DoD awards $16M+ for Aircraft Manufacturing to Boeing, raising value-for-money questions

Contract Overview

Contract Amount: $16,056,037 ($16.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-08-15

End Date: 2026-01-31

Contract Duration: 2,726 days

Daily Burn Rate: $5.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: STUDIES AND QUICK REACTION (S&QR) 3

Place of Performance

Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90808

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $16.1 million to THE BOEING COMPANY for work described as: STUDIES AND QUICK REACTION (S&QR) 3 Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns. 2. Sole-source award limits competitive pressure, potentially impacting price efficiency. 3. Long contract duration (2018-2026) suggests a sustained need but also potential for evolving requirements. 4. Focus on aircraft manufacturing indicates a critical defense capability. 5. The contract's value is significant within the aerospace and defense sector. 6. Lack of competition raises concerns about optimal resource utilization for taxpayers.

Value Assessment

Rating: questionable

The $16 million awarded to Boeing for aircraft manufacturing is substantial. However, the cost-plus-fixed-fee (CPFF) contract type, combined with a sole-source award, presents a risk to achieving optimal value. CPFF contracts incentivize contractors to incur costs, as their fee is a percentage of those costs, potentially leading to higher overall expenditures than fixed-price contracts. Without competitive bidding, it is difficult to benchmark the pricing against market rates or alternative providers to ensure the government is receiving a fair deal.

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 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 that the government did not benefit from the price discovery and innovation that typically arises from a competitive bidding process.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to secure the best possible value for public funds.

Public Impact

The Department of Defense, specifically the Air Force, is the primary beneficiary, receiving critical aircraft manufacturing services. This contract supports the sustainment and potential production of key aircraft platforms essential for national security. The geographic impact is centered in California, where Boeing has significant manufacturing operations. The contract likely supports a specialized workforce in aerospace engineering and manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may incentivize higher costs.
Sole-source award limits competitive benchmarking and price discovery.
Long contract duration could lead to scope creep or outdated technology if not managed carefully.
Reliance on a single contractor for critical manufacturing raises supply chain risk.

Positive Signals

Award to a major, established defense contractor like Boeing suggests a high level of technical capability and experience.
The contract addresses a critical need within the Department of Defense for aircraft manufacturing.
Long-term nature of the contract provides stability for both the agency and the contractor.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls within the aircraft manufacturing sub-sector, which is a cornerstone of national defense capabilities. Spending in this area is often driven by strategic imperatives and technological advancements. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of military aircraft, but large-scale contracts with major primes like Boeing are typical for sustainment and production programs.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the prime contractor being a large entity (Boeing), there is limited direct opportunity for small businesses through set-asides on this specific award. However, Boeing may engage small businesses as subcontractors, but the extent of this subcontracting is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The Air Force is the procuring agency. Accountability measures would be embedded in the contract's terms and conditions, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature and the sensitive aspects of defense manufacturing. Inspector General jurisdiction would apply for investigations into fraud, waste, or abuse.

Related Government Programs

Aircraft Procurement
Aircraft Maintenance and Repair
Defense Industrial Base
Aerospace Manufacturing
Air Force Sustainment Programs

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.1 million to THE BOEING COMPANY. STUDIES AND QUICK REACTION (S&QR) 3

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 $16.1 million.

What is the period of performance?

Start: 2018-08-15. End: 2026-01-31.

What is the historical spending pattern for aircraft manufacturing services provided by The Boeing Company to the Department of Defense?

Historical spending data for aircraft manufacturing services between The Boeing Company and the Department of Defense (DoD) would likely show a long-standing relationship, given Boeing's position as a primary defense contractor. This specific contract, valued at over $16 million and spanning from 2018 to 2026, represents a portion of that ongoing expenditure. To provide a comprehensive historical view, one would need to analyze contract databases (like FPDS or USASpending) for all awards to Boeing related to aircraft manufacturing, including prime contracts, delivery orders, and modifications, across various DoD agencies over several fiscal years. This analysis would reveal trends in contract types (e.g., fixed-price vs. cost-reimbursement), average award values, and the specific aircraft platforms or manufacturing capabilities supported. Without access to that granular historical data, it's challenging to contextualize this $16 million award precisely within Boeing's broader contractual history with the DoD for aircraft manufacturing.

How does the cost-plus-fixed-fee (CPFF) structure of this contract compare to other aircraft manufacturing contracts awarded by the DoD?

The use of a Cost-Plus-Fixed-Fee (CPFF) structure for this $16 million aircraft manufacturing contract with Boeing is notable. CPFF contracts are common in defense acquisition, particularly for research, development, and complex manufacturing where costs are difficult to estimate upfront. However, they carry inherent risks for the government, as the contractor is reimbursed for actual costs incurred plus a fixed fee, which can incentivize higher spending. Comparing this to other DoD aircraft manufacturing contracts would involve analyzing the prevalence of CPFF versus other contract types like Firm-Fixed-Price (FFP) or Cost-Plus-Incentive-Fee (CPIF). If FFP contracts are more common for similar production or sustainment activities, it might suggest this CPFF award warrants closer scrutiny regarding cost control. Conversely, if CPFF is standard for the specific type of manufacturing or R&D involved, it might be considered appropriate, though still requiring robust oversight to manage costs effectively and ensure the fixed fee provides adequate contractor incentive.

What are the specific risks associated with a sole-source award for critical aircraft manufacturing, and how are they mitigated?

A sole-source award for critical aircraft manufacturing, like this $16 million contract to Boeing, presents several risks. Primarily, the lack of competition can lead to higher prices than might be achieved through a competitive process, as the government lacks leverage to negotiate the best possible deal. There's also a risk of complacency from the contractor, potentially impacting innovation or efficiency over the contract's long duration. Furthermore, over-reliance on a single supplier can create supply chain vulnerabilities. Mitigation strategies typically involve intensive government oversight, including rigorous cost analysis, performance monitoring, and detailed technical reviews. Agencies may also conduct market research to identify potential future competitors or alternative solutions. For long-term sole-source contracts, establishing clear performance metrics, incentivizing cost savings where possible (even within a CPFF structure), and maintaining open communication channels are crucial to managing risks and ensuring value for the taxpayer.

What is the track record of The Boeing Company in delivering on similar aircraft manufacturing contracts for the Department of Defense?

The Boeing Company has a long and extensive track record of delivering aircraft manufacturing services and platforms to the Department of Defense (DoD). As one of the largest aerospace and defense contractors globally, Boeing has been instrumental in producing and sustaining numerous critical military aircraft, including fighters, bombers, transport planes, and rotorcraft. Their history with the DoD encompasses both large-scale production programs and complex sustainment efforts. While specific performance metrics for individual contracts are often proprietary or require deep dives into contract databases, Boeing's continued selection for major defense programs suggests a generally reliable performance history. However, like any large contractor, they have faced challenges and scrutiny on specific programs related to cost, schedule, and technical issues. For this particular $16 million contract, assessing Boeing's specific track record would involve examining past performance evaluations and any documented issues on prior, similar aircraft manufacturing or sustainment contracts within the Air Force or other DoD branches.

How does the $16 million contract value compare to the overall annual spending on aircraft manufacturing within the Department of the Air Force?

The $16 million contract value awarded to Boeing represents a specific component within the Department of the Air Force's (DAF) broader aircraft manufacturing and sustainment budget. The DAF's annual spending on aircraft encompasses a vast array of activities, including the procurement of new platforms (like the F-35, B-21, or future trainers), sustainment and modernization of existing fleets (e.g., B-52, C-130, F-15, F-16), and associated research and development. Total DAF aircraft-related spending can easily run into the tens or even hundreds of billions of dollars annually, depending on the fiscal year and major program milestones. Therefore, a $16 million contract, while significant in absolute terms, is likely a relatively small slice of the overall DAF aircraft manufacturing pie. It probably funds a specific set of manufacturing tasks, component production, or sustainment activities for a particular aircraft type or system, rather than a major new aircraft program.

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2401 E WARDLOW RD, LONG BEACH, CA, 90807

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $19,169,214

Exercised Options: $18,235,921

Current Obligation: $16,056,037

Actual Outlays: $356,979

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $188,997

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA861413D2002

IDV Type: IDC

Timeline