DoD awards $351M C-17 sustainment contract to Boeing, raising concerns over limited competition
Contract Overview
Contract Amount: $351,226,092 ($351.2M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2016-08-24
End Date: 2017-09-30
Contract Duration: 402 days
Daily Burn Rate: $873.7K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: IGF::OT::IGF FY17 SUSTAINMENT MATERIAL IN SUPPORT OF C-17 FLEET
Place of Performance
Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647
Plain-Language Summary
Department of Defense obligated $351.2 million to THE BOEING COMPANY for work described as: IGF::OT::IGF FY17 SUSTAINMENT MATERIAL IN SUPPORT OF C-17 FLEET Key points: 1. Significant contract value for sustainment of a critical military asset. 2. Sole reliance on Boeing for C-17 sustainment materials presents a competitive risk. 3. Cost-plus contract type may incentivize higher spending without strict cost controls. 4. The defense sector heavily relies on established prime contractors for complex systems.
Value Assessment
Rating: questionable
The contract's cost-plus incentive fee structure, coupled with limited competition, raises questions about optimal pricing. Benchmarking against similar sustainment contracts for large aircraft fleets would be necessary to fully assess value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This lack of competition limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: The absence of competition for essential sustainment materials could result in taxpayers bearing higher costs than if the contract had been competitively bid.
Public Impact
Taxpayers may be overpaying for C-17 sustainment parts due to lack of competition. The long-term reliance on a single supplier could impact the operational readiness of the C-17 fleet if supply issues arise. Future sustainment costs for the C-17 could be higher if this sole-source trend continues.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of competition
Positive Signals
- Supports critical C-17 fleet readiness
- Established relationship with prime contractor
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically supporting the C-17 Globemaster III transport aircraft. Spending in this area is crucial for maintaining military logistics capabilities, but often involves high-value, long-term contracts with limited competitive opportunities.
Small Business Impact
There is no indication that small businesses were involved in this specific contract award. The prime contractor, Boeing, is a large aerospace company, and the nature of the award suggests it was not structured to encourage small business participation.
Oversight & Accountability
The Department of Defense, through its contracting agencies like the Defense Contract Management Agency, is responsible for overseeing this contract. However, the sole-source nature limits the agency's ability to leverage competition for cost savings, shifting the focus to monitoring cost and performance.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- Cost-plus contract type may lead to higher costs without strict oversight.
- Dependency on a single supplier creates supply chain and price vulnerability.
- Potential for taxpayer overpayment due to lack of competitive pressure.
Tags
aircraft-manufacturing, department-of-defense, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $351.2 million to THE BOEING COMPANY. IGF::OT::IGF FY17 SUSTAINMENT MATERIAL IN SUPPORT OF C-17 FLEET
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 $351.2 million.
What is the period of performance?
Start: 2016-08-24. End: 2017-09-30.
What is the historical cost trend for C-17 sustainment materials under this sole-source arrangement, and how does it compare to industry benchmarks for similar aircraft?
Analyzing historical cost data is crucial to understanding the long-term financial implications of this sole-source contract. Comparing these trends against industry benchmarks for aircraft sustainment, particularly for comparable airframes, would reveal potential cost efficiencies or inefficiencies. Without this comparative analysis, it's difficult to definitively assess whether taxpayers are receiving fair value for the funds expended on C-17 sustainment materials.
What are the specific risks associated with relying solely on The Boeing Company for C-17 sustainment materials, particularly concerning supply chain disruptions or price escalations?
The primary risk is the lack of leverage in price negotiations, potentially leading to significant cost escalations over time. Furthermore, a sole-source dependency creates vulnerability to supply chain disruptions originating from Boeing or its subcontractors. Any geopolitical events, labor disputes, or unforeseen production issues at Boeing could directly impact the availability of critical C-17 sustainment materials, jeopardizing fleet readiness.
How effectively is the cost-plus incentive fee structure being monitored to ensure it drives efficiency and prevents cost overruns for the C-17 sustainment program?
Effective monitoring of a cost-plus incentive fee contract requires rigorous oversight of Boeing's cost accounting and performance metrics. The government must ensure that incentive targets are challenging yet achievable and that penalties for cost overruns are enforced. Regular audits and performance reviews are essential to verify that Boeing is actively seeking cost efficiencies and that the fee structure is genuinely incentivizing value for the taxpayer, rather than simply covering costs.
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
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 14441 ASTRONAUTICS LN, HUNTINGTON BEACH, CA, 92647
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: $413,722,302
Exercised Options: $413,722,302
Current Obligation: $351,226,092
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA852612D0001
IDV Type: IDC
Timeline
Start Date: 2016-08-24
Current End Date: 2017-09-30
Potential End Date: 2026-09-30 00:00:00
Last Modified: 2026-01-15
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