Boeing awarded $18.6M for aircraft manufacturing support, raising questions about competition and value

Contract Overview

Contract Amount: $18,559,289 ($18.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-01-01

End Date: 2022-09-30

Contract Duration: 1,368 days

Daily Burn Rate: $13.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: B-1 ENGINEERING REPAIR SERVICE

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $18.6 million to THE BOEING COMPANY for work described as: B-1 ENGINEERING REPAIR SERVICE Key points: 1. Contract awarded to a single, large defense contractor, limiting competitive pressure. 2. Pricing and value for money require deeper analysis against industry benchmarks. 3. Performance history and risk indicators appear stable, but long duration warrants scrutiny. 4. This contract falls within the broader aircraft manufacturing sector, a significant area of defense spending. 5. The firm-fixed-price structure aims to control costs, but requires careful monitoring of scope.

Value Assessment

Rating: fair

The contract's value of $18.6 million for aircraft manufacturing support requires benchmarking against similar services. Without specific details on the services rendered, it's challenging to definitively assess value for money. The firm-fixed-price contract type suggests an attempt to control costs, but the absence of competitive bidding means potential savings from a competitive process were not realized. Further analysis of the specific deliverables and their alignment with market rates is needed.

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 only one vendor possesses the necessary capabilities or when urgency dictates a rapid award. The lack of competition means that pricing may not have been driven down by market forces, and taxpayers may not have received the best possible value. The rationale for the sole-source award needs to be thoroughly documented and justified.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

The primary beneficiaries are likely the Department of Defense, receiving essential aircraft manufacturing support services. Services delivered are critical for maintaining and potentially enhancing the operational readiness of aircraft fleets. The geographic impact is centered around the contractor's facilities and the operational bases of the supported aircraft. Workforce implications include the employment of skilled labor within the aerospace and defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can reduce transparency in pricing.
Long contract duration increases the risk of cost overruns if not managed effectively.

Positive Signals

Firm-fixed-price contract type provides cost certainty.
The contractor, The Boeing Company, is a major established player in the aerospace industry.
Contract performance status is marked as 'OK', suggesting no immediate issues.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant research and development investment, and long production cycles. Spending in this area is often driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other large-scale aircraft production, modification, or sustainment contracts within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the nature of the work and the prime contractor, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available within this specific award. Further investigation into Boeing's overall subcontracting plans would be necessary to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by 'sa: Defense Contract Management Agency'. Accountability measures are inherent in the firm-fixed-price contract type, which places the cost risk on the contractor. Transparency is limited due to the sole-source nature of the award, but contract performance data should be available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Production and Services
Defense Logistics and Sustainment
Aerospace Manufacturing Support
Military Aircraft Maintenance

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Long contract duration requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.6 million to THE BOEING COMPANY. B-1 ENGINEERING REPAIR SERVICE

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 $18.6 million.

What is the period of performance?

Start: 2019-01-01. End: 2022-09-30.

What specific aircraft manufacturing support services are being provided under this contract?

The provided data indicates the contract is for 'B-1 ENGINEERING REPAIR SERVICE' and falls under NAICS code 336411 (Aircraft Manufacturing). While the specific engineering and repair tasks are not detailed, it can be inferred that the services relate to the sustainment, maintenance, modification, or upgrade of B-1 bomber aircraft. This could encompass a range of activities from component repair and overhaul to structural integrity assessments and the implementation of engineering change proposals. The duration of the contract (1368 days) suggests a long-term support requirement rather than a one-off repair.

How does the contract value of $18.6 million compare to similar aircraft manufacturing support contracts?

Benchmarking this $18.6 million contract requires access to a database of comparable sole-source or competed contracts for B-1 bomber sustainment or similar large military aircraft. Without such comparative data, it's difficult to definitively state if the price is competitive. However, given that it's a sole-source award to a major prime contractor like Boeing, there's a potential risk that the price may be higher than if it had been competed. The firm-fixed-price nature provides some cost control, but the absence of competition is a key factor in assessing value.

What is the justification for awarding this contract on a sole-source basis to The Boeing Company?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For a large defense contractor like Boeing, justifications often relate to proprietary data, unique manufacturing capabilities, existing system integration expertise, or the need to maintain commonality with existing fleets. The specific justification for this contract would need to be formally documented by the contracting agency, likely the Department of the Air Force given the B-1 aircraft, and approved through established procurement regulations.

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

The primary risks associated with a sole-source contract of this magnitude ($18.6 million over approximately 3.75 years) include potential cost inefficiencies due to the lack of competitive pressure, reduced incentive for the contractor to innovate or offer cost-saving solutions, and a potential for scope creep if not tightly managed. The long duration increases the risk of the contract becoming misaligned with evolving technological needs or strategic priorities. Furthermore, reliance on a single source can create vulnerabilities in the supply chain or operational support if the contractor faces financial or production issues.

What is The Boeing Company's track record with similar Department of Defense contracts?

The Boeing Company is a major, long-established defense contractor with extensive experience in producing, modifying, and sustaining military aircraft, including bombers like the B-1. They have a long history of holding numerous large contracts with the Department of Defense across various platforms. While specific performance metrics for this particular contract are not detailed beyond 'OK', Boeing's overall track record involves both successes and challenges, as is common for companies of its size and scope. Scrutiny often focuses on program execution, cost control, and delivery timelines for their large defense programs.

How does this contract fit into the broader spending patterns for aircraft sustainment within the Department of Defense?

This contract represents a portion of the Department of Defense's significant investment in maintaining and extending the life of its aging aircraft fleets. Sustainment, including engineering, repair, and logistics support, constitutes a substantial part of the defense budget. Contracts like this are crucial for ensuring aircraft readiness and operational capability. The total spending on aircraft sustainment is in the tens of billions of dollars annually, encompassing a wide range of aircraft types and support services. This specific contract, while substantial, is one of many contributing to the overall sustainment effort.

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

Pricing Type: FIRM FIXED PRICE (J)

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: $19,631,136

Exercised Options: $18,697,802

Current Obligation: $18,559,289

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