Boeing awarded $858M for KC-46 FMS to Israel, with no competition

Contract Overview

Contract Amount: $858,226,728 ($858.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-09-01

End Date: 2026-12-31

Contract Duration: 1,582 days

Daily Burn Rate: $542.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KC-46 FMS ISRAEL AIRCRAFT 1-4

Place of Performance

Location: TUKWILA, KING County, WASHINGTON, 98108

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $858.2 million to THE BOEING COMPANY for work described as: KC-46 FMS ISRAEL AIRCRAFT 1-4 Key points: 1. Contract awarded via sole-source justification, raising concerns about price discovery. 2. Significant foreign military sale (FMS) for advanced aircraft manufacturing. 3. Long-term contract duration (2022-2026) suggests a sustained need. 4. Firm-fixed-price contract type aims to control costs, but competition is key. 5. Boeing is the sole manufacturer of the KC-46, limiting alternatives. 6. Delivery order under an existing contract structure. 7. No small business set-aside indicated, potentially limiting broader economic impact.

Value Assessment

Rating: questionable

The contract value of $858.2 million for KC-46 aircraft for Israel represents a substantial investment. Without competitive bidding, it is difficult to benchmark the value for money. However, as the sole provider of the KC-46, Boeing's pricing is likely influenced by its unique position. Further analysis would require comparing this FMS pricing to other KC-46 sales or similar large-scale aircraft procurements, which are often complex and subject to international agreements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicated by 'NOT COMPETED' in the data. The sole-source nature stems from Boeing being the exclusive manufacturer of the KC-46 aircraft. This lack of competition means that the government and the foreign partner did not have the opportunity to solicit bids from multiple vendors, which could potentially lead to higher prices than if a competitive process had been employed.

Taxpayer Impact: Taxpayers are exposed to potential overpricing due to the absence of competitive pressure. The government's ability to negotiate the best possible price is diminished in a sole-source scenario.

Public Impact

The primary beneficiary is the Israeli Air Force, which will receive advanced aerial refueling and strategic airlift capabilities. The contract delivers critical military hardware, enhancing Israel's defense posture and operational reach. The geographic impact is focused on Israel, with potential implications for regional security dynamics. The contract supports high-skilled jobs within the aerospace manufacturing sector, primarily at Boeing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potential cost savings.
Lack of competition may reduce incentives for contractor efficiency.
Long-term commitment without competitive review raises concerns about sustained value.
Dependence on a single contractor for critical defense assets poses supply chain risks.

Positive Signals

Firm-fixed-price contract provides cost certainty for the buyer.
Boeing's established expertise in military aircraft manufacturing ensures technical capability.
Foreign Military Sales (FMS) are a key tool for U.S. foreign policy and defense cooperation.
Delivery order structure implies it's part of a larger, potentially previously vetted, program.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors for complex defense platforms like the KC-46. This contract falls within the defense industrial base, specifically focusing on aircraft manufacturing. Global spending on military aircraft is substantial, with major players like Boeing and its competitors vying for international contracts. Benchmarking this specific FMS requires comparing it against other international sales of similar aircraft types or against U.S. Air Force procurement costs for the KC-46.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the nature of large-scale military aircraft manufacturing, prime contracts are typically awarded to major defense corporations. While Boeing may utilize small businesses for subcontracting, the absence of a direct set-aside means that small businesses are not the primary recipients of this award. The impact on the small business ecosystem would be indirect, through potential subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management oversight bodies, as well as the U.S. Embassy in Israel and relevant Israeli defense authorities. Transparency is facilitated through reporting mechanisms for Foreign Military Sales. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract execution.

Related Government Programs

KC-46 Pegasus Program
Foreign Military Sales (FMS)
Aircraft Manufacturing Contracts
Defense Logistics Agency
Air Mobility Command

Risk Flags

Sole-source award
Potential for cost overruns
Dependence on single manufacturer

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $858.2 million to THE BOEING COMPANY. KC-46 FMS ISRAEL AIRCRAFT 1-4

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 $858.2 million.

What is the period of performance?

Start: 2022-09-01. End: 2026-12-31.

What is the track record of The Boeing Company in fulfilling large-scale foreign military aircraft sales?

The Boeing Company has a long and extensive history of supplying military aircraft to both U.S. and international customers through Foreign Military Sales (FMS) and direct commercial sales. They have delivered numerous platforms, including fighters, bombers, transport aircraft, and specialized mission aircraft, to various allied nations. Their track record generally indicates a high level of technical capability and production capacity for complex defense systems. However, like any large defense contractor, Boeing has faced challenges with specific programs, including cost overruns and schedule delays on certain projects. For the KC-46 specifically, while the platform is operational, its development and initial fielding faced significant hurdles. Evaluating this specific FMS requires looking at Boeing's overall performance in delivering complex, high-value defense systems internationally, considering both successes and past challenges.

How does the $858.2 million value compare to other KC-46 FMS contracts or similar aircraft sales?

Directly comparing the $858.2 million value of this specific delivery order for Israel requires access to detailed pricing data for other KC-46 Foreign Military Sales (FMS) contracts, which is often not publicly available in granular detail. However, the KC-46 is a technologically advanced, multi-role tanker aircraft, and its unit cost is substantial. International sales of similar large military aircraft, such as transport planes or specialized tankers, typically range from hundreds of millions to over a billion dollars per platform, depending on configuration, quantity, and support packages. This contract value appears consistent with the high cost associated with acquiring advanced military aviation assets. Without specific comparative FMS pricing, it's challenging to definitively state if this represents a premium or a fair market value, especially given the sole-source nature.

What are the primary risks associated with a sole-source award for a major defense system like the KC-46?

The primary risks associated with a sole-source award for a major defense system like the KC-46 are centered around cost and potential lack of innovation. Without competition, the government and the foreign partner have limited leverage to negotiate the lowest possible price, potentially leading to higher costs than if multiple bids were solicited. This can result in taxpayers bearing a greater financial burden. Furthermore, the absence of competitive pressure might reduce the contractor's incentive to innovate, improve efficiency, or offer cost-saving alternatives. There's also a risk of vendor lock-in, where the acquiring entity becomes heavily reliant on a single supplier, making future procurements or upgrades potentially more expensive and less flexible. Finally, sole-source awards can sometimes face public scrutiny regarding fairness and the justification for foregoing competition.

What is the expected program effectiveness and impact of the KC-46 for the Israeli Air Force?

The KC-46 Pegasus is designed to provide critical aerial refueling and strategic airlift capabilities, significantly enhancing the operational reach and flexibility of air forces. For the Israeli Air Force, acquiring the KC-46 is expected to bolster its ability to project power, support long-range strike missions, and conduct complex air operations across various theaters. Its advanced refueling systems and cargo capacity are key assets for maintaining air superiority and enabling sustained operations far from home bases. The program's effectiveness will be measured by its reliability, operational availability, and its contribution to achieving Israel's strategic defense objectives. Successful integration and utilization of the KC-46 should significantly increase the Israeli Air Force's mission effectiveness and strategic depth.

How has historical spending on the KC-46 program by the U.S. Department of Defense compared to this FMS award?

Historical spending on the KC-46 program by the U.S. Department of Defense has been substantial, primarily focused on research, development, testing, evaluation, and procurement of the aircraft for the U.S. Air Force. The program has experienced significant cost growth and schedule delays since its inception, leading to billions of dollars in investment. This specific $858.2 million award is for a Foreign Military Sale (FMS) to Israel, meaning it is a separate transaction from the U.S. Air Force's direct procurement. While the unit cost of the aircraft is a factor in both, FMS pricing can differ due to factors like international customer requirements, support packages, and specific contract terms negotiated through the FMS framework. The U.S. DoD's internal spending on the KC-46 has been a major budget item, and this FMS represents a portion of the global investment in the platform.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7755 E MARGINAL WAY S, SEATTLE, WA, 98108

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: $858,226,728

Exercised Options: $858,226,728

Current Obligation: $858,226,728

Subaward Activity

Number of Subawards: 41

Total Subaward Amount: $29,712,061

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA860919D0007

IDV Type: IDC

Timeline