DoD Acquires Two Leased Aircraft for $48M from Boeing via Full and Open Competition
Contract Overview
Contract Amount: $48,010,000 ($48.0M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2008-09-12
End Date: 2008-09-18
Contract Duration: 6 days
Daily Burn Rate: $8.0M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIXED PRICE
Sector: Defense
Official Description: PURCHASE TWO (2) LEASED AIRCRAFT
Place of Performance
Location: KENT, KING County, WASHINGTON, 98032
Plain-Language Summary
Department of Defense obligated $48.0 million to THE BOEING COMPANY for work described as: PURCHASE TWO (2) LEASED AIRCRAFT Key points: 1. Significant investment in aircraft acquisition, totaling $48.01 million. 2. Sole supplier identified as The Boeing Company, indicating potential market concentration. 3. Contract awarded under full and open competition, suggesting a competitive bidding process. 4. Aircraft Manufacturing sector, with a specific NAICS code of 336411. 5. Fixed-price contract type aims to control costs for the Department of the Air Force.
Value Assessment
Rating: good
The contract price of $48.01 million for two leased aircraft appears reasonable given the benchmark of $8.00 million for similar contracts. The fixed-price nature provides cost certainty.
Cost Per Unit: $24,005,000
Competition Analysis
Competition Level: full-and-open
The contract was awarded through full and open competition, which typically leads to competitive pricing and ensures the government receives the best value. The existence of a benchmark price suggests that pricing discovery was effective.
Taxpayer Impact: The competitive award process is expected to ensure taxpayer funds are used efficiently for this significant aircraft acquisition.
Public Impact
Enhances Air Force operational capabilities with new leased aircraft. Supports the aerospace manufacturing industry and associated supply chains. Potential for long-term strategic asset development for national defense.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Leasing vs. purchasing decision impact on long-term asset ownership.
- Dependence on a single manufacturer (Boeing) for critical assets.
Positive Signals
- Awarded via full and open competition.
- Fixed-price contract type for cost control.
- Clear benchmark price available for comparison.
Sector Analysis
This acquisition falls within the Aircraft Manufacturing sector, specifically NAICS 336411. Spending in this sector is critical for defense readiness and technological advancement. Benchmarks for similar aircraft procurements are essential for evaluating cost-effectiveness.
Small Business Impact
The contract was awarded to The Boeing Company, a large prime contractor. There is no explicit indication of small business participation in this specific award, which is common for large-scale aerospace procurements.
Oversight & Accountability
The contract was awarded by the Department of the Air Force, a component of the Department of Defense. Oversight would typically involve program management, contract administration, and potentially Inspector General reviews to ensure compliance and value.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Potential for high long-term costs associated with leasing.
- Concentration of supply with a single manufacturer.
- Lack of detailed specifications for leased aircraft.
- Limited information on small business participation.
Tags
aircraft-manufacturing, department-of-defense, wa, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $48.0 million to THE BOEING COMPANY. PURCHASE TWO (2) LEASED AIRCRAFT
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 $48.0 million.
What is the period of performance?
Start: 2008-09-12. End: 2008-09-18.
What is the total cost of ownership over the lease term, including maintenance and operational costs, compared to outright purchase?
The provided data focuses on the initial acquisition cost of $48.01 million for two leased aircraft. A comprehensive total cost of ownership analysis would require details on lease duration, residual value, maintenance agreements, insurance, and potential upgrade costs. Without these specifics, a direct comparison to outright purchase is difficult, but leasing often shifts upfront capital expenditure for operational expenditure, which can have different budgetary implications.
What specific factors contributed to the benchmark price of $8.00 million for similar contracts, and how do the leased aircraft compare in terms of capabilities?
The benchmark price of $8.00 million likely reflects the cost of similar aircraft models or configurations acquired under comparable contract terms. Factors influencing this benchmark could include aircraft size, range, payload capacity, avionics, and age. The specific capabilities of the two leased aircraft acquired for $48.01 million (averaging $24.005 million each) are not detailed, but they are presumably higher-specification or newer models than those represented by the lower benchmark, justifying the significant price difference.
How does the reliance on Boeing for these leased aircraft impact the Air Force's long-term strategic sourcing and potential for future competition?
Sole-sourcing or heavy reliance on a single provider like Boeing for critical assets can limit future competition and potentially increase long-term costs if pricing power shifts. While this specific contract was competitively awarded, the ongoing relationship and potential for follow-on leases or acquisitions warrant strategic sourcing analysis to ensure sustained access to diverse suppliers and maintain competitive pressure in the aerospace market.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 1
Pricing Type: FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 20403 68TH AVE S MS 8K-10, KENT, WA, 98032
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $48,010,000
Exercised Options: $48,010,000
Current Obligation: $48,010,000
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: YES
Timeline
Start Date: 2008-09-12
Current End Date: 2008-09-18
Potential End Date: 2008-09-18 00:00:00
Last Modified: 2020-01-23
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