lack of competitive bidding makes a direct value-for-money assessment challenging. Benchmarking against similar sole-source contracts for specialized aircraft components or platforms would be necessary for a more definitive evaluation. The provided data does not offer enough detail to compare unit costs or assess if the pricing is significantly above or below market rates for comparable services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This approach is typically used when only one responsible source can provide the required goods or services. The absence of multiple bidders means there was no direct price competition to drive down costs or encourage innovative solutions. The limited competition raises concerns about whether the government secured the best possible price and terms.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the government lacks the leverage that competition provides. Without competing bids, there's a risk of paying a premium for the goods or services.

Public Impact

The primary beneficiary is the Department of Defense, receiving critical aircraft manufacturing services. The contract supports the production and delivery of specific aircraft components or platforms. The geographic impact is likely concentrated around Boeing's manufacturing facilities. This contract supports jobs within the aerospace manufacturing sector, particularly at Boeing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may reduce incentives for contractor efficiency and innovation.
Contract duration of over 2000 days suggests a long-term commitment with potential for cost overruns if not managed tightly.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Awarded to a known prime contractor (The Boeing Company) with established manufacturing capabilities.
Contract is managed by the Defense Contract Management Agency, indicating established oversight processes.

Sector Analysis

This contract falls within the broader Defense Industrial Base, specifically the aircraft manufacturing sub-sector. This sector is characterized by high barriers to entry, significant R&D investment, and long production cycles. The market is often dominated by a few large prime contractors. Spending in this area is critical for national security and is subject to stringent government oversight and procurement regulations. Comparable spending benchmarks would typically involve other large-scale aircraft production or modification contracts within the DoD.

Small Business Impact

The provided data indicates that small business participation was not a primary consideration for this specific award (ss: false, sb: false). There is no indication of a small business set-aside. Subcontracting opportunities for small businesses may exist within the supply chain for this large contract, but this is not explicitly detailed in the award information. The overall impact on the small business ecosystem is likely indirect, depending on Boeing's subcontracting strategy.

Oversight & Accountability

Oversight for this contract is provided by the Defense Contract Management Agency (DCMA). Standard oversight mechanisms would include monitoring contractor performance, ensuring compliance with contract terms, and verifying delivery schedules. Accountability is primarily driven by the Firm Fixed Price nature of the contract, which caps the government's financial liability. Transparency is generally maintained through contract databases, though specific performance details may be sensitive.

Related Government Programs

Aircraft Production Contracts
Defense Manufacturing
Sole-Source Procurements
Major Weapon Systems Acquisition

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Long contract duration requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $287.1 million to THE BOEING COMPANY. ACATII, IBS, UCA LOT 1

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 $287.1 million.

What is the period of performance?

Start: 2011-06-29. End: 2017-04-30.

What specific aircraft or components does this contract cover, and why was it sole-sourced?

The provided data does not specify the exact aircraft or components covered by this $287 million contract awarded to The Boeing Company. The justification for sole-sourcing (CT: NOT COMPETED) indicates that only one responsible source was deemed capable of fulfilling the requirement. This could be due to proprietary technology, unique manufacturing capabilities, existing platform integration, or urgent national security needs where competition would cause unacceptable delays or costs. Without further details from the contracting agency (Department of Defense), the precise reasons and the specific nature of the aircraft or components remain undisclosed, making it difficult to fully assess the necessity of the sole-source approach.

How does the $287 million award compare to similar aircraft manufacturing contracts awarded by the DoD?

Comparing this $287 million award requires context on the specific type of aircraft or components being manufactured. Large-scale production contracts for major platforms like fighter jets or transport aircraft can easily run into billions of dollars. However, for specialized components, upgrades, or smaller aircraft programs, $287 million represents a significant investment. Without knowing the exact scope, a direct comparison is difficult. The fact that it was sole-sourced also complicates benchmarking, as competitive contracts often yield lower prices due to market forces. To assess value, one would need to compare it to other sole-sourced contracts for similar complexity or to historical pricing for the same or equivalent items if available.

What are the key performance indicators (KPIs) and risks associated with this contract?

Key performance indicators for this contract would likely revolve around meeting production schedules, adhering to quality standards (e.g., defect rates), and ensuring timely delivery of the specified aircraft or components. Given the Firm Fixed Price (P) nature, the primary risk for the government is potential cost overruns if the contractor encounters unforeseen issues, although the contractor bears most of this risk. For the contractor, risks include production delays, quality control failures, and potential penalties if contract terms are breached. The sole-source (CT: NOT COMPETED) aspect introduces a risk of suboptimal pricing and potentially less incentive for the contractor to innovate or optimize efficiency compared to a competitive environment.

What is The Boeing Company's track record with similar large-scale defense manufacturing contracts?

The Boeing Company has an extensive and long-standing track record as a major prime contractor for the Department of Defense, involved in the design, manufacturing, and sustainment of numerous aircraft platforms, including fighters, bombers, helicopters, and transport aircraft. They have experience managing large, complex, multi-year production programs. While generally considered a capable manufacturer, Boeing has also faced scrutiny and challenges on various large contracts related to cost overruns, production delays, and technical issues on specific programs. Their overall performance history is mixed, with significant successes alongside notable difficulties, underscoring the importance of robust oversight for contracts of this magnitude.

How has federal spending on aircraft manufacturing evolved, and where does this contract fit?

Federal spending on aircraft manufacturing, particularly within the Department of Defense, has historically been substantial, driven by the need for advanced air capabilities. Spending fluctuates based on modernization priorities, geopolitical events, and budget cycles. This $287 million contract, awarded in 2011 and ending in 2017, represents a specific investment within a broader portfolio of aircraft acquisition and sustainment programs. It fits into the category of major defense procurement, likely supporting a specific platform's production or a critical component. Analyzing its place requires understanding the overall defense budget allocation for aviation during that period and the strategic importance of the platform it supports.

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: 2600 WESTMINSTER AVE, SEAL BEACH, CA, 90740

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $287,716,886

Exercised Options: $287,133,877

Current Obligation: $287,133,877

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365701D2050

IDV Type: IDC

Timeline