Boeing awarded $251.7M for airframe structural components, with a significant portion for sustainment

Contract Overview

Contract Amount: $251,697,542 ($251.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2005-03-29

End Date: 2014-07-07

Contract Duration: 3,387 days

Daily Burn Rate: $74.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200506!000073!5700!FA8107!OC-ALC/LAD B52 !FA810705C0001 !A!N! !N! ! !20050329!20100131!007237241!007237241!009256819!N!THE BOEING COMPANY !4615 SOUTH OLIVER !WICHITA !KS!67210!79000!173!20!WICHITA !SEDGWICK !KANSAS !+000006200000!N!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !336413!E! !3! ! ! ! ! !20200930!B! ! !A! !D!N!U!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $251.7 million to THE BOEING COMPANY for work described as: 200506!000073!5700!FA8107!OC-ALC/LAD B52 !FA810705C0001 !A!N! !N! ! !20050329!20100131!007237241!007237241!009256819!N!THE BOEING COMPANY !4615 SOUTH OLIVER !WICHITA !KS!67210!79000!173!20!WICHITA !SEDG… Key points: 1. Contract value represents a substantial investment in maintaining critical aircraft components. 2. The contract's duration suggests a long-term need for these specialized parts and services. 3. Sole-source award raises questions about potential cost efficiencies and market alternatives. 4. Performance period spans nearly a decade, indicating a stable, ongoing requirement. 5. The award falls under the 'Other Aircraft Parts' category, highlighting a specific niche within defense procurement.

Value Assessment

Rating: fair

The total award of $251.7 million over a period of approximately 9 years (from March 2005 to July 2014) averages to about $28 million per year. Without specific details on the quantity and type of airframe structural components or sustainment services provided, a direct per-unit cost comparison is difficult. However, given the nature of aerospace components and the sole-source award to a major prime contractor like Boeing, the pricing is likely to reflect significant R&D, manufacturing complexity, and established support infrastructure. Benchmarking against similar sole-source sustainment contracts for major weapon systems would be necessary for a more definitive value assessment.

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 among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of a necessary component or service. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than might be achieved in an open market.

Taxpayer Impact: For taxpayers, a sole-source award means that the government may not be achieving the most cost-effective solution. Without competitive pressure, there is a risk that the contractor's pricing may not be as aggressive, and the government lacks the leverage to negotiate lower prices based on market alternatives.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating aircraft that utilize these airframe structural components, ensuring flight safety and operational readiness. Services delivered include the provision of essential structural parts and potentially sustainment or maintenance support for these components. The geographic impact is likely concentrated around Air Force bases and maintenance depots where these aircraft are serviced. Workforce implications include the employment of skilled manufacturing, engineering, and logistics personnel at Boeing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Long contract duration without clear performance metrics makes ongoing value assessment challenging.
Lack of transparency in the sole-source justification could obscure potential inefficiencies.
Reliance on a single supplier for critical components poses a supply chain risk.

Positive Signals

Award to a prime contractor like Boeing ensures access to specialized expertise and manufacturing capabilities.
Long-term contract provides stability for critical aircraft sustainment, supporting operational readiness.
Focus on structural components addresses fundamental safety and airworthiness requirements.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and equipment. The market for such components is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long development cycles. Major defense contractors like Boeing dominate this space, often securing long-term sustainment contracts for the platforms they produce. Spending in this area is critical for maintaining the operational readiness of military fleets and represents a significant portion of the defense budget.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to The Boeing Company, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within this award. Consequently, the direct impact on the small business ecosystem is likely minimal, although large prime contractors are often encouraged or mandated to utilize small businesses in their supply chains for other aspects of their operations.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions. Accountability measures are embedded within the Cost Plus Fixed Fee (CPFF) contract type, which requires the contractor to justify costs and provides a fixed profit margin. Transparency is limited due to the sole-source nature of the award; however, contract modifications and performance reports would be subject to internal government review and potentially Inspector General oversight if specific concerns arise.

Related Government Programs

Aircraft Component Manufacturing
Defense Logistics and Sustainment
Airframe Repair and Overhaul
Military Aircraft Parts Procurement
Aerospace Supply Chain Management

Risk Flags

Sole-source award
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $251.7 million to THE BOEING COMPANY. 200506!000073!5700!FA8107!OC-ALC/LAD B52 !FA810705C0001 !A!N! !N! ! !20050329!20100131!007237241!007237241!009256819!N!THE BOEING COMPANY !4615 SOUTH OLIVER !WICHITA !KS!67210!79000!173!20!WICHITA !SEDGWICK !KANSAS !+000006200000!N!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !336413!E! !3! ! ! ! ! !202

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 $251.7 million.

What is the period of performance?

Start: 2005-03-29. End: 2014-07-07.

What specific types of airframe structural components were procured under this contract, and what is their criticality to aircraft operation?

The contract identifies the Product Service Code (PSC) as '1560' for Airframe Structural Components and 'A1C' for Other Aircraft Equipment. While the specific components are not detailed in the provided data, 'airframe structural components' generally refer to critical elements of an aircraft's fuselage, wings, tail, and internal support structures. These components are fundamental to an aircraft's integrity, safety, and ability to withstand flight stresses. Their criticality is extremely high, as failure could lead to catastrophic loss of the aircraft. The contract likely covers a range of parts necessary for the maintenance, repair, and overhaul (MRO) of various aircraft platforms operated by the Department of Defense.

How does the $251.7 million award compare to historical spending on similar airframe structural components from The Boeing Company?

To compare this $251.7 million award to historical spending, one would need to analyze past contracts awarded to The Boeing Company for similar airframe structural components and sustainment services. This would involve querying contract databases for relevant PSC codes and contractor identifiers over a significant period. The provided data covers a contract awarded in 2005 with an end date in 2014. Without access to a comprehensive historical contract database and the ability to filter by specific component types or aircraft platforms, a direct comparison is not feasible. However, the magnitude of this award suggests it represents a substantial, long-term commitment to supporting Boeing-manufactured aircraft.

What are the key performance indicators (KPIs) and risk mitigation strategies associated with this Cost Plus Fixed Fee (CPFF) contract?

For a Cost Plus Fixed Fee (CPFF) contract like this one, key performance indicators (KPIs) would typically revolve around meeting delivery schedules, maintaining quality standards for the structural components, and ensuring the cost of goods and services remains within the estimated ceiling. Risk mitigation strategies employed by the government would include rigorous auditing of contractor costs to ensure allowability, allocability, and reasonableness, as well as performance surveillance to ensure the components meet specifications. The fixed fee provides the contractor an incentive to control costs, as any savings beyond the estimated cost would increase their profit, while overruns would reduce it. The government's primary risk is that the contractor may not perform efficiently, leading to higher-than-expected costs, which are borne by the government up to the contract ceiling.

Given the sole-source nature, what mechanisms were in place to ensure fair and reasonable pricing for these airframe structural components?

In a sole-source procurement, ensuring fair and reasonable pricing is critical and relies heavily on the government's negotiation and auditing capabilities. Mechanisms typically include obtaining certified cost and pricing data from the contractor, conducting detailed cost analyses, and performing market research to establish independent government cost estimates. The government contracting officer must make a formal determination that the price is fair and reasonable based on available data and negotiation. For sole-source awards exceeding certain thresholds, Truth in Negotiations Act (TINA) requirements mandate that contractors submit accurate, complete, and current cost or pricing data. Additionally, Defense Contract Audit Agency (DCAA) audits play a crucial role in verifying the contractor's proposed costs.

What is the historical spending trend 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,' represents a significant segment of the defense industrial base. Historical spending within the Department of Defense (DoD) for this category has generally been substantial, reflecting the ongoing need to maintain and modernize a vast fleet of aircraft. Spending trends are influenced by factors such as the introduction of new aircraft platforms, the aging of existing fleets requiring extensive sustainment, geopolitical events driving readiness requirements, and budget allocations. While specific annual figures fluctuate, the DoD consistently invests billions of dollars annually in aircraft parts and related manufacturing, making this a critical area of expenditure for ensuring air superiority and operational capability.

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

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