DoD Awards Boeing $662M for VC-25A Follow-On, Lacking Competition
Contract Overview
Contract Amount: $662,138,497 ($662.1M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2009-09-01
End Date: 2019-11-30
Contract Duration: 3,742 days
Daily Burn Rate: $176.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FOLLOW-ON VC-25A
Place of Performance
Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135
State: Oklahoma Government Spending
Plain-Language Summary
Department of Defense obligated $662.1 million to THE BOEING COMPANY for work described as: FOLLOW-ON VC-25A Key points: 1. Significant contract value of $662M awarded to a single large business. 2. Lack of competition raises concerns about potential overpricing and value. 3. The contract is for aircraft parts and auxiliary equipment, indicating a specialized need. 4. Oversight is crucial given the sole-source nature and substantial funding.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes it difficult to assess value. Benchmarking against similar sole-source contracts for specialized aircraft components is necessary to determine if the $662M award represents fair pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to The Boeing Company. The absence of competition limits price discovery and may lead to higher costs for taxpayers.
Taxpayer Impact: The sole-source nature of this large contract raises concerns about potential inefficiencies and higher costs for taxpayers compared to a competitively awarded contract.
Public Impact
Taxpayers may be paying a premium due to the lack of competitive bidding. The long duration of the contract (over 10 years) means sustained potential for overspending. Dependence on a single contractor for critical aircraft components could pose supply chain risks.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- No small business participation indicated
Positive Signals
- Awarded to a known, established contractor
- Contract is for essential aircraft parts
Sector Analysis
This contract falls within the Defense sector, specifically for aircraft parts. Defense spending on specialized components can be high, and benchmarks for similar sole-source contracts are often difficult to establish due to unique requirements.
Small Business Impact
The data indicates no small business participation in this contract. This is common for large, specialized defense contracts awarded to prime contractors like Boeing, but it represents a missed opportunity for small business engagement.
Oversight & Accountability
The contract's sole-source nature necessitates robust oversight from the Department of Defense and the Defense Contract Management Agency to ensure cost control and adherence to contract terms. Regular audits and performance reviews are critical.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- Potential for cost overruns
- No small business involvement
- Long contract duration
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, ok, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $662.1 million to THE BOEING COMPANY. FOLLOW-ON VC-25A
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 $662.1 million.
What is the period of performance?
Start: 2009-09-01. End: 2019-11-30.
What specific justifications were provided for the sole-source award of this significant contract?
Sole-source awards typically require extensive justification, often citing unique capabilities, proprietary technology, or urgent needs that only a specific contractor can meet. Without access to the contract file, the precise reasons for not competing this $662M award remain unclear, necessitating further investigation into the justification documentation.
How does the cost-plus-fixed-fee structure impact the government's ability to control costs on this contract?
Cost-plus-fixed-fee contracts allow the contractor to recover all allowable costs plus a predetermined fixed fee. While the fee is fixed, the overall cost can escalate if actual costs are higher than anticipated. This structure provides less incentive for the contractor to control costs compared to fixed-price contracts, increasing risk for the government.
What is the projected taxpayer impact of the $662M award, considering the lack of competition?
The lack of competition inherently suggests a higher potential taxpayer impact. Without competitive pressure, the contractor may not be incentivized to offer the lowest possible price. The cost-plus-fixed-fee structure further exacerbates this risk, as the government bears the brunt of cost overruns, potentially leading to millions in additional expenditure beyond initial estimates.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 4615 SOUTH OLIVER, WICHITA, KS, 67210
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $671,131,864
Exercised Options: $671,131,564
Current Obligation: $662,138,497
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2009-09-01
Current End Date: 2019-11-30
Potential End Date: 2019-11-30 00:00:00
Last Modified: 2020-10-01
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