Boeing awarded $258.6M for logistics support services, a sole-source contract for aircraft equipment

Contract Overview

Contract Amount: $25,862,608 ($25.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2005-05-15

End Date: 2021-04-11

Contract Duration: 5,810 days

Daily Burn Rate: $4.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200608!000057!5700!FA8107!OC-ALC/LAD B52 !FA810705C0009 !A!N! !N! !P00008!20060515!20140930!039267141!039267141!009256819!N!THE BOEING COMPANY !7755 E MARGINAL WAY !SEATTLE !WA!98124!63000!033!53!SEATTLE !KING !WASHINGTON!+000000300000!N!N!000000000000!R706!LOGISTICS SUPPORT SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !000 !NOT DISCERNABLE !336411!E! !3! ! !C! ! !99990909!B! ! !A! !D!U!J!1!001!N!1A!Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: TUKWILA, KING County, WASHINGTON, 98108

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $25.9 million to THE BOEING COMPANY for work described as: 200608!000057!5700!FA8107!OC-ALC/LAD B52 !FA810705C0009 !A!N! !N! !P00008!20060515!20140930!039267141!039267141!009256819!N!THE BOEING COMPANY !7755 E MARGINAL WAY !SEATTLE !WA!98124!63000!033!53!SEATTLE !KING… Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Long contract duration of over 15 years suggests a sustained need for these services. 3. The contract value represents a significant investment in maintaining aircraft readiness. 4. Services are categorized under 'Other Aircraft Equipment', indicating specialized support. 5. The awardee, Boeing, is a primary manufacturer, suggesting a need for original equipment manufacturer support.

Value Assessment

Rating: fair

The total contract value of $258.6 million over its extended period is substantial. Benchmarking this against similar sole-source logistics support contracts for major aircraft platforms is challenging due to the proprietary nature of such agreements. However, the lack of competition inherently limits the opportunity for price discovery and potentially higher costs for the government compared to a competed contract. The firm-fixed-price structure provides cost certainty to the government, but the overall value proposition is diminished by the absence of competitive pressure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This typically occurs when a specific vendor possesses unique capabilities, intellectual property, or is the sole provider of a required good or service. The lack of competition means there was no opportunity for other companies to bid, which can limit price negotiation and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive bidding. Without competing offers, it's difficult to ascertain if the government secured the best possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force units that rely on the supported aircraft. Services delivered include essential logistics support for aircraft equipment, ensuring operational readiness. The geographic impact is likely nationwide, supporting Air Force bases and operations across the U.S. Workforce implications include maintaining specialized technical jobs within Boeing and potentially at Air Force depots.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings.
Long contract duration may not reflect evolving technological needs or market changes.
Lack of transparency in sole-source justifications can obscure true necessity and value.
Potential for cost overruns if not closely managed due to lack of competitive pressure.

Positive Signals

Award to a prime manufacturer ensures specialized knowledge and support for complex aircraft.
Firm-fixed-price contract provides budget certainty for the government.
Long-term nature of the contract suggests a stable and reliable support solution.
Contract supports critical national defense assets, ensuring operational capability.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft logistics and support services. The market for such specialized services is often dominated by original equipment manufacturers (OEMs) like Boeing due to proprietary knowledge and technical expertise. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of OEM support contracts and the sole-source award. However, overall government spending on aircraft maintenance, repair, and overhaul (MRO) is in the billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded directly to The Boeing Company. There is no explicit information regarding subcontracting plans for small businesses within this award. The focus on a large prime contractor for specialized OEM support may limit opportunities for small businesses to participate directly in this specific contract, though they may be involved in Boeing's broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the contract terms, including performance standards and payment schedules. Transparency is limited due to the sole-source nature of the award, with justifications typically being internal. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Maintenance and Repair
Logistics Services
Defense Logistics Agency Contracts
Air Force Sustainment Contracts
Aerospace Manufacturing Support

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 $25.9 million to THE BOEING COMPANY. 200608!000057!5700!FA8107!OC-ALC/LAD B52 !FA810705C0009 !A!N! !N! !P00008!20060515!20140930!039267141!039267141!009256819!N!THE BOEING COMPANY !7755 E MARGINAL WAY !SEATTLE !WA!98124!63000!033!53!SEATTLE !KING !WASHINGTON!+000000300000!N!N!000000000000!R706!LOGISTICS SUPPORT SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !000 !NOT DISCERNABLE !336411!E! !3! ! !C! ! !999

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 $25.9 million.

What is the period of performance?

Start: 2005-05-15. End: 2021-04-11.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed in the extract, sole-source awards are typically made when only one responsible source is available or capable of providing the required service or supply. For complex aerospace systems, this often involves the original equipment manufacturer (OEM) due to proprietary technical data, specialized tooling, unique manufacturing processes, or established expertise that cannot be replicated by other firms. Without the detailed justification document, it's presumed that Boeing was deemed the only viable provider for these specific logistics support services for the aircraft equipment in question.

How does the $258.6 million value compare to similar sole-source logistics contracts for aircraft?

Direct comparison of sole-source logistics contracts is challenging due to the proprietary nature of the services and the specific aircraft platforms involved. However, $258.6 million over a period of approximately 15 years (from May 2005 to April 2021) suggests an average annual value of roughly $17.2 million. This figure is substantial but must be contextualized by the complexity and criticality of the aircraft systems being supported. Sole-source contracts inherently lack the price competition that drives down costs in open markets, so this value may be higher than if the contract had been competed. Benchmarking would require access to similar sole-source agreements for comparable military aircraft.

What are the primary risks associated with a sole-source contract of this magnitude and duration?

The primary risks associated with this sole-source contract include potential cost overruns and a lack of innovation. Without competitive pressure, the contractor (Boeing) may have less incentive to control costs rigorously or to seek efficiencies, potentially leading to higher prices than a competed contract. The long duration (over 15 years) also presents a risk of the contracted services becoming outdated or less efficient compared to emerging technologies or alternative support methods. Furthermore, the government's reliance on a single provider can create vendor lock-in, making it difficult and costly to switch providers in the future, even if performance or pricing becomes unsatisfactory.

What performance metrics or oversight mechanisms are likely in place for this contract?

While specific performance metrics are not detailed in the provided data, typical oversight for such a significant logistics support contract would include: Contractor Performance Assessment Reporting System (CPARS) evaluations, Key Performance Indicators (KPIs) related to delivery timeliness, equipment availability, repair turnaround times, and quality of service. The Air Force contracting officer and program managers would be responsible for monitoring performance against contract requirements. Regular reviews, audits, and potentially site visits would be conducted to ensure compliance and identify any issues. The firm-fixed-price nature implies that Boeing is responsible for meeting the defined scope within the agreed price, barring any contract modifications.

What is Boeing's track record with the Department of Defense for similar services?

The Boeing Company has an extensive and long-standing track record as a major defense contractor for the Department of Defense (DoD). They are a primary manufacturer of numerous military aircraft platforms and provide a wide range of support services, including logistics, maintenance, repair, and upgrades. Their history with the DoD includes numerous large, complex contracts, often awarded on both competitive and sole-source bases, reflecting their critical role in supporting advanced military systems. While specific performance details for this particular contract are not provided, Boeing's overall relationship with the DoD is characterized by deep integration and substantial contract values across various defense programs.

How does this contract fit into the broader landscape of Air Force aircraft sustainment?

This contract represents a component of the U.S. Air Force's broader aircraft sustainment strategy, focusing on providing essential logistics support for specific equipment. Sustainment encompasses a wide range of activities, including maintenance, repair, overhaul, supply chain management, and technical support, all aimed at ensuring aircraft are mission-capable. Contracts like this, especially when awarded to the OEM, are crucial for maintaining the airworthiness and operational readiness of complex platforms where specialized knowledge is paramount. It complements other sustainment efforts, potentially including organic depot maintenance and contracts with other third-party providers.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7755 E MARGINAL WAY, SEATTLE, WA, 98124

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline