Boeing awarded $303.6M for F117 engine sustainment, a sole-source contract with a 547-day duration
Contract Overview
Contract Amount: $303,562,491 ($303.6M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2016-04-01
End Date: 2017-09-30
Contract Duration: 547 days
Daily Burn Rate: $555.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: IGF::OT::IGF F117 ENGINE SUSTAINMENT
Place of Performance
Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647
Plain-Language Summary
Department of Defense obligated $303.6 million to THE BOEING COMPANY for work described as: IGF::OT::IGF F117 ENGINE SUSTAINMENT Key points: 1. Contract awarded to a single supplier, raising questions about price competitiveness. 2. Limited competition may lead to higher costs for taxpayers. 3. Contract duration of 547 days suggests a focus on immediate sustainment needs. 4. The contract falls under Aircraft Manufacturing, a critical sector for defense operations. 5. No small business subcontracting goals were specified, potentially limiting small business participation. 6. The firm-fixed-price structure shifts cost risk to the contractor.
Value Assessment
Rating: questionable
The contract's value of $303.6 million for 547 days of F117 engine sustainment requires careful benchmarking. As a sole-source award, direct comparisons to similar competitively bid contracts are difficult. However, the absence of competition suggests potential for inflated pricing. Without more data on the scope of work and specific services provided, a definitive value-for-money assessment is challenging, but the lack of competitive pressure is a concern.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they typically result in less price discovery and potentially higher costs compared to full and open competition.
Taxpayer Impact: Sole-source awards limit the opportunity for multiple companies to bid, which can drive down prices through competition. Taxpayers may therefore be paying a premium for this engine sustainment service due to the lack of competitive pressure.
Public Impact
The U.S. Air Force benefits from the sustainment of its F117 engines, ensuring operational readiness. This contract supports the maintenance and repair of critical aircraft engines. The primary geographic impact is likely within the operational bases of the U.S. Air Force. The contract supports specialized technical roles within The Boeing Company and its potential supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
- Lack of competition may reduce incentives for innovation and efficiency from the contractor.
- Absence of small business set-aside or subcontracting goals could limit opportunities for smaller firms.
- Contract duration is relatively short (547 days), potentially leading to frequent re-competition or contract modifications.
Positive Signals
- Firm-fixed-price contract shifts cost risk to the contractor, providing budget certainty.
- Award to a single, established provider like Boeing suggests a focus on proven capability and reliability.
- Sustainment contracts are crucial for maintaining the operational readiness of military assets.
Sector Analysis
The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Engine sustainment is a critical, albeit niche, segment within this sector, often dominated by original equipment manufacturers or specialized MRO (Maintenance, Repair, and Overhaul) providers. Spending in this area is driven by the need to maintain the operational readiness of aging military fleets. Comparable spending benchmarks are difficult to establish without detailed service scope, but large sustainment contracts are common for major defense platforms.
Small Business Impact
This contract does not appear to have a small business set-aside component, nor were specific subcontracting goals mentioned. As a sole-source award to a large prime contractor, the direct impact on small businesses is limited unless Boeing voluntarily includes them in its supply chain. Without explicit requirements, there is a risk that small businesses may be excluded from participating in this significant defense sustainment effort.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General of the Department of Defense may also conduct audits or investigations into contract performance and pricing, particularly given the sole-source nature. Transparency is moderate, as contract awards are publicly reported, but detailed performance metrics and pricing breakdowns are often not fully disclosed.
Related Government Programs
- F117 Engine Maintenance
- Aircraft Engine Repair
- Defense Logistics Agency Contracts
- Air Force Sustainment Programs
- Boeing Defense Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns
- Limited small business participation
Tags
defense, department-of-defense, department-of-the-air-force, aircraft-manufacturing, not-competed, sole-source, firm-fixed-price, engine-sustainment, california, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $303.6 million to THE BOEING COMPANY. IGF::OT::IGF F117 ENGINE SUSTAINMENT
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 $303.6 million.
What is the period of performance?
Start: 2016-04-01. End: 2017-09-30.
What is the historical spending trend for F117 engine sustainment with The Boeing Company?
Analyzing historical spending requires accessing prior contract data for F117 engine sustainment awarded to The Boeing Company. Without specific historical contract numbers and award dates, a precise trend cannot be determined from the provided data alone. However, the current award of $303.6 million for a 547-day period suggests a significant ongoing investment in maintaining this engine type. If this is a recurring need, it implies consistent, substantial annual spending. Further investigation into previous contracts, including their value, duration, and scope, would be necessary to establish a clear spending trend and identify any fluctuations or patterns over time. This would also help in assessing whether the current award represents an increase, decrease, or stable level of expenditure for this service.
How does the cost per day for this contract compare to industry benchmarks for similar engine sustainment services?
To benchmark the cost per day, we first calculate it from the provided data: $303,562,491.08 / 547 days ≈ $554,959 per day. Comparing this to industry benchmarks for similar engine sustainment services is challenging without knowing the specific type and complexity of the F117 engine and the exact scope of 'sustainment' (e.g., scheduled maintenance, unscheduled repairs, parts replacement, overhaul). However, this daily rate appears substantial. For context, major commercial aircraft engine maintenance contracts can range from tens of thousands to hundreds of thousands of dollars per day, depending on the engine size, utilization, and service level agreements. Given the military context and the likely high operational tempo, a rate in the mid-five figures per day might be expected for complex engines. The calculated rate of approximately $555,000 per day warrants further scrutiny, especially considering this is a sole-source award.
What specific risks are associated with a sole-source contract for critical aircraft engine sustainment?
The primary risk associated with a sole-source contract for critical aircraft engine sustainment is the lack of price competition. This can lead to inflated costs for the government, as the contractor faces no pressure to offer the most competitive pricing. Another significant risk is reduced incentive for the contractor to innovate or improve efficiency, as they are the only provider. This can result in suboptimal performance or higher long-term operational costs. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future, even if performance or pricing becomes unsatisfactory. There's also a risk of complacency from the contractor regarding quality or responsiveness. Finally, the justification for a sole-source award must be robust; if not properly documented or if competition was feasible but avoided, it raises concerns about fairness and fiscal responsibility.
What is the track record of The Boeing Company in fulfilling similar sole-source sustainment contracts for the Department of Defense?
The Boeing Company has a long history of contracting with the Department of Defense (DoD) and often holds sole-source contracts for sustainment of its platforms, including aircraft and associated systems. Their track record generally reflects extensive experience and capability in providing complex sustainment services. However, like many large defense contractors, Boeing has faced scrutiny over pricing and contract management in various sole-source engagements. Specific performance metrics, past issues (e.g., cost overruns, schedule delays), and the effectiveness of their oversight mechanisms on similar sole-source sustainment contracts would need to be examined on a case-by-case basis. Publicly available data often highlights major awards and contract types, but detailed performance reviews and pricing analyses for specific sole-source sustainment deals are less common, making a comprehensive assessment challenging without deeper research into individual contract histories.
What are the potential implications for aircraft availability and readiness given this contract's duration and sole-source nature?
The contract duration of 547 days (approximately 1.5 years) for F117 engine sustainment is relatively short in the context of long-term military readiness. This short duration might indicate a focus on immediate or near-term sustainment needs, or it could be a precursor to a larger, longer-term contract. The sole-source nature, while potentially ensuring continuity of service from a known provider, carries the risk of price escalation or less proactive maintenance if competitive pressures are absent. If Boeing is the sole entity capable of providing this specific sustainment, then the Air Force is reliant on their performance. A short duration also means the Air Force will need to plan for re-competition or contract extension relatively soon, which can introduce administrative overhead and potential gaps if not managed effectively. Ultimately, the impact on aircraft availability hinges on Boeing's execution and the Air Force's oversight, but the sole-source aspect adds a layer of risk regarding cost-effectiveness and potential complacency.
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
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 5301 BOLSA AVE, HUNTINGTON BEACH, CA, 92647
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $620,064,555
Exercised Options: $620,064,555
Current Obligation: $303,562,491
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA852612D0001
IDV Type: IDC
Timeline
Start Date: 2016-04-01
Current End Date: 2017-09-30
Potential End Date: 2017-09-30 00:00:00
Last Modified: 2023-06-01
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