Boeing awarded $38.7M for C-17 initial spares, supporting base stand-up

Contract Overview

Contract Amount: $38,690,463 ($38.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-07-29

End Date: 2024-08-15

Contract Duration: 1,844 days

Daily Burn Rate: $21.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TASK ORDER TO PROVIDE INITIAL LAY-IN SPARES FOR THE STAND UP OF CHARLOTTE AND PITTSBURG BASES IN SUPPORT OF THE C-17 FLEET

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $38.7 million to THE BOEING COMPANY for work described as: TASK ORDER TO PROVIDE INITIAL LAY-IN SPARES FOR THE STAND UP OF CHARLOTTE AND PITTSBURG BASES IN SUPPORT OF THE C-17 FLEET Key points: 1. Contract supports critical C-17 fleet readiness by providing essential initial spare parts. 2. Sole-source award raises questions about potential price overruns and lack of competitive pressure. 3. Long performance period (5 years) suggests a sustained need for these components. 4. Aircraft manufacturing sector is highly specialized, potentially limiting competition for such specific needs. 5. Contract value is significant, underscoring the importance of efficient procurement for military readiness. 6. Focus on base stand-up indicates a strategic investment in operational capability.

Value Assessment

Rating: fair

The contract value of $38.7 million for initial lay-in spares for the C-17 fleet appears substantial. Without specific benchmarks for similar 'initial lay-in spares' procurements for large aircraft fleets, it is difficult to definitively assess value for money. However, given the sole-source nature of the award, there is a heightened risk that the pricing may not reflect competitive market rates. Further analysis would be needed to compare the unit costs of these spares against industry averages or previous similar procurements to ensure fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one company, The Boeing Company, was solicited. This approach is typically used when a specific product or service is only available from a single source, or in cases of urgent and compelling need. The lack of competition means that taxpayers did not benefit from the price discovery that typically occurs in a competitive bidding process, potentially leading to higher costs.

Taxpayer Impact: The absence of competition for this significant contract means taxpayers may have paid a premium compared to what could have been achieved through a competitive solicitation. This limits the government's ability to secure the best possible price for these critical spare parts.

Public Impact

The primary beneficiaries are the Department of Defense and the U.S. Air Force, ensuring the operational readiness of the C-17 Globemaster III fleet. The contract delivers essential spare parts required for the initial setup and sustained operation of Charlotte and Pittsburg bases. Geographic impact is focused on the locations of the Charlotte and Pittsburg bases, supporting their logistical and maintenance capabilities. Workforce implications include potential support roles for logistics, maintenance, and inventory management related to the C-17 fleet at these bases.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration could mask inefficiencies if not closely monitored.
Reliance on a single contractor for critical spares may pose supply chain risks.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Ensures availability of critical spares for a vital military asset (C-17).
Supports the strategic stand-up of new bases, enhancing operational capacity.
Boeing's established expertise in C-17 manufacturing suggests technical proficiency.
Long-term contract provides stability for spares provisioning.

Sector Analysis

The aircraft manufacturing sector is characterized by high barriers to entry, significant capital investment, and stringent regulatory requirements. This contract falls within the broader aerospace and defense industry, a sector where major original equipment manufacturers (OEMs) like Boeing often hold dominant positions for their specific platforms. Spending on aircraft spares is a critical component of maintaining fleet readiness and operational availability, with values often running into millions or billions of dollars annually across various military aircraft types. Benchmarking this specific contract is challenging without detailed cost breakdowns, but it represents a necessary investment in sustaining a key strategic airlift capability.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, The Boeing Company, is a large aerospace manufacturer. While Boeing may engage small businesses as subcontractors for certain components or services, the primary award itself is not directed towards small businesses. The lack of a specific small business set-aside means that opportunities for small businesses to directly contract with the government for these specific spares are limited in this instance.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. As a sole-source award, transparency might be limited compared to competitively bid contracts. Accountability measures would be embedded in the contract's cost-plus-fixed-fee structure, requiring Boeing to justify costs and adhere to the fixed fee. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

C-17 Globemaster III Sustainment
Air Mobility Command Logistics Support
Department of Defense Aircraft Spare Parts Procurement
Defense Logistics Agency Aviation Support

Risk Flags

Sole-source award
Potential for cost overruns
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.7 million to THE BOEING COMPANY. TASK ORDER TO PROVIDE INITIAL LAY-IN SPARES FOR THE STAND UP OF CHARLOTTE AND PITTSBURG BASES IN SUPPORT OF THE 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 $38.7 million.

What is the period of performance?

Start: 2019-07-29. End: 2024-08-15.

What is the track record of The Boeing Company in delivering spare parts for military aircraft, specifically the C-17?

The Boeing Company is the original manufacturer of the C-17 Globemaster III and has a long-standing relationship with the U.S. Air Force for its sustainment. Boeing has historically been responsible for providing spare parts, maintenance, and support services for the C-17 fleet. Their track record generally indicates a strong technical capability and understanding of the aircraft's complex systems. However, like many large defense contractors, Boeing has faced scrutiny in the past regarding cost overruns and delivery schedules on various programs. For C-17 spares specifically, the focus would be on their ability to provide parts in a timely manner and at a reasonable cost, especially given the sole-source nature of this particular award, which implies a reliance on their established supply chain and manufacturing expertise.

How does the $38.7 million value compare to similar initial spares procurements for large military aircraft?

Directly comparing the $38.7 million value for 'initial lay-in spares' is challenging without access to specific contract details and market data for comparable aircraft programs. 'Initial lay-in spares' are typically procured during the initial fielding or stand-up of new bases or aircraft squadrons, representing a critical but often one-time or early-stage investment. The value is influenced by the complexity of the aircraft, the number of bases being supported, and the specific types and quantities of spares required. Given the C-17's size and role as a strategic airlifter, $38.7 million is a significant sum, but it may be within the expected range for establishing a foundational inventory. The sole-source nature, however, prevents a definitive value-for-money assessment against competitive benchmarks.

What are the primary risks associated with a sole-source award for critical aircraft spares?

The primary risks associated with a sole-source award for critical aircraft spares are centered around cost and competition. Without competitive bidding, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to higher costs for the government and taxpayers. This lack of price discovery means the government may not be achieving the best value. Additionally, sole-source awards can create a dependency on a single supplier, which can pose supply chain risks if the contractor experiences production issues, financial difficulties, or decides to discontinue certain product lines. It also limits opportunities for other capable suppliers to enter the market or provide alternative solutions.

How effective is a Cost Plus Fixed Fee (CPFF) contract type for procuring specialized aircraft spares?

A Cost Plus Fixed Fee (CPFF) contract type, like the one used here, is often employed when the scope of work is well-defined but the exact costs are uncertain, which can be the case for specialized spares. The government agrees to pay the contractor's actual allowable costs plus a fixed fee representing profit. This structure provides some cost control as the fee is fixed, unlike Cost Plus Incentive Fee (CPIF) contracts. However, it still carries risks for the government, as the contractor is reimbursed for all allowable costs, potentially leading to higher overall expenditures if costs are not managed efficiently. For specialized spares, CPFF can ensure that the necessary parts are produced, but requires robust government oversight to monitor costs and prevent overruns.

What is the historical spending pattern for C-17 related spare parts procurements by the Department of Defense?

Historical spending on C-17 related spare parts by the Department of Defense has been substantial over the life cycle of the aircraft, reflecting its critical role in air mobility. Annual spending on spares, maintenance, and support for the C-17 fleet typically runs into hundreds of millions of dollars. This specific $38.7 million award for initial spares represents a portion of that overall sustainment cost, focused on a particular phase (base stand-up). Analyzing broader historical spending patterns would reveal consistent investment in maintaining the C-17's operational readiness, often through a mix of competitively awarded contracts for common parts and sole-source or limited competition contracts for proprietary or manufacturer-specific components.

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 FIXED FEE (U)

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: $45,219,352

Exercised Options: $45,219,352

Current Obligation: $38,690,463

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