Boeing awarded $35.9M for aircraft manufacturing services, with limited competition and a cost-plus-fixed-fee structure

Contract Overview

Contract Amount: $35,887,108 ($35.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-03-21

End Date: 2022-03-31

Contract Duration: 1,471 days

Daily Burn Rate: $24.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: B-1 ENGINEERING SERVICES

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $35.9 million to THE BOEING COMPANY for work described as: B-1 ENGINEERING SERVICES Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for limited price negotiation. 2. The cost-plus-fixed-fee structure may incentivize cost overruns, requiring robust oversight. 3. Long contract duration suggests a need for sustained services and potential for evolving requirements. 4. Services are tied to aircraft manufacturing, a critical but specialized sector. 5. The contract's value is significant, but requires benchmarking against similar specialized services. 6. Performance history and specific deliverables will be key to assessing value for money.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee (CPFF) structure, while common for complex R&D or services where costs are uncertain, can lead to higher overall costs compared to fixed-price contracts. Without detailed breakdowns of labor hours, material costs, and the fixed fee, a precise value-for-money assessment is difficult. Benchmarking against similar aircraft manufacturing support contracts would be necessary to determine if the $35.9 million expenditure represents a fair price for the services rendered over its duration.

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 approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. This necessitates a strong justification for the sole-source award and rigorous negotiation of terms and pricing.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible pricing, potentially leading to higher costs for taxpayers.

Public Impact

The primary beneficiary is the Department of Defense, receiving critical aircraft manufacturing services. Services likely support the maintenance, modification, or production of specific aircraft platforms. Geographic impact is concentrated around the contractor's facilities, likely in Oklahoma. Workforce implications include employment for skilled engineers, technicians, and manufacturing personnel at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may not incentivize cost efficiency.
Sole-source award limits competitive pressure on pricing.
Long contract duration increases exposure to potential cost escalations or scope creep.
Lack of detailed performance metrics in provided data makes outcome assessment challenging.

Positive Signals

Award to a major defense contractor suggests established capabilities and experience.
Contract duration indicates a stable, long-term need for these services.
Specific aircraft manufacturing services are vital for national defense readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a highly specialized and capital-intensive industry. The market is dominated by a few large, established players like The Boeing Company. Government contracts are a significant driver of revenue in this sector, often involving complex engineering, production, and sustainment services for military platforms. Benchmarking would involve comparing this contract's value and structure to other large-scale aircraft manufacturing or sustainment contracts awarded by the DoD.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for them based on the prime contractor being a large entity. The focus is on a direct award to a major corporation, suggesting that the primary objective was to leverage the prime contractor's extensive capabilities rather than to foster small business participation through this specific award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance, compliance with terms, and proper cost accounting. The CPFF structure necessitates close monitoring of expenditures and the fixed fee. Transparency is generally maintained through contract reporting systems, though detailed operational oversight specifics are not provided here. Inspector General involvement would be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

Aircraft Production and Sustainment Programs
Defense Manufacturing Industrial Base
Aerospace Engineering Services
Military Aircraft Maintenance Contracts

Risk Flags

Sole-source award limits competitive pricing.
Cost-plus-fixed-fee structure may incentivize higher costs.
Long contract duration increases risk exposure.
Lack of detailed performance metrics hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.9 million to THE BOEING COMPANY. B-1 ENGINEERING 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 $35.9 million.

What is the period of performance?

Start: 2018-03-21. End: 2022-03-31.

What is the specific nature of the aircraft manufacturing services provided under this contract?

The provided data indicates the contract is for 'ENGINEERING SERVICES' related to aircraft manufacturing (NAICS 336411). While the specific nature isn't detailed, it likely encompasses a range of activities such as design support, modification engineering, production process improvements, technical documentation, and potentially integration of new systems or components onto existing or new aircraft platforms. Given the long duration and CPFF structure, it suggests ongoing, complex engineering efforts rather than a one-off production run.

How does the $35.9 million contract value compare to similar aircraft manufacturing services contracts awarded by the DoD?

Direct comparison is challenging without knowing the exact scope and duration of services. However, $35.9 million over approximately 3.5 years (March 2018 - March 2022) represents an average annual value of roughly $10.3 million. This is a substantial sum, but within the range for specialized engineering and manufacturing support for major defense platforms. Larger, multi-year production contracts can run into billions, while smaller, targeted engineering task orders might be in the low millions. This contract appears to be in the mid-to-high range for specialized, ongoing engineering support.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for aircraft manufacturing?

The primary risks are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than could be achieved through a competitive bidding process. The government must rely heavily on negotiation and justification for the proposed costs. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing flexibility for uncertain costs, can reduce the contractor's incentive to control expenses, as costs are reimbursed plus a fixed profit. This increases the risk of cost overruns and necessitates stringent oversight to ensure efficiency and prevent unnecessary spending.

What is The Boeing Company's track record with similar DoD aircraft manufacturing contracts?

The Boeing Company is one of the largest aerospace and defense contractors globally, with an extensive history of delivering aircraft and related services to the DoD. They are involved in numerous large-scale programs, including fighter jets, bombers, transport aircraft, and rotorcraft. Their track record includes both highly successful deliveries and instances of program challenges, cost overruns, and schedule delays, which are not uncommon in complex defense manufacturing. Performance on specific contracts varies, and a detailed review of their past performance ratings for similar contracts would be necessary for a comprehensive assessment.

How has historical spending on aircraft manufacturing services by the DoD trended, and where does this contract fit?

The DoD consistently spends tens of billions of dollars annually on aircraft procurement, modification, and sustainment services. Spending trends are influenced by geopolitical factors, modernization priorities, and budget allocations. This $35.9 million contract represents a relatively small portion of the overall DoD aircraft services budget but is significant for the specific services it covers. It fits within the broader category of sustainment and readiness support, ensuring the operational capability of existing or newly manufactured aircraft platforms.

What oversight mechanisms are in place to manage the risks of this specific contract?

Oversight for this contract is primarily managed by the Defense Contract Management Agency (DCMA). Key mechanisms include monitoring contractor expenditures against the estimated cost, auditing invoices, ensuring compliance with contract terms and specifications, and evaluating performance against milestones. For a CPFF contract, DCMA would pay close attention to the allowability, allocability, and reasonableness of costs incurred. Regular progress reports from the contractor and potentially on-site inspections would also be part of the oversight process to mitigate risks associated with cost control and timely delivery.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $38,581,471

Exercised Options: $38,581,471

Current Obligation: $35,887,108

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $40,697

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810714D0002

IDV Type: IDC

Timeline