Boeing's C-17 sustainment contract awarded $378M in FY21 for aircraft manufacturing services

Contract Overview

Contract Amount: $378,367,524 ($378.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-10-01

End Date: 2023-09-30

Contract Duration: 1,094 days

Daily Burn Rate: $345.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: C-17 FY21 LABOR SUSTAINMENT

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $378.4 million to THE BOEING COMPANY for work described as: C-17 FY21 LABOR SUSTAINMENT Key points: 1. Contract awarded to a single source, raising questions about price competitiveness. 2. Long-term sustainment contract indicates a critical need for ongoing C-17 support. 3. Fixed Price Incentive contract type suggests shared risk between government and contractor. 4. Performance period spans nearly three years, requiring sustained oversight. 5. Focus on labor sustainment highlights the importance of skilled personnel for aircraft readiness. 6. Geographic concentration in California for manufacturing services.

Value Assessment

Rating: fair

The contract value of $378 million for FY21 for C-17 labor sustainment is substantial. Without direct comparable contracts for the same period and scope, a precise value-for-money assessment is challenging. However, the sole-source nature of the award suggests limited opportunity for competitive pricing, potentially leading to higher costs than if multiple bidders were involved. Benchmarking against historical C-17 sustainment costs or similar large aircraft maintenance contracts would be necessary for a more definitive value assessment.

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 considered. This approach is typically used when a specific contractor possesses unique capabilities or when it's deemed not practical or advantageous to solicit bids from multiple sources. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially impacting the final price.

Taxpayer Impact: The sole-source award limits the government's ability to secure the best possible price through competition, which could result in higher expenditures for taxpayers compared to a competed contract.

Public Impact

The primary beneficiaries are the U.S. Air Force, ensuring the continued operational readiness of the C-17 Globemaster III fleet. Services delivered include essential labor sustainment for aircraft maintenance and support. Geographic impact is concentrated in California, where the manufacturing and sustainment activities are likely based. Workforce implications include the employment of skilled technicians and engineers necessary for complex aircraft maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Long-term nature of sustainment contracts can lead to cost creep if not managed effectively.
Reliance on a single contractor for critical sustainment may pose supply chain risks.

Positive Signals

Contract awarded to the original equipment manufacturer, likely ensuring deep technical expertise.
Fixed Price Incentive contract type aligns contractor and government interests on cost and performance.
Sustained support ensures high readiness rates for a critical strategic airlift asset.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Sustainment contracts like this are crucial for maintaining the operational readiness of complex military platforms. The C-17 program represents a significant portion of the U.S. Air Force's airlift capability. Spending on aircraft sustainment is a substantial component of the overall defense budget, with major contractors like Boeing playing a vital role in supporting the fleet throughout its service life.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Boeing, is a large aerospace company. While there may be subcontracting opportunities for small businesses within the performance of this contract, the primary award is not directed towards them. Further analysis of subcontracting plans would be needed to assess the specific impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The fixed-price incentive structure includes provisions for performance monitoring and cost control. Transparency is generally maintained through contract reporting requirements. The Inspector General of the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

C-17 Globemaster III Sustainment
Air Mobility Command Logistics
Aerospace Manufacturing Services
Defense Logistics Agency Aircraft Parts

Risk Flags

Sole-source award
Potential for cost overruns due to incentive structure
Long-term sustainment dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $378.4 million to THE BOEING COMPANY. C-17 FY21 LABOR 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 $378.4 million.

What is the period of performance?

Start: 2020-10-01. End: 2023-09-30.

What is the historical spending trend for C-17 sustainment contracts awarded to The Boeing Company?

Historical spending data for C-17 sustainment contracts awarded to The Boeing Company reveals a consistent and significant investment over multiple fiscal years. While the specific FY21 award of $378 million is a key data point, examining trends from previous years (e.g., FY19, FY20) and subsequent years would provide a clearer picture of the program's cost trajectory. Factors influencing these trends include fleet size, operational tempo, aging aircraft issues, and evolving maintenance requirements. Understanding these patterns is crucial for long-term budget forecasting and identifying potential cost efficiencies or areas of concern regarding the sustainment of this critical airlift asset.

How does the pricing structure of this Fixed Price Incentive (FPI) contract compare to other similar large aircraft sustainment contracts?

The Fixed Price Incentive (FPI) pricing structure for this C-17 sustainment contract aims to balance cost control with performance incentives. In an FPI contract, the final price is adjusted based on the contractor's performance against target cost and target profit objectives. If the contractor achieves lower costs than targeted, both the government and contractor share in the savings. Conversely, if costs exceed targets, the sharing mechanism dictates how the overrun is distributed. Comparing this to other large aircraft sustainment contracts, which might utilize Firm Fixed Price (FFP), Cost Plus Incentive Fee (CPIF), or Time and Materials (T&M) structures, reveals different risk allocations and incentive alignments. FPI contracts are generally seen as a middle ground, offering more predictability than cost-reimbursable types while providing flexibility beyond FFP, especially for complex, long-duration efforts where cost uncertainties exist.

What are the key performance indicators (KPIs) being tracked under this contract, and what are the performance targets?

While the provided data does not explicitly list the Key Performance Indicators (KPIs) and their specific targets for this C-17 labor sustainment contract, typical KPIs for such agreements often revolve around aircraft availability rates, mission capable rates, response times for maintenance actions, turnaround times for repairs, and adherence to scheduled maintenance. The 'Fixed Price Incentive' (FPI) contract type suggests that performance against these or similar metrics directly influences the final contract price and profit. The government would establish baseline performance targets, and the contractor's ability to meet or exceed these targets would trigger incentive payments or penalties as defined in the contract's incentive clauses. Detailed KPIs and targets are usually found within the contract's Statement of Work (SOW) or Performance Work Statement (PWS).

What is the contractor's track record with the Department of Defense, specifically regarding C-17 sustainment or similar large aircraft programs?

The Boeing Company has an extensive and long-standing track record with the Department of Defense, particularly concerning the C-17 Globemaster III program. As the original equipment manufacturer (OEM), Boeing has been involved in the C-17's design, production, and sustainment since its inception. Their performance history includes delivering numerous aircraft, providing ongoing maintenance, repair, and overhaul (MRO) services, and supplying spare parts. While specific performance metrics for past contracts are not detailed here, Boeing's continued role as the primary sustainment provider for the C-17 fleet indicates a generally satisfactory performance history in meeting the Air Force's requirements for this critical asset. However, like any large defense contractor, there may have been instances of performance issues or contract disputes that would require deeper investigation.

Are there any identified risks associated with the sole-source nature of this contract, beyond potential pricing disadvantages?

Beyond the potential for higher pricing due to a lack of competition, the sole-source nature of this contract introduces several other risks. A primary concern is vendor lock-in, where the government becomes heavily reliant on a single provider, making it difficult and costly to switch contractors even if performance or pricing becomes unsatisfactory. This reliance can also reduce the incentive for the sole-source provider to innovate or improve efficiency, as they face less market pressure. Furthermore, a sole-source award can increase vulnerability to supply chain disruptions if the single contractor experiences operational issues, financial instability, or labor disputes. The government's bargaining power is also diminished, potentially impacting its ability to negotiate favorable terms or modifications to the contract over its lifecycle.

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: FIXED PRICE INCENTIVE (L)

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: $378,367,524

Exercised Options: $378,367,524

Current Obligation: $378,367,524

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