Boeing awarded $37.2M for C-17 aircraft manufacturing, a sole-source contract with a firm fixed price

Contract Overview

Contract Amount: $37,185,759 ($37.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-01-10

End Date: 2020-09-30

Contract Duration: 264 days

Daily Burn Rate: $140.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C-17 REQUIREMENT

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $37.2 million to THE BOEING COMPANY for work described as: C-17 REQUIREMENT Key points: 1. Contract awarded to a single supplier, raising questions about price competitiveness. 2. Firm fixed-price contract shifts risk to the contractor, potentially stabilizing costs. 3. Delivery order for aircraft manufacturing indicates a specific need within the Air Force's fleet. 4. The contract duration of 264 days suggests a focused production or modification effort. 5. No small business set-aside was applied, indicating the primary contractor is not a small business. 6. The contract falls under Aircraft Manufacturing, a critical sector for defense logistics.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without comparable sole-source contracts for C-17 manufacturing or modification. The firm fixed-price structure is generally favorable for cost control, but the lack of competition means there's no direct market comparison to assess if the price represents optimal value. Further analysis would require understanding the specific scope of work for this delivery order and comparing it to historical pricing for similar C-17 related activities.

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 typically occurs when only one vendor possesses the necessary capabilities, intellectual property, or when urgency dictates a direct award. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a specific manufacturer for this aircraft type.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust internal cost analysis and negotiation by the procuring agency to ensure fair and reasonable pricing.

Public Impact

The primary beneficiary is the U.S. Air Force, which receives critical airlift capabilities through the C-17 aircraft. Services delivered include the manufacturing or modification of C-17 aircraft, essential for global mobility. The geographic impact is national, supporting military operations and readiness across various theaters. Workforce implications include employment at The Boeing Company's facilities involved in aircraft production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing opportunities.
Lack of transparency in the specific scope of work for this delivery order.
Potential for cost overruns if not adequately managed due to lack of competition.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to a known, established manufacturer (Boeing) suggests reliability in production.
Focus on a critical defense asset (C-17) ensures continued operational capability.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long production cycles. The C-17 Globemaster III is a key strategic airlift aircraft, and its manufacturing is dominated by a few major players like Boeing. Spending in this area is driven by national security requirements and the need to maintain a modern, capable military fleet. Comparable spending benchmarks would involve other large aircraft procurement or sustainment contracts within the defense sector.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like Boeing typically means that opportunities for small businesses would be through subcontracts, if any are planned by the prime. The absence of a specific small business focus in this award suggests it does not directly contribute to the small business contracting goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, scrutiny would focus on the justification for the non-competitive procurement and the negotiation of a fair and reasonable price. Transparency is limited by the nature of the award, but contract modifications and performance reports would be subject to internal agency review and potentially Inspector General oversight if performance issues arise.

Related Government Programs

C-17 Globemaster III Sustainment
Air Mobility Command Aircraft Procurement
Department of Defense Aircraft Manufacturing Contracts
Strategic Airlift Capabilities

Risk Flags

Sole-source award
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.2 million to THE BOEING COMPANY. C-17 REQUIREMENT

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 $37.2 million.

What is the period of performance?

Start: 2020-01-10. End: 2020-09-30.

What is the historical spending trend for C-17 aircraft manufacturing and sustainment by the Department of Defense?

Historical spending on the C-17 program, encompassing both manufacturing and sustainment, has been substantial over the years. While specific figures for 'manufacturing' as a distinct category within recent years can be difficult to isolate from broader sustainment and upgrade contracts, the program's lifecycle has seen billions invested. The C-17 was primarily produced between the early 1990s and 2015. Post-production, spending shifts heavily towards sustainment, spare parts, and upgrades. The Department of Defense has consistently allocated significant portions of its budget to maintaining and operating its strategic airlift fleet, with the C-17 being a cornerstone. Analyzing annual defense budgets and specific appropriations for airlift assets would reveal a long-term trend of significant, albeit fluctuating, investment in the C-17 fleet's operational readiness and capability.

How does the firm fixed-price contract type impact the risk profile for this C-17 manufacturing delivery order?

A firm fixed-price (FFP) contract type generally places the majority of the cost risk on the contractor, in this case, The Boeing Company. This means that Boeing is obligated to complete the work for the agreed-upon price, regardless of their actual costs. If Boeing's costs exceed the fixed price, their profit margin will decrease, or they may incur a loss. Conversely, if their costs are lower than anticipated, their profit will increase. For the government, an FFP contract offers the highest degree of cost certainty, as the final price is known upfront, assuming no contract modifications. This structure incentivizes the contractor to manage costs efficiently to maximize their profit. However, for complex or uncertain scopes of work, an FFP contract can sometimes lead to higher initial pricing to account for the contractor's risk premium.

What are the potential implications of a sole-source award for aircraft manufacturing on future competition for C-17 related needs?

A sole-source award for aircraft manufacturing, particularly for a platform like the C-17 where production lines may be winding down or specialized, can have several implications for future competition. Firstly, it reinforces the incumbent contractor's (Boeing's) position as the sole provider of specific manufacturing capabilities or intellectual property related to the C-17. This can create a barrier for potential competitors who may lack the established infrastructure, tooling, or expertise. Secondly, if this award represents a continuation of production or a specific modification, it might signal that the government foresees no viable alternative suppliers for these particular needs in the near term. This could reduce the incentive for other companies to invest in developing competing capabilities. However, for highly specialized or end-of-life production runs, sole-source awards are often a pragmatic necessity rather than a strategic choice to limit competition.

Can the $37.2 million award value be benchmarked against other recent C-17 related contracts?

Benchmarking the $37.2 million award value for this C-17 manufacturing delivery order requires careful consideration of the specific scope of work and contract type. Without detailed information on whether this represents new aircraft production, a specific modification, or a component manufacturing effort, direct comparisons are difficult. However, historical data indicates that individual C-17 aircraft production costs, when the line was active, were in the hundreds of millions of dollars. More recent contracts tend to focus on sustainment, upgrades, and spare parts, which can range from a few million to hundreds of millions depending on the scope. A $37.2 million delivery order suggests a focused effort, possibly for a limited number of aircraft modifications, specific component production, or a specialized upgrade package, rather than full aircraft assembly. Comparing it to other sole-source delivery orders for similar modification or component work would be the most relevant approach.

What is The Boeing Company's track record with large sole-source defense contracts, particularly for aircraft?

The Boeing Company has a long and extensive track record of securing large defense contracts, many of which have been sole-source or competitively awarded. As one of the largest aerospace manufacturers globally, Boeing is a critical supplier for numerous U.S. military platforms, including fighters, bombers, tankers, and transport aircraft like the C-17. Sole-source awards to Boeing often arise due to the proprietary nature of their designs, the need for specialized manufacturing capabilities that only they possess, or the strategic importance of maintaining production lines for key assets. While Boeing generally has a strong performance record, like any major defense contractor, they have faced scrutiny over cost, schedule, and performance on various programs. Their history with sole-source contracts demonstrates a deep integration with the defense industrial base, where their role is often indispensable for specific weapon systems.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $37,185,759

Exercised Options: $37,185,759

Current Obligation: $37,185,759

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852612D0001

IDV Type: IDC

Timeline