DoD awards Boeing $1.51B for Aircraft Manufacturing, spanning 16 years
Contract Overview
Contract Amount: $1,510,098,200 ($1.5B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2001-07-30
End Date: 2017-09-30
Contract Duration: 5,906 days
Daily Burn Rate: $255.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Place of Performance
Location: WICHITA, SEDGWICK County, KANSAS, 67210
State: Kansas Government Spending
Plain-Language Summary
Department of Defense obligated $1.51 billion to THE BOEING COMPANY for work described as: Key points: 1. Significant long-term contract awarded to a major defense contractor. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. Contract type is Cost Plus Award Fee, which can incentivize performance but may lead to higher costs. 4. The duration of the contract is exceptionally long, raising questions about flexibility and potential for cost overruns.
Value Assessment
Rating: fair
The contract value of $1.51 billion over 16 years is substantial. Without specific benchmarks for similar long-term aircraft manufacturing contracts, it's difficult to definitively assess pricing. The Cost Plus Award Fee structure introduces variability.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This method generally promotes competitive pricing, but the long duration and specific nature of aircraft manufacturing might limit the number of truly competitive bids.
Taxpayer Impact: The long-term nature and cost-plus structure of this contract mean taxpayers are exposed to potential cost increases over 16 years, though the competitive award aims to mitigate this.
Public Impact
Taxpayers fund a significant portion of national defense through this contract. The contract supports jobs and economic activity within the aerospace and defense sector. Long-term defense contracts can impact the government's ability to adapt to evolving technological needs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Extended contract duration
- Cost Plus Award Fee structure
- Potential for scope creep over 16 years
Positive Signals
- Full and open competition
- Award to established prime contractor
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a critical component of national defense spending. Benchmarks for such long-term, high-value contracts are scarce due to their unique nature and the specialized capabilities required.
Small Business Impact
While the prime contractor is a large corporation, the contract may indirectly benefit small businesses through subcontracts. However, the data does not indicate direct awards or set-asides for small businesses on this specific contract.
Oversight & Accountability
The long duration necessitates robust oversight to ensure performance, cost control, and adherence to contract terms. Regular reviews and audits would be crucial for accountability.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Long contract duration increases risk of obsolescence and changing needs.
- Cost Plus Award Fee structure can lead to higher final costs if not managed tightly.
- Potential for contractor lock-in due to specialized nature of aircraft manufacturing.
- Limited visibility into specific performance metrics and award fee triggers.
- Significant taxpayer exposure over the 16-year period.
Tags
aircraft-manufacturing, department-of-defense, ks, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.51 billion 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 $1.51 billion.
What is the period of performance?
Start: 2001-07-30. End: 2017-09-30.
What is the typical profit margin for Cost Plus Award Fee contracts in aircraft manufacturing, and how does this contract's structure compare?
Cost Plus Award Fee (CPAFF) contracts typically allow for a base fee plus an additional award fee based on performance metrics. Profit margins can vary significantly depending on the specific award criteria and the contractor's ability to exceed them. Benchmarking requires detailed analysis of similar CPAFF contracts within the defense aerospace sector, considering factors like program complexity, risk, and desired outcomes.
How does the 16-year duration impact the government's ability to incorporate technological advancements or change requirements?
A 16-year contract duration presents a significant challenge for incorporating rapid technological advancements common in the aerospace industry. While contract modifications are possible, they can be complex and costly. This extended timeline may lock the government into specific technologies, potentially hindering agility and the adoption of more innovative solutions that emerge during the contract period.
What mechanisms are in place to ensure cost efficiency and prevent overruns given the Cost Plus Award Fee structure and long duration?
The 'Award Fee' component of CPAFF is designed to incentivize cost efficiency by rewarding contractors who meet or exceed performance targets, which can include cost control. However, robust oversight, including regular audits, Earned Value Management (EVM) analysis, and clear performance metrics, is essential to monitor spending and prevent cost overruns throughout the contract's extensive lifecycle.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 4
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 6001 S AIR DEPOT BLVD, OKLAHOMA CITY, OK, 73135
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $1,552,858,024
Exercised Options: $1,552,858,024
Current Obligation: $1,510,098,200
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2001-07-30
Current End Date: 2017-09-30
Potential End Date: 2017-09-30 00:00:00
Last Modified: 2020-10-05
More Contracts from THE Boeing Company
- KC-X Modernization Program — $32.0B (Department of Defense)
- International Space Station — $22.4B (National Aeronautics and Space Administration)
- 200112!000108!9700!ZD60 !ballistic Missile Defense ORG. !HQ000601C0001 !A!N!*!N! !20001222!20080930!848025649!848025649!009256819!n!the Boeing Company !3370 E Miraloma AVE !anaheim !ca!92806!37000!089!01!huntsville !madison !alabama !+000383571022!n!n!000000000000!ad93!rdte/Other Defense-Adv Tech DEV !S1 !services !1caa!ballistic Missile Defense SYS !541710!*!*!3! ! ! !*!*!*!B!*!*!A! !A !U!R!2!001!B! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! — $18.8B (Department of Defense)
- USN P-8A FRP II Long Lead Material — $18.1B (Department of Defense)
- 200512!010860!2100!w56hzv!tacom - Warren !w56hzv05c0724 !A!N! !Y! ! !20050923!20141231!016544780!016544780!009256819!n!the Boeing Company !J S Mcdonnell Blvd !saint Louis !mo!63166!65000!510!29!st. Louis !ST. Louis (city) !missouri !+000219245691!n!n!000000000000!az15!rdte/Other Research&development-Eng/Manuf Devel !S1 !services !301 !FCS !541330!E! !1! ! ! ! ! !20200930!B! ! !A! !d!u!u!1!001!n!1a!z!y!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! TAS::21 2040::TAS — $12.7B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)