DoD awards $307.8M to Boeing for aircraft parts, raising questions on competition and value

Contract Overview

Contract Amount: $307,759,623 ($307.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 1999-11-04

End Date: 2012-08-30

Contract Duration: 4,683 days

Daily Burn Rate: $65.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $307.8 million to THE BOEING COMPANY for work described as: Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. Long contract duration (over 13 years) suggests a need for ongoing support, but also risks price escalation. 3. The firm-fixed-price structure aims to control costs, but the lack of competition is a significant concern. 4. This contract represents a substantial investment in aircraft parts, highlighting the importance of sustainment for military readiness. 5. The absence of small business set-asides or subcontracting plans warrants further investigation into broader economic impacts.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available comparable data for sole-source awards of this magnitude and duration. The firm-fixed-price contract type is generally favorable for cost control, but the absence of competition means there's no direct market comparison to assess if the pricing is truly competitive. Without competitive bids, it's difficult to ascertain if taxpayers received the best possible value for the $307.8 million obligated.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. The Department of Defense likely determined that only The Boeing Company could provide the required aircraft parts, possibly due to proprietary technology, existing system integration, or unique manufacturing capabilities. The lack of competition means there were no other bidders, and therefore no direct price comparison or market pressure to drive down costs.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing the requirement, the government missed the opportunity to leverage market forces to secure potentially lower prices and better terms.

Public Impact

The primary beneficiaries are the Department of Defense and its operational readiness, ensuring the availability of necessary aircraft parts. Services delivered include the manufacturing and supply of 'Other Aircraft Parts and Auxiliary Equipment'. The geographic impact is primarily national, supporting Air Force operations across various bases. Workforce implications include continued employment for skilled manufacturing and engineering personnel at Boeing and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
Long contract duration could lead to cost overruns if not managed diligently.
Sole-source awards can stifle innovation by limiting opportunities for other suppliers.
Absence of small business participation may limit economic opportunities for smaller enterprises.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
The contract supports critical national defense needs, ensuring operational readiness.
Boeing is a long-standing, established defense contractor with a track record in aircraft manufacturing.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for defense aerospace components is characterized by high barriers to entry, significant R&D investment, and often long-term relationships between prime contractors and government agencies. Spending in this category is substantial, driven by the need to maintain and modernize aging military fleets. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of many defense contracts and the specific requirements of military aircraft.

Small Business Impact

This contract does not appear to have included small business set-asides, nor is there explicit information regarding subcontracting plans for small businesses. The sole-source nature of the award limits opportunities for small businesses to participate directly. This could mean that the economic benefits are concentrated within the prime contractor and its larger suppliers, potentially bypassing the small business ecosystem that often supports the defense industrial base.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature and the classification of some defense-related procurements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Manufacturing
Defense Procurement
Air Force Sustainment Programs
Military Aircraft Parts

Risk Flags

Sole-source award lacks competitive pricing.
Extended contract duration may pose cost escalation risks.
Limited transparency on specific justification for sole-source.
Potential lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $307.8 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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $307.8 million.

What is the period of performance?

Start: 1999-11-04. End: 2012-08-30.

What is the historical spending pattern for this specific contract or similar sole-source aircraft parts contracts awarded to The Boeing Company by the Department of Defense?

Analyzing historical spending for this specific contract is challenging as the provided data represents the total obligated amount over its lifecycle. However, the contract's duration (1999-2012) and value ($307.8 million) suggest a consistent need for these parts. Without access to detailed historical obligation data broken down by year or specific delivery orders, it's difficult to pinpoint precise spending trends. Generally, sole-source contracts for specialized defense components can represent significant, long-term financial commitments. Comparing this to other sole-source awards for similar parts would require extensive database analysis, but such contracts often reflect the unique nature of the components and the limited supplier base, leading to substantial, sustained outlays.

How does the per-unit cost of these aircraft parts compare to market rates or similar components purchased competitively?

Determining the per-unit cost and comparing it to market rates is not feasible with the provided data. The contract value is an aggregate sum, and specific unit costs for individual parts are not disclosed. Furthermore, as this was a sole-source award, there is no competitive benchmark to establish market rates. The nature of specialized aircraft parts, especially those for military applications, often means they are not commodities with readily available market prices. Without detailed specifications, quantities, and competitive bids, any comparison would be speculative. The lack of competition inherently limits the ability to assess if the per-unit cost represents fair market value.

What specific risks were identified by the Department of Defense that justified a sole-source award for these aircraft parts?

The provided data does not specify the exact risks or justifications that led the Department of Defense to award this contract on a sole-source basis. Typically, sole-source justifications are based on factors such as unique technical capabilities, proprietary data rights, essential system integration, or the unavailability of alternative sources. For aircraft parts, this could relate to highly specialized components designed for specific Boeing aircraft platforms, where Boeing holds the intellectual property or possesses the only certified manufacturing process. The risks associated with not awarding to Boeing might have been deemed too high in terms of schedule delays, performance degradation, or incompatibility with existing systems.

What is The Boeing Company's track record with the Department of Defense regarding contract performance and delivery for similar aircraft parts?

The Boeing Company has a long and extensive track record as a major defense contractor for the Department of Defense, involved in the manufacturing of aircraft, systems, and components. While the provided data indicates the contract status was 'OK' ('st': 'OK', 'sn': 'OK'), this is a high-level indicator. A comprehensive assessment of their track record would involve reviewing past performance evaluations, on-time delivery rates, quality control metrics, and any disputes or contract modifications across numerous contracts. Given Boeing's scale and history, performance can vary, but they are generally considered a capable supplier for complex defense systems. However, specific performance details for this particular $307.8 million contract over its 13-year span would require deeper data analysis.

How does this contract's value and duration compare to other major aircraft parts procurements by the DoD, particularly those that were competed?

This contract, valued at approximately $307.8 million over roughly 13 years (contract award date 1999, end date 2012), represents a significant but not extraordinary expenditure for aircraft parts within the DoD's vast budget. Its duration is notable, suggesting a long-term sustainment requirement. Comparing it to competed contracts is difficult without specific data points. Competed contracts for similar parts might yield lower aggregate values due to price pressures, but they could also involve multiple smaller awards rather than one large sole-source deal. The key differentiator here is the sole-source nature, which inherently makes direct value comparison challenging. Larger, competed programs often involve billions of dollars, but this contract focuses on a specific component category.

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: FIRM FIXED PRICE (J)

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline