DoD awards $52M contract for aircraft parts to Boeing, raising questions about competition and value

Contract Overview

Contract Amount: $52,054,573 ($52.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2000-06-30

End Date: 2006-06-30

Contract Duration: 2,191 days

Daily Burn Rate: $23.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Place of Performance

Location: WICHITA, SEDGWICK County, KANSAS, 67210

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $52.1 million to THE BOEING COMPANY for work described as: Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Fixed-price incentive contract type suggests performance targets, but details on incentives are not provided. 3. Long contract duration of 6 years may indicate a need for sustained support, but also locks in pricing. 4. Awarded to a large, established defense contractor, potentially crowding out smaller, specialized firms. 5. Geographic location in Kansas for contract administration may have implications for local oversight. 6. Lack of competition is a significant risk indicator for potential overspending.

Value Assessment

Rating: questionable

The contract value of $52 million over six years averages approximately $8.67 million annually. Without comparable sole-source contracts for similar aircraft parts, it is difficult to definitively benchmark the value. However, the absence of competition inherently raises concerns about whether the government secured the best possible price. The fixed-price incentive structure suggests an attempt to control costs, but the effectiveness of these incentives is not detailed.

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 indicates that the Department of Defense likely determined that only The Boeing Company could provide the required aircraft parts. The lack of competition means there was no opportunity for other vendors to bid, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive pricing, potentially resulting in higher overall expenditure for these aircraft parts.

Public Impact

The primary beneficiaries are the Department of Defense, which receives essential aircraft parts for its operations. The contract supports the continued airworthiness and operational readiness of specific military aircraft. The geographic impact is primarily felt in Kansas, where the contract is administered, potentially supporting local jobs and the regional economy. The contract sustains a portion of The Boeing Company's workforce involved in manufacturing and supplying these specialized parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Long contract duration may not reflect evolving market prices or technological advancements.
Lack of transparency regarding specific performance metrics and incentive payouts within the fixed-price incentive contract.
Reliance on a single large contractor could create dependency and reduce future sourcing flexibility.

Positive Signals

Award to a major defense contractor like Boeing suggests a high likelihood of meeting technical specifications.
Fixed-price incentive contract type aims to align contractor performance with government objectives.
Contract administration in Kansas may facilitate closer oversight and communication with the contractor.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized military aircraft components is often dominated by a few large, established players due to high barriers to entry, including technical expertise, certifications, and existing relationships. Spending in this sub-sector is critical for maintaining military readiness, and contracts are often long-term due to the lifecycle of defense platforms. Comparable spending benchmarks are difficult to ascertain without specific part identification, but the overall defense procurement budget runs into hundreds of billions annually.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to The Boeing Company, a large aerospace manufacturer. There is no information provided regarding subcontracting plans for small businesses. The sole-source nature of the award further suggests limited opportunities for small businesses to participate directly in this specific contract, potentially impacting the small business ecosystem within this niche of defense manufacturing.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA) in Kansas. The fixed-price incentive contract type implies that performance metrics and cost controls are in place, subject to DCMA's monitoring. Transparency regarding the specific details of the incentive structure and performance outcomes is limited in the provided data. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Aircraft Procurement
Defense Logistics Agency (DLA) Aviation
Military Aircraft Parts Manufacturing
Aerospace Component Suppliers

Risk Flags

Sole-source award lacks competitive pricing.
Contract duration is lengthy, potentially leading to price inflexibility.
Lack of detailed performance metrics for incentive contract.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.1 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 $52.1 million.

What is the period of performance?

Start: 2000-06-30. End: 2006-06-30.

What specific aircraft parts are being procured under this contract, and what is their criticality to DoD operations?

The provided data indicates the contract is for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' under NAICS code 336413. However, the specific part numbers or types of components are not detailed. These parts are likely critical for the maintenance, repair, and operational readiness of various military aircraft platforms operated by the Department of Defense. Without knowing the exact components, it's impossible to quantify their specific criticality, but auxiliary equipment and parts are essential for the sustained functioning of any complex machinery, including aircraft.

How does the $52 million contract value compare to historical spending on similar aircraft parts from Boeing or other suppliers?

Direct comparison of the $52 million contract value is challenging without knowing the specific parts procured. However, historical spending data for The Boeing Company with the Department of Defense is extensive, given its role as a major prime contractor. To assess value, one would need to analyze past contracts for identical or highly similar parts, considering inflation and any technological upgrades. The sole-source nature of this award prevents a direct comparison with competitive bids, making it difficult to determine if $52 million represents a fair market price relative to what could have been achieved through competition.

What are the key performance metrics and incentive targets within the Fixed Price Incentive (FPI) contract structure?

The data specifies the contract type as Fixed Price Incentive (FPI), which means the final price is determined after performance is measured against an agreed-upon target. Typically, FPI contracts include a target cost, target profit, and a price ceiling. The incentive is designed to motivate the contractor to control costs below the target cost, sharing the savings with the government up to a certain point. However, the specific performance metrics, cost targets, profit-sharing formulas, and the price ceiling for this $52 million contract are not publicly detailed in the provided information. Understanding these elements is crucial for assessing the effectiveness of the incentive and the potential value realized by the government.

What is the rationale behind awarding this contract on a sole-source basis instead of through full and open competition?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For aircraft parts, this could be due to proprietary technology, unique manufacturing capabilities held exclusively by a single company, or the need for compatibility with existing platforms where only the original equipment manufacturer (OEM) can supply the necessary components. The Department of Defense would have had to document the justification for this sole-source award, likely citing reasons such as Boeing's exclusive rights to the design, manufacturing process, or necessary certifications for these specific aircraft parts, making competition impractical or impossible.

What is the expected impact of this contract on The Boeing Company's production capacity and workforce in Kansas?

A $52 million contract awarded over six years represents a significant revenue stream for The Boeing Company, particularly for its operations in Kansas. This contract would likely contribute to maintaining or potentially expanding production capacity related to the specific aircraft parts being supplied. It would also support employment within Boeing's facilities in Kansas, including roles in manufacturing, engineering, quality assurance, and program management. The sustained nature of the contract provides a degree of stability for the workforce involved in fulfilling these orders.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: FIXED PRICE INCENTIVE (L)

Contractor Details

Address: 6001 S AIR DEPOT BLVD, OKLAHOMA CITY, OK, 73135

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline