Air Force Awards $2.8B for F-15S/SA Conversion to Boeing, Facing Limited Competition
Contract Overview
Contract Amount: $2,806,532,949 ($2.8B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2012-06-22
End Date: 2021-04-30
Contract Duration: 3,234 days
Daily Burn Rate: $867.8K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: IGF::OT::IGF F-15S/SA CONVERSION
Place of Performance
Location: SAN ANTONIO, BEXAR County, TEXAS, 78226
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $2.81 billion to THE BOEING COMPANY for work described as: IGF::OT::IGF F-15S/SA CONVERSION Key points: 1. Significant contract value of $2.8 billion awarded to a single large business. 2. Limited competition due to the nature of aircraft modification and specialized parts. 3. Potential risk associated with sole-source or limited competition pricing. 4. Spending falls within the Defense sector, specifically aircraft parts manufacturing.
Value Assessment
Rating: fair
The contract value of $2.8 billion for F-15S/SA conversion is substantial. Without specific benchmarks for similar complex aircraft modifications, assessing its value relative to market rates is challenging. The fixed-price incentive structure suggests an attempt to control costs, but the lack of readily available comparative data makes a definitive assessment difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was not available for competition, indicating a limited or sole-source award. This approach is often necessary for highly specialized defense systems where only a few entities possess the required expertise and technology. However, it limits price discovery and potentially increases costs for the government.
Taxpayer Impact: The limited competition likely results in higher costs for taxpayers compared to a fully competitive process, as the government may not achieve the lowest possible price.
Public Impact
Modernization of critical F-15 fighter jets enhances national defense capabilities. Investment supports advanced aerospace manufacturing and associated jobs. Taxpayer funds are directed towards maintaining and upgrading a key military asset.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition raises concerns about potential overpricing.
- Lack of transparency in pricing due to sole-source nature.
- Long contract duration could lead to cost overruns if not managed effectively.
Positive Signals
- Supports modernization of essential military aircraft.
- Awarded to a major defense contractor with proven capabilities.
- Fixed-price incentive contract aims to align contractor and government interests on cost.
Sector Analysis
This contract falls within the Defense sector, specifically focusing on aircraft parts and auxiliary equipment manufacturing. Spending in this area is critical for maintaining military readiness and technological superiority. Benchmarks for such specialized modifications are often proprietary or difficult to obtain due to the unique nature of defense systems.
Small Business Impact
The contract was awarded to The Boeing Company, a large business. There is no indication that small businesses were involved as prime contractors or significant subcontractors in this specific award, which is common for large, complex defense manufacturing contracts.
Oversight & Accountability
Oversight of this contract would typically involve the Department of the Air Force and potentially the Department of Defense's Inspector General. Ensuring cost efficiency and adherence to contract terms, especially given the limited competition, is crucial for accountability.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Limited competition may lead to higher costs.
- Lack of transparency in pricing due to sole-source nature.
- Potential for cost overruns over the contract's duration.
- Reliance on a single contractor for critical upgrades.
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, tx, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.81 billion to THE BOEING COMPANY. IGF::OT::IGF F-15S/SA CONVERSION
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 $2.81 billion.
What is the period of performance?
Start: 2012-06-22. End: 2021-04-30.
What specific factors justified the limited competition for this F-15 conversion contract, and how were these assessed to ensure fair pricing?
The justification for limited competition likely stems from the highly specialized nature of F-15 modifications, requiring unique technical expertise, proprietary data, and specific tooling possessed by The Boeing Company. The government would have assessed these factors to determine if alternative sources were feasible. Fair pricing in such scenarios often relies on historical data, should-cost analyses, and negotiation strategies to mitigate the lack of competitive pressure.
How does the fixed-price incentive (FPI) structure mitigate the risks associated with limited competition in this $2.8 billion contract?
The FPI structure aims to control costs by establishing a target cost, target profit, and a price ceiling. If the final cost is below the target, both the contractor and the government share in the savings. Conversely, if costs exceed the target, the contractor bears a portion of the overrun up to the ceiling. This incentivizes the contractor to manage costs efficiently, offering some protection against the potential for overpricing inherent in limited competition.
What is the long-term strategic value of converting F-15S/SA aircraft, and how does this $2.8 billion investment contribute to the Air Force's overall mission effectiveness?
Converting F-15S/SA aircraft upgrades their capabilities to meet modern threats, extending their service life and enhancing combat effectiveness. This investment ensures the Air Force maintains a potent air superiority platform, crucial for national defense. The upgraded aircraft will possess improved avionics, weapons integration, and potentially enhanced survivability, directly contributing to mission success and deterrence.
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 AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134
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: $2,806,532,949
Exercised Options: $2,806,532,949
Current Obligation: $2,806,532,949
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2012-06-22
Current End Date: 2021-04-30
Potential End Date: 2021-04-30 00:00:00
Last Modified: 2026-01-15
More Contracts from THE Boeing Company
- KC-X Modernization Program — $32.0B (Department of Defense)
- International Space Station — $22.4B (National Aeronautics and Space Administration)
- 200112!000108!9700!ZD60 !ballistic Missile Defense ORG. !HQ000601C0001 !A!N!*!N! !20001222!20080930!848025649!848025649!009256819!n!the Boeing Company !3370 E Miraloma AVE !anaheim !ca!92806!37000!089!01!huntsville !madison !alabama !+000383571022!n!n!000000000000!ad93!rdte/Other Defense-Adv Tech DEV !S1 !services !1caa!ballistic Missile Defense SYS !541710!*!*!3! ! ! !*!*!*!B!*!*!A! !A !U!R!2!001!B! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! — $18.8B (Department of Defense)
- USN P-8A FRP II Long Lead Material — $18.1B (Department of Defense)
- 200512!010860!2100!w56hzv!tacom - Warren !w56hzv05c0724 !A!N! !Y! ! !20050923!20141231!016544780!016544780!009256819!n!the Boeing Company !J S Mcdonnell Blvd !saint Louis !mo!63166!65000!510!29!st. Louis !ST. Louis (city) !missouri !+000219245691!n!n!000000000000!az15!rdte/Other Research&development-Eng/Manuf Devel !S1 !services !301 !FCS !541330!E! !1! ! ! ! ! !20200930!B! ! !A! !d!u!u!1!001!n!1a!z!y!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! TAS::21 2040::TAS — $12.7B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)