DoD's $354M Boeing Contract for Aircraft Parts: A Decade of Operations

Contract Overview

Contract Amount: $354,109,480 ($354.1M)

Contractor: Boeing Aerospace Operations, I

Awarding Agency: Department of Defense

Start Date: 1999-10-15

End Date: 2010-12-31

Contract Duration: 4,095 days

Daily Burn Rate: $86.5K/day

Competition Type: FOLLOW ON TO COMPETED ACTION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $354.1 million to BOEING AEROSPACE OPERATIONS, I for work described as: Key points: 1. Contract awarded for a significant duration, spanning over a decade. 2. The contract type is Time and Materials, which can pose cost control challenges. 3. Awarded by the Defense Contract Management Agency, indicating a focus on operational support. 4. The contract is a follow-on to a competed action, suggesting some prior market engagement. 5. The base value is substantial, reflecting the scale of services provided. 6. The contract's duration and type warrant close monitoring for cost efficiency.

Value Assessment

Rating: fair

The contract's base value of $354 million over more than 10 years suggests a significant investment. However, the Time and Materials pricing structure inherently carries a higher risk of cost overruns compared to fixed-price contracts. Without detailed breakdowns of labor rates and material markups, a direct value-for-money assessment is challenging. Benchmarking against similar long-term, operational support contracts for complex aerospace systems would be necessary for a more precise evaluation of its cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

The data indicates this contract is a 'FOLLOW ON TO COMPETED ACTION,' which implies that the original contract was competed. However, the competition level for this specific follow-on action is not detailed. It's unclear if this follow-on was also competed, or if it was awarded sole-source based on the prior relationship. The number of bidders and the specific procurement method for this extension are critical to understanding the competitive landscape.

Taxpayer Impact: If this follow-on action was not competed, taxpayers may not have benefited from the most competitive pricing. A lack of competition can lead to higher costs than might be achieved in a more open bidding process.

Public Impact

Provides essential aircraft parts and auxiliary equipment, supporting the operational readiness of military aircraft. Benefits the Department of Defense by ensuring the continued functionality of its aviation assets. The contract's impact is primarily national, supporting defense infrastructure. Likely supports a workforce involved in manufacturing, logistics, and quality assurance for aerospace components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing structure increases risk of cost escalation.
Long contract duration (over 10 years) may reduce flexibility and opportunities for re-competition.
Lack of specific competition details for the follow-on action raises concerns about price discovery.
The base value is substantial, requiring diligent oversight to manage expenditures.

Positive Signals

Follow-on to a competed action suggests a foundation of prior market engagement.
Awarded by DCMA indicates a focus on contract execution and oversight.
The contract has a defined period of performance, allowing for structured management.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. This is a highly specialized industry characterized by long production cycles, stringent quality requirements, and significant R&D investment. The market is often dominated by a few large, established players due to high barriers to entry. Spending in this category is critical for maintaining national defense capabilities and supporting the broader aerospace industrial base.

Small Business Impact

The provided data does not indicate any small business set-aside provisions (ss: false, sb: false). This suggests the contract was not specifically targeted towards small businesses. There is no information on subcontracting plans, so the extent to which small businesses might be involved as subcontractors to Boeing is unknown. Without specific set-asides or reporting on subcontracting, the direct impact on the small business ecosystem for this particular contract is likely limited.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for overseeing contract performance and ensuring compliance. The 'OK' status for 'st' (status) and 'sn' (state) suggests no immediate red flags were raised at the time of data extraction. However, the long duration and Time and Materials nature of the contract necessitate ongoing vigilance regarding cost, schedule, and performance to ensure accountability and transparency.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Manufacturing
Defense Logistics Support
Military Aircraft Procurement
Defense Industrial Base

Risk Flags

Long contract duration
Time and Materials pricing
Lack of specific competition details for follow-on action

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $354.1 million to BOEING AEROSPACE OPERATIONS, I. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is BOEING AEROSPACE OPERATIONS, I.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $354.1 million.

What is the period of performance?

Start: 1999-10-15. End: 2010-12-31.

What was the original contract that this 'FOLLOW ON TO COMPETED ACTION' succeeded, and what were its key terms and competition details?

The provided data indicates this contract (ID 336413) is a follow-on to a competed action, awarded to BOEING AEROSPACE OPERATIONS, INC. The original contract details are not explicitly provided in this dataset. However, the nature of a 'follow-on to competed action' implies that the initial award was subject to a competitive bidding process. To understand the full context, one would need to access procurement records for the predecessor contract to ascertain its scope, duration, award value, number of bidders, and the specific reasons for selecting the incumbent contractor for the subsequent follow-on action. This information is crucial for assessing whether the competition was robust and if the follow-on award continues to leverage competitive pricing or represents a sole-source continuation.

How does the Time and Materials (T&M) pricing structure compare to other contract types for similar aerospace support services in terms of cost control?

Time and Materials (T&M) contracts are generally considered less desirable for the government when compared to fixed-price contracts, especially for services with predictable scopes. T&M contracts reimburse the contractor for the actual cost of labor (at specified hourly rates) and materials, plus a fee or profit. While flexible for undefined scopes or rapidly changing requirements, T&M contracts place a significant burden on the government to closely monitor labor hours and material costs to prevent overspending. Fixed-price contracts, conversely, offer greater cost certainty to the government as the price is set upfront. For long-term support services like aircraft parts and auxiliary equipment manufacturing, where requirements can often be defined with reasonable predictability, fixed-price incentive or firm-fixed-price contracts are typically preferred to ensure better value for money and mitigate cost overrun risks inherent in T&M arrangements.

What are the potential risks associated with a contract duration exceeding 10 years, and what mitigation strategies are typically employed?

Contracts with durations exceeding 10 years, like this one, present several risks. Firstly, the long timeframe can lead to cost escalation due to inflation, changes in market rates, and potential inefficiencies that become entrenched over time. Secondly, it reduces the government's agility to adapt to technological advancements or changing mission requirements, as modifying or replacing a long-term contract can be complex and costly. Thirdly, it may stifle innovation if the contractor becomes complacent. Mitigation strategies include incorporating robust cost-control mechanisms, regular performance reviews, clear incentive structures for efficiency, and potentially including options for early termination for convenience with appropriate clauses. Furthermore, periodic market research and re-evaluation of the contract's necessity and scope are crucial to ensure continued value and alignment with evolving needs.

What is the typical annual spending for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) within the Department of Defense?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' encompasses a broad range of components critical to aviation. While the specific annual spending for this code within the Department of Defense (DoD) can fluctuate based on operational tempo, modernization programs, and specific fleet needs, it represents a significant segment of defense procurement. Historical data suggests that spending within this category can range from hundreds of millions to billions of dollars annually across the federal government, with the DoD being the primary customer. This particular contract's base value of over $354 million spread across more than a decade indicates a substantial, ongoing requirement for Boeing's specialized products and services within this sector.

What does the 'Base Realignment and Closure' (BRAC) designation 'OKLAHOMA' imply for this contract?

The 'OKLAHOMA' designation (sn: OKLAHOMA) likely refers to the geographic location associated with the contract's performance or administration, rather than a direct implication of Base Realignment and Closure (BRAC) actions. BRAC is a process used by the U.S. federal government to reorganize and eliminate military bases to become more efficient and cost-effective. While military bases in Oklahoma have been subject to BRAC actions in the past, the 'OKLAHOMA' tag here most probably indicates that the contractor's facility, a DCMA office, or a significant portion of the contract's work is situated within the state of Oklahoma. It does not inherently signal any specific risk or benefit related to BRAC itself for this particular contract.

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: FOLLOW ON TO COMPETED ACTION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 2601 LIBERTY PKWY, OKLAHOMA CITY, OK, 73110

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline