Boeing awarded $27.2M for aircraft guidance system repairs, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $27,192,524 ($27.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-11-07

End Date: 2023-09-29

Contract Duration: 1,787 days

Daily Burn Rate: $15.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: REPAIR OF GUIDANCE AND NAVIGATIONAL SYSTEMS FOR MULTIPLE AIRCRAFT.

Place of Performance

Location: HEATH, LICKING County, OHIO, 43056

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $27.2 million to THE BOEING COMPANY for work described as: REPAIR OF GUIDANCE AND NAVIGATIONAL SYSTEMS FOR MULTIPLE AIRCRAFT. Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. Long contract duration suggests a need for ongoing support, but may limit opportunities for new entrants. 3. The 'Cost Plus Award Fee' structure incentivizes performance but requires robust oversight to manage costs. 4. Focus on repair and maintenance indicates a mature fleet requiring specialized, long-term support. 5. Geographic location of performance in Ohio may have local economic implications. 6. Absence of small business set-aside suggests the prime contractor will manage the entire scope.

Value Assessment

Rating: fair

This contract's value is difficult to benchmark without comparable sole-source repair contracts for similar aircraft systems. The 'Cost Plus Award Fee' (CPAF) pricing structure means the final cost can fluctuate based on performance, making direct price comparisons challenging. While the total award is $27.2 million, the actual expenditure will depend on the awarded fees, which are tied to performance metrics. Without insight into these metrics and the base cost, assessing value for money is limited. However, the long duration and specialized nature of the repair work suggest that the cost may be justified if the service is critical and performed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one contractor possesses the necessary technical expertise, facilities, or proprietary knowledge to perform the required services. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government compared to a competed contract. The justification for a sole-source award would need to demonstrate why other responsible sources could not be found or why a competitive process was not feasible.

Taxpayer Impact: Sole-source awards limit taxpayer savings by eliminating the downward price pressure that competition provides. This means taxpayers may be paying a premium for the goods or services received.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the affected aircraft, ensuring the continued functionality of critical guidance and navigational systems. The services delivered include the repair and maintenance of specialized aeronautical systems, crucial for mission readiness and safety. The geographic impact is centered in Ohio, where the performance is scheduled to take place, potentially supporting local jobs and businesses. Workforce implications may involve specialized technicians and engineers employed by The Boeing Company or its subcontractors to perform the repair work.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Long contract duration could indicate potential for cost overruns if not managed tightly.
CPAF structure requires diligent oversight to ensure performance incentives do not drive unnecessary costs.

Positive Signals

Award to a single, experienced contractor like Boeing suggests a high likelihood of technical competence.
Long performance period indicates a sustained need for these critical repair services.
Focus on repair of existing systems supports the longevity and operational readiness of the Air Force fleet.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on the maintenance and repair of aeronautical systems. The market for such specialized repair services is often dominated by original equipment manufacturers (OEMs) or highly specialized MRO (Maintenance, Repair, and Overhaul) providers due to the proprietary nature of the technology and the stringent certification requirements. Spending in this area is critical for maintaining the operational readiness of military fleets, and contracts are often long-term due to the complexity and lifespan of the equipment.

Small Business Impact

The contract data indicates that small business participation was not a specified element, and the prime contractor, The Boeing Company, is a large business. There is no indication of a small business set-aside. It is possible that Boeing may utilize small business subcontractors for certain components or services, but this information is not detailed in the provided data. The absence of specific small business goals suggests that the primary focus is on the prime contractor's capability to perform the entire scope of work.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Award Fee (CPAF) contract, performance metrics and fee determination will be key areas of oversight. The contract's long duration and sole-source nature necessitate rigorous monitoring of costs, schedule, and quality to ensure accountability and prevent potential waste. Inspector General (IG) investigations could be initiated if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Maintenance and Repair Services
Aeronautical Navigation Systems
Defense Logistics Support
Air Force Fleet Readiness Programs
Cost Plus Award Fee Contracts

Risk Flags

Sole-source award lacks price competition.
Long contract duration may not align with rapid technological advancements.
CPAF structure requires robust government oversight to control costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.2 million to THE BOEING COMPANY. REPAIR OF GUIDANCE AND NAVIGATIONAL SYSTEMS FOR MULTIPLE AIRCRAFT.

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 $27.2 million.

What is the period of performance?

Start: 2018-11-07. End: 2023-09-29.

What is the historical spending pattern for repair of guidance and navigational systems for this specific aircraft type or fleet?

Analyzing historical spending for similar repair services on this aircraft fleet is crucial for context. Without specific historical data for this contract or similar ones, it's challenging to determine if the $27.2 million award is consistent with past expenditures. Factors such as inflation, changes in system complexity, and the number of aircraft requiring service over time can significantly influence spending. A review of previous contracts with The Boeing Company or other relevant entities for similar services would reveal trends in cost, duration, and scope, helping to assess whether the current award represents a reasonable increase or a deviation from established patterns. This historical perspective is vital for identifying potential cost efficiencies or areas of concern.

How does the 'Cost Plus Award Fee' (CPAF) structure for this contract compare to industry standards for similar repair services?

The Cost Plus Award Fee (CPAF) structure is common in defense contracting, particularly for services where performance outcomes are critical and difficult to define precisely upfront. In this structure, the contractor is reimbursed for allowable costs plus a fee that is composed of a fixed base amount and an award amount, contingent upon meeting or exceeding performance objectives. For repair services of complex guidance and navigational systems, CPAF incentivizes the contractor (The Boeing Company) to perform efficiently and effectively to earn the maximum award fee. Industry standards often involve detailed performance metrics and evaluation criteria. The effectiveness of this structure hinges on the clarity and measurability of these metrics and robust government oversight to ensure the award fee is earned legitimately and does not incentivize unnecessary cost escalation.

What specific performance metrics are used to determine the award fee for The Boeing Company under this contract?

The specific performance metrics used to determine the award fee for The Boeing Company are not detailed in the provided summary data. However, for a contract involving the repair of guidance and navigational systems, typical metrics would likely include factors such as on-time delivery of repaired components, quality of repairs (e.g., low defect rates upon return to service), system reliability improvements post-repair, adherence to technical specifications, and responsiveness to Air Force requests. The 'Cost Plus Award Fee' (CPAF) structure necessitates clearly defined and measurable Key Performance Indicators (KPIs). The government contracting officer is responsible for evaluating Boeing's performance against these metrics to determine the amount of the award fee, ensuring that the fee truly reflects superior performance and value delivered.

Given the sole-source nature, what mechanisms are in place to ensure The Boeing Company maintains competitive pricing and efficiency?

Even in sole-source contracts, mechanisms exist to promote competitive pricing and efficiency, although they differ from a formal bidding process. For this contract, the 'Cost Plus Award Fee' (CPAF) structure itself is a key mechanism; the award fee component incentivizes performance and efficiency. The government's contracting officer and technical representatives will closely monitor costs, ensuring they are allowable, allocable, and reasonable. Regular audits by agencies like the Defense Contract Audit Agency (DCAA) can scrutinize costs. Furthermore, the government may negotiate pricing elements, conduct market research on component costs, and establish ceilings for certain cost categories. The long-term nature of the contract also implies ongoing dialogue and potential renegotiation points to ensure continued value.

What is the potential impact of the long contract duration (ending in 2023, awarded in 2018) on technological obsolescence of the guidance and navigational systems?

A contract duration spanning from 2018 to 2023 for the repair of guidance and navigational systems raises concerns about potential technological obsolescence. While the contract focuses on repair, the underlying technology of these systems might evolve rapidly. If the systems themselves are becoming outdated, the cost and feasibility of repairing them may increase over time, or the repairs might not fully address future operational needs. Conversely, a long-term repair contract can be essential if replacement systems are not yet available or if the existing systems are expected to remain in service for an extended period. The government's strategy likely involves balancing the cost of maintaining older systems with the investment required for modernization, and this contract reflects a decision to prioritize repair for the duration specified.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument 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 AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 801 IRVING WICK DR W, NEWARK, OH, 43056

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: $27,192,524

Exercised Options: $27,192,524

Current Obligation: $27,192,524

Subaward Activity

Number of Subawards: 27

Total Subaward Amount: $4,089,456

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA811715D0030

IDV Type: IDC

Timeline