Boeing awarded $16.7M for initial spares, raising questions about competition and value

Contract Overview

Contract Amount: $16,761,983 ($16.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-02-15

End Date: 2026-09-30

Contract Duration: 2,784 days

Daily Burn Rate: $6.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST NO FEE

Sector: Defense

Official Description: LFTS INTIAL SPARES PROCUREMENT

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $16.8 million to THE BOEING COMPANY for work described as: LFTS INTIAL SPARES PROCUREMENT Key points: 1. Limited competition may have impacted pricing efficiency. 2. Contract duration extends over several years, suggesting long-term needs. 3. The 'Other Aircraft Parts' category indicates a broad scope of potential items. 4. Performance status is marked 'OK', but detailed metrics are absent. 5. Geographic location of contract performance is Oklahoma. 6. The contract type is Cost No Fee, which shifts risk to the government.

Value Assessment

Rating: fair

The contract value of $16.7 million for initial spares is difficult to benchmark without specific item details. Given the 'NOT COMPETED' status, it's challenging to assess if the pricing reflects competitive market rates. The Cost No Fee (CNF) structure, while common for certain types of procurements, places the financial risk on the government, potentially leading to higher overall costs if not managed closely. Further analysis of the specific spares procured and their unit costs against industry benchmarks 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 approach is typically used when only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition limits the government's ability to solicit and compare offers, potentially resulting in less favorable pricing and terms than would be achieved through a competitive process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also reduces opportunities for other businesses to compete for government contracts.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring operational readiness of aircraft. The contract delivers essential spare parts for aircraft maintenance and repair. Performance is located in Oklahoma, potentially supporting local industry and jobs. The availability of these spares directly impacts the operational readiness and effectiveness of Air Force assets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs.
Cost No Fee structure places financial risk on the government.
Lack of detailed performance metrics makes it hard to assess contractor efficiency.
Long contract duration (over 7 years) requires sustained oversight.

Positive Signals

Contract performance is currently rated 'OK', indicating no major issues.
The procurement addresses a clear need for initial spares, crucial for operational readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for aircraft spares is substantial, driven by military and commercial aviation needs. Boeing is a major player in this sector. Comparable spending benchmarks would typically involve analyzing the cost of similar spare parts procured competitively by the government or commercial entities, considering factors like part criticality, volume, and supplier.

Small Business Impact

There is no indication that this contract includes a small business set-aside. As a sole-source award to a large prime contractor (The Boeing Company), it is unlikely that significant subcontracting opportunities for small businesses are mandated within this specific award, though Boeing may engage small businesses in its 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 would be tied to delivery schedules and the quality of the spares provided. Transparency is limited due to the sole-source nature and the absence of publicly available detailed performance data. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Manufacturing
Defense Logistics
Air Force Procurement
Spare Parts Management

Risk Flags

Sole-source award may limit value for money.
Cost-reimbursement elements (implied by CNF) require strong government cost oversight.
Lack of specific performance metrics hinders detailed assessment.
Long contract duration necessitates sustained monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.8 million to THE BOEING COMPANY. LFTS INTIAL SPARES PROCUREMENT

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 $16.8 million.

What is the period of performance?

Start: 2019-02-15. End: 2026-09-30.

What specific aircraft or systems are these initial spares intended for?

The provided data does not specify the exact aircraft or weapon systems for which these initial spares are procured. The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' suggests a broad range of potential components. To understand the criticality and value, identifying the specific end-item systems is essential. This information would allow for a comparison of the spares' importance to overall mission capability and potentially inform a more accurate assessment of the procurement's necessity and urgency, which are key factors in justifying a sole-source award.

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

The data indicates the contract was 'NOT COMPETED,' implying a sole-source award. Typical justifications for sole-source procurements include unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when only one responsible source exists. Without further documentation (e.g., a Justification for Other Than Full and Open Competition - JOFOC), the specific reason remains unclear. Understanding this rationale is crucial for assessing whether the government adequately explored competitive options and obtained the best possible value under the circumstances.

How does the Cost No Fee (CNF) contract type impact risk and pricing?

A Cost No Fee (CNF) contract type means the contractor is reimbursed for allowable costs but receives no fee or profit. This structure is often used when the scope of work is uncertain or when the government wants to minimize contractor risk. However, it places the primary financial risk on the government, as the contractor is incentivized to incur costs without the direct profit motive tied to efficiency. This can potentially lead to higher overall costs if cost controls are not rigorously enforced by the government. It also means the government bears the risk of cost overruns.

What are the key performance indicators (KPIs) for this contract, and how is performance being measured?

The provided data indicates the contract status is 'OK' (ST='OK', SN='OKLAHOMA'). However, this is a very high-level status and does not detail specific Key Performance Indicators (KPIs) or the metrics used for measurement. Effective oversight requires clearly defined KPIs related to delivery timeliness, quality of spares, and adherence to specifications. Without insight into these detailed performance metrics, it is difficult to independently assess the contractor's efficiency and the overall success of the contract beyond a basic 'satisfactory' rating.

What is the historical spending pattern for similar initial spares procurements by the Air Force?

The provided data snippet focuses on a single contract award and does not offer historical spending patterns for similar initial spares procurements. To establish a benchmark, one would need to analyze past contracts for initial spares for comparable aircraft or systems, noting their value, contract type, competition level, and duration. Understanding historical spending can reveal trends, identify potential cost efficiencies or inefficiencies, and provide context for evaluating the current $16.7 million award. A longer-term view across multiple fiscal years would be necessary for a comprehensive analysis.

Are there any known issues or concerns regarding The Boeing Company's track record with similar defense contracts?

While The Boeing Company is a major defense contractor with extensive experience, like any large entity, it has faced scrutiny and challenges on various programs. Specific to aircraft parts and sustainment, past performance issues could range from delivery delays to quality control concerns on different contracts. A thorough assessment would require reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) and any publicly reported issues related to Boeing's supply chain management or spare parts delivery for Department of Defense contracts. The 'OK' status here suggests no current major performance red flags on this specific contract.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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 NO FEE (S)

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: $16,761,983

Exercised Options: $16,761,983

Current Obligation: $16,761,983

Actual Outlays: $646,583

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810616D0002

IDV Type: IDC

Timeline