Boeing awarded $2.3M for Japan KC-46 emergent spares and support, bypassing competition

Contract Overview

Contract Amount: $2,340,443 ($2.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2025-04-30

End Date: 2027-04-30

Contract Duration: 730 days

Daily Burn Rate: $3.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMS JAPAN KC-46 FMS JAPAN - EMERGENT REQUIREMENTS: SPARES AND SUPPORT EQUIPMENT DELIVERY ORDER

Place of Performance

Location: TUKWILA, KING County, WASHINGTON, 98108

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $2.3 million to THE BOEING COMPANY for work described as: FMS JAPAN KC-46 FMS JAPAN - EMERGENT REQUIREMENTS: SPARES AND SUPPORT EQUIPMENT DELIVERY ORDER Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Focus on emergent requirements suggests potential for future, unbudgeted spending. 3. Delivery order for spares and support indicates ongoing operational needs for the KC-46 fleet. 4. Long-term support contract duration of two years provides some stability for planning. 5. Firm Fixed Price contract type shifts cost risk to the contractor, but sole-sourcing mitigates this. 6. Lack of competition raises questions about whether the government secured the best value.

Value Assessment

Rating: questionable

The contract value of $2.3 million for spares and support equipment is relatively small in the context of major defense procurements. However, without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The sole-source nature means the government did not explore options that could have yielded better value or lower costs. The firm-fixed-price structure is positive, but the lack of competition undermines the overall value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not solicit bids from multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means there was no opportunity for price negotiation or comparison among potential suppliers, which can lead to higher prices than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a bidding process, there is less assurance that the price reflects fair market value.

Public Impact

The primary beneficiaries are the U.S. Air Force personnel operating the KC-46 aircraft, ensuring operational readiness. Services delivered include the provision of critical spare parts and support equipment necessary for aircraft maintenance. The geographic impact is primarily within the Department of Defense's operational theaters where the KC-46 is deployed. Workforce implications are minimal for this specific delivery order, but sustained support ensures the jobs of maintenance and operational crews.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits opportunities for small businesses to participate in the supply chain.
Lack of competition may indicate a lack of market research or a reliance on a single provider.
Emergent requirements can signal poor initial planning or unforeseen operational challenges.

Positive Signals

Firm Fixed Price contract protects the government from cost overruns on this specific order.
Delivery order for spares and support ensures operational readiness of a key military asset.
Contract duration provides a defined period for delivery, aiding in logistical planning.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically supporting aircraft sustainment. The market for specialized aircraft spares and support equipment is often dominated by original equipment manufacturers like Boeing due to proprietary knowledge and design control. While the overall defense aerospace market is substantial, individual component and support contracts can vary widely in value and competitive landscape. Benchmarking is difficult without knowing the specific parts and their criticality.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or outcome (ss: false, sb: false). As a sole-source award to a large prime contractor, there are limited direct opportunities for small businesses unless they are subcontractors to Boeing. The absence of a small business set-aside or subcontracting plan means the direct economic benefit to the small business ecosystem from this specific award is likely negligible.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Air Force's contracting and program management offices. Accountability is maintained through the firm-fixed-price structure, which obligates Boeing to deliver specified goods within the agreed price. Transparency is limited due to the sole-source nature of the award, with fewer public details available compared to competed contracts. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

KC-46 Pegasus Tanker Aircraft Program
Air Force Sustainment and Logistics Contracts
Defense Spares and Repair Parts Procurement
Foreign Military Sales (FMS) Support

Risk Flags

Sole-source award
Lack of competition
Emergent requirements

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.3 million to THE BOEING COMPANY. FMS JAPAN KC-46 FMS JAPAN - EMERGENT REQUIREMENTS: SPARES AND SUPPORT EQUIPMENT DELIVERY ORDER

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 $2.3 million.

What is the period of performance?

Start: 2025-04-30. End: 2027-04-30.

What is the track record of The Boeing Company in delivering KC-46 related spares and support equipment?

The Boeing Company is the prime contractor for the KC-46 Pegasus tanker aircraft and has a long-standing relationship with the Department of Defense. Their track record in delivering the aircraft itself has faced delays and cost overruns, but they are the sole manufacturer and possess the necessary technical data and expertise for spares and support. For this specific delivery order, the track record is limited to their general performance on the KC-46 program. Historical data on their performance for similar emergent requirement orders would be beneficial for a complete assessment, but is not readily available in the provided data.

How does the pricing of this contract compare to similar KC-46 support contracts?

Direct comparison of pricing is challenging without access to detailed pricing breakdowns and a list of specific spares and support equipment included in this $2.3 million delivery order. Furthermore, the sole-source nature of this award means there was no competitive bidding process to establish a market-based price. Typically, sole-source contracts are expected to be priced higher than competitively awarded ones. Benchmarking would require access to historical data on similar emergent requirement orders for the KC-46 or other complex aircraft platforms, ideally from competed contracts, to assess if Boeing's pricing is reasonable.

What are the primary risks associated with this sole-source award for emergent requirements?

The primary risk is the potential for overpayment due to the lack of competition, as the government may not be receiving the best possible price. Another risk is the 'emergent requirement' itself, which could indicate underlying issues with the initial provisioning of spares or unexpected operational demands that might lead to further unplanned expenditures. There's also a risk that the sole-source designation could become a pattern, reducing future competitive opportunities. Finally, if the 'emergent' nature implies urgency, there's a slight risk of rushed procurement processes that could overlook certain due diligence aspects, though the firm-fixed-price mitigates some financial risk.

What is the expected effectiveness of this contract in ensuring KC-46 operational readiness?

The contract is expected to be effective in ensuring KC-46 operational readiness by providing necessary spare parts and support equipment. The firm-fixed-price nature ensures that the government pays a set amount for these items, and the two-year duration suggests a commitment to meeting ongoing needs. However, the effectiveness is contingent on Boeing's ability to deliver the correct items promptly and the actual criticality of the 'emergent requirements' being addressed. Without knowing the specific parts or the operational context, it's difficult to quantify the precise impact on readiness beyond the general assumption that necessary parts contribute to it.

What are the historical spending patterns for KC-46 spares and support from the Department of Defense?

Historical spending patterns for KC-46 spares and support are not detailed in the provided data. However, the KC-46 program has been subject to significant investment and scrutiny due to its development and production challenges. Sustaining a fleet of complex aircraft like the KC-46 typically involves substantial, ongoing expenditures for spare parts, maintenance, and support equipment over the aircraft's lifecycle. This $2.3 million delivery order represents a small, specific instance of that broader spending. Understanding the overall trend would require analyzing multi-year budgets and contract awards related to KC-46 sustainment.

What is the justification for awarding this contract on a sole-source basis?

The provided data does not explicitly state the justification for the sole-source award. However, common justifications for sole-source procurements in defense include: (1) the unique capability or proprietary nature of the product/service offered only by one source (e.g., specific manufacturer parts), (2) urgent and compelling needs where competition is not feasible, or (3) when the contract is a logical follow-on to a previous contract awarded competitively. Given this is for spares and support equipment for the KC-46, it is highly probable that Boeing, as the original equipment manufacturer, is the only source capable of providing these specific items, especially if they are proprietary or require specialized knowledge.

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: $2,340,443

Exercised Options: $2,340,443

Current Obligation: $2,340,443

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $45,910

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