DoD's $30M Boeing PDM Services contract awarded without competition, raising value-for-money questions

Contract Overview

Contract Amount: $30,220,632 ($30.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2017-12-21

End Date: 2020-12-31

Contract Duration: 1,106 days

Daily Burn Rate: $27.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: PROGRAMMED DEPOT MAINTENANCE (PDM) SERVICES

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $30.2 million to THE BOEING COMPANY for work described as: PROGRAMMED DEPOT MAINTENANCE (PDM) SERVICES Key points: 1. The contract awarded to The Boeing Company for Programmed Depot Maintenance (PDM) services lacked competition, potentially impacting price discovery. 2. The Cost Plus Incentive Fee (CPIF) contract structure suggests an attempt to align contractor incentives with performance, but oversight is crucial. 3. The duration of over three years (1106 days) indicates a significant, long-term need for these specialized maintenance services. 4. The contract's focus on aircraft parts manufacturing (NAICS 336413) places it within a critical segment of the defense industrial base. 5. While the contract was not competed, the 'OK' status for both 'st' (status) and 'sn' (state) suggests no immediate performance red flags. 6. The absence of small business set-aside indicates this contract was not specifically targeted to support small business participation.

Value Assessment

Rating: questionable

The contract's value-for-money is difficult to assess without competitive benchmarks. Awarded at over $30 million, the CPIF structure aims to incentivize performance, but the lack of competition means there was no market pressure to ensure the lowest possible price. Comparing this to similar PDM contracts for other aircraft types or even for the same aircraft by different providers would be necessary to gauge if the pricing is reasonable. The absence of a per-unit cost benchmark makes direct price comparison challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, indicating a sole-source procurement. This means only one vendor, The Boeing Company, was solicited for these specific Programmed Depot Maintenance services. The lack of competition limits the government's ability to explore alternative solutions or pricing structures that might be offered by other qualified contractors. This approach is typically used when only one source possesses the necessary capabilities or when urgency precludes a competitive process.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive bidding. Without competing the requirement, the government cannot be certain it secured the most cost-effective solution for these essential depot maintenance services.

Public Impact

The primary beneficiaries are the Department of Defense units relying on the sustained operational readiness of aircraft requiring Programmed Depot Maintenance. The services delivered involve specialized maintenance, repair, and overhaul of aircraft and their components, ensuring airworthiness and performance. The geographic impact is likely concentrated around the facilities where the maintenance is performed, potentially supporting local economies and specialized workforces. This contract supports a highly skilled technical workforce specializing in aircraft maintenance and repair, contributing to the defense industrial base's human capital.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer dollars.
Sole-source awards can limit innovation by excluding potential new entrants or alternative solutions.
The CPIF contract type requires careful monitoring to ensure incentive fees are earned appropriately and do not inflate costs unnecessarily.

Positive Signals

The CPIF contract structure is designed to incentivize contractor performance and cost control.
The 'OK' status for contract and state suggests no immediate performance or logistical issues.
Programmed Depot Maintenance is critical for maintaining the operational readiness of military aircraft.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on the maintenance and sustainment of military aircraft. The Programmed Depot Maintenance (PDM) market is a critical, albeit specialized, segment of the defense industrial base. Spending in this area is driven by the need to maintain aging fleets and ensure aircraft are mission-ready. Comparable spending benchmarks would involve analyzing other PDM contracts for different aircraft platforms or comparing costs for similar maintenance activities across various defense agencies.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. Consequently, there are no direct subcontracting requirements mandated for small businesses within this specific award. The absence of a set-aside means that large businesses, like The Boeing Company, are eligible to receive the prime contract without specific obligations to engage small businesses for this particular requirement. This could limit opportunities for small businesses that specialize in aircraft parts manufacturing or maintenance services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). The CPIF (Cost Plus Incentive Fee) structure necessitates close monitoring of costs and performance metrics to ensure incentive fees are justified. Transparency is generally maintained through contract reporting mechanisms, though the specifics of the incentive fee calculations and performance evaluations would be detailed within the contract itself. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance Services
Depot Level Maintenance and Repair
Defense Logistics Agency Contracts
Air Force Sustainment Contracts
Naval Aviation Maintenance Programs

Risk Flags

Lack of Competition
Potential for Cost Overruns (CPIF structure)
Limited Market Access for Small Businesses

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.2 million to THE BOEING COMPANY. PROGRAMMED DEPOT MAINTENANCE (PDM) SERVICES

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 $30.2 million.

What is the period of performance?

Start: 2017-12-21. End: 2020-12-31.

What is the historical spending trend for Programmed Depot Maintenance (PDM) services for this specific aircraft type or similar platforms within the Department of Defense?

Analyzing historical spending for PDM services is crucial for understanding cost trends and identifying potential anomalies. Without specific data on past PDM contracts for this particular aircraft, a general trend can be inferred from overall defense maintenance budgets. Defense spending on depot-level maintenance typically fluctuates based on fleet age, operational tempo, and modernization programs. Historically, such services represent a significant portion of the defense sustainment budget. A detailed analysis would require access to historical contract awards for similar services, allowing for comparisons of contract values, durations, and pricing structures over time. This would help determine if the $30 million awarded to Boeing is consistent with past investments or represents an increase.

How does the Cost Plus Incentive Fee (CPIF) structure in this contract compare to other PDM contracts awarded by the DoD?

The Cost Plus Incentive Fee (CPIF) contract type is common in defense procurements where performance objectives can be clearly defined and measured, but costs are not fully predictable. In a CPIF contract, the final profit is adjusted based on the contractor's performance relative to target costs and performance incentives. Compared to other PDM contracts, CPIF aims to incentivize efficiency and cost savings, unlike a fixed-price contract which places cost risk on the contractor. However, it requires robust government oversight to ensure the incentive targets are appropriate and achievable, and that the government does not overpay for performance. Other PDM contracts might utilize Fixed-Price Incentive Fee (FPIF) or Cost Plus Award Fee (CPAF) structures, each with different risk allocations and incentive mechanisms.

What specific performance metrics and targets are included in the CPIF structure for this contract, and how are they measured?

The specific performance metrics and targets for this CPIF contract are detailed within the contract's Statement of Work (SOW) and associated clauses. Typically, for PDM services, these metrics could include on-time delivery of aircraft, adherence to quality standards (e.g., defect rates post-maintenance), achievement of specific technical performance parameters (e.g., engine performance, structural integrity), and potentially cost-saving initiatives. The 'incentive fee' portion of the contract would be tied to the contractor's performance against these pre-defined targets. Measurement would involve rigorous government inspection, testing, and data collection throughout the maintenance process. The 'OK' status for 'st' and 'sn' suggests that, at least from a reporting perspective, these metrics are being met or are not flagging significant issues.

Given the sole-source nature of this award, what steps has the DoD taken to ensure fair and reasonable pricing?

When a contract is awarded on a sole-source basis, the government is obligated to conduct a thorough price analysis to ensure fair and reasonable pricing. This typically involves techniques such as analyzing historical pricing data for similar items or services, evaluating the contractor's cost proposals (including direct costs, indirect costs, and profit), and potentially obtaining pricing information from commercial sources or other government agencies. For a contract of this magnitude ($30M+), the Defense Contract Audit Agency (DCAA) may be involved in auditing the contractor's cost proposal. The CPIF structure itself includes an incentive component that, if structured correctly, can help drive down costs, but the baseline cost must first be deemed fair and reasonable.

What is the potential impact of this sole-source PDM contract on the broader market for aircraft maintenance services, particularly for smaller, specialized firms?

A sole-source award of this magnitude to a large incumbent like Boeing can have a significant impact on the broader market for aircraft maintenance services. It reinforces the incumbent's position and potentially limits opportunities for smaller, specialized firms to enter the market or compete for similar contracts. These smaller firms might possess niche expertise or offer more cost-effective solutions, but without a competitive process, their capabilities are not evaluated. This can lead to a less dynamic market, potentially higher long-term costs for the government, and reduced innovation. It also means that the government may not be leveraging the full spectrum of available talent and technology in the aircraft maintenance sector.

Are there any known risks associated with The Boeing Company's performance on previous PDM contracts that might be relevant to this award?

Assessing the risks associated with The Boeing Company's performance on previous PDM contracts requires access to performance evaluations, past performance reviews, and any documented issues or disputes. While the current contract status is 'OK', this reflects its current standing, not necessarily its historical performance record. Boeing, as a major defense contractor, has a long history of performing complex maintenance and manufacturing. However, like any large organization, it may have faced challenges in specific contracts related to cost overruns, schedule delays, or quality issues. A comprehensive risk assessment would involve reviewing CPARS (Contractor Performance Assessment Reporting System) data and any other available records pertaining to Boeing's past performance on similar DoD contracts.

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

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

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

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: $30,220,632

Exercised Options: $30,220,632

Current Obligation: $30,220,632

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810616D0002

IDV Type: IDC

Timeline