Boeing awarded $3.8B contract for Presidential Aircraft Recapitalization, a sole-source deal

Contract Overview

Contract Amount: $3,847,538,056 ($3.8B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2016-01-04

End Date: 2027-08-31

Contract Duration: 4,257 days

Daily Burn Rate: $903.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ACAT I, AFLCMC/WLJK, PRESIDENTIAL AIRCRAFT RECAPITALIZATION

Place of Performance

Location: TUKWILA, KING County, WASHINGTON, 98108

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $3.85 billion to THE BOEING COMPANY for work described as: ACAT I, AFLCMC/WLJK, PRESIDENTIAL AIRCRAFT RECAPITALIZATION Key points: 1. This contract represents a significant investment in critical national security assets. 2. The sole-source nature of the award warrants scrutiny regarding potential cost efficiencies. 3. Long-term duration suggests a sustained need for aircraft modernization and support. 4. The cost-plus-fixed-fee structure may incentivize cost overruns if not closely monitored. 5. Focus on aircraft manufacturing highlights the specialized capabilities required for this program. 6. The absence of small business participation is noted, requiring review of subcontracting plans.

Value Assessment

Rating: questionable

The total award of over $3.8 billion for the Presidential Aircraft Recapitalization program is substantial. Benchmarking this cost is challenging due to the unique nature of presidential aircraft and the sole-source award to The Boeing Company. Without competitive bids, it is difficult to definitively assess if the pricing represents fair market value. The cost-plus-fixed-fee contract type introduces inherent risk of cost escalation, which requires rigorous oversight to ensure value for taxpayer money. The provided data does not include specific cost breakdowns or comparisons to similar, non-presidential aircraft programs, limiting a precise value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to The Boeing Company. This indicates that the government determined Boeing was the only responsible source capable of fulfilling the requirement, likely due to the highly specialized nature of presidential aircraft manufacturing and modification. The lack of competition means that price discovery through a bidding process did not occur, potentially leading to higher costs than if multiple vendors had competed. This approach is typically reserved for situations where unique capabilities or national security concerns preclude open competition.

Taxpayer Impact: The sole-source award means taxpayers did not benefit from the price reductions typically achieved through competitive bidding. This could result in a higher overall expenditure for the program compared to a competed contract.

Public Impact

The primary beneficiaries are the executive branch and its staff, ensuring safe and reliable air transportation. The contract delivers critical aircraft manufacturing and sustainment services for the presidential fleet. The geographic impact is primarily national, supporting a key government function. Workforce implications include specialized engineering, manufacturing, and maintenance roles within The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type can lead to cost overruns if not managed effectively.
Lack of transparency in sole-source justification requires careful review.
Long contract duration increases exposure to potential scope creep or changing requirements.
Absence of small business set-aside raises questions about broader economic participation.

Positive Signals

Award to a single, experienced contractor (Boeing) may ensure program continuity and expertise.
Focus on recapitalization addresses critical modernization needs for essential government assets.
Clear contract end date provides a defined period for program completion.
The contract is for a definitive contract type, implying a clear scope of work.

Sector Analysis

The Presidential Aircraft Recapitalization program falls within the aerospace and defense manufacturing sector. This sector is characterized by high barriers to entry, significant R&D investment, and stringent regulatory requirements. The market for specialized government aircraft is limited, often dominated by a few large prime contractors. Comparable spending benchmarks are difficult to establish due to the unique nature of presidential aircraft, which involve extensive customization, security features, and operational requirements beyond standard commercial or military platforms.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb': false. The large value and specialized nature of presidential aircraft manufacturing often lead to prime contracts being awarded to large, established aerospace companies like Boeing. While the prime contract may not be set aside, there is an opportunity and expectation for significant subcontracting to small businesses within the aerospace supply chain. The extent to which Boeing engages small businesses for specialized components, services, or manufacturing will be crucial for assessing the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, which manages the presidential aircraft fleet. Given the ACAT I designation (a major defense acquisition program), rigorous oversight mechanisms are expected, including program management reviews, milestone tracking, and potentially Defense Contract Management Agency (DCMA) oversight. Transparency may be limited due to the sole-source nature and national security implications. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Presidential Airlift
Air Force One Program
Special Air Mission Aircraft
Defense Acquisition Programs
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award requires justification and scrutiny.
Cost-plus-fixed-fee contract type carries inherent cost overrun risk.
Long contract duration increases exposure to economic fluctuations and scope creep.
Lack of small business participation needs monitoring for subcontracting opportunities.
High dollar value necessitates rigorous oversight and accountability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.85 billion to THE BOEING COMPANY. ACAT I, AFLCMC/WLJK, PRESIDENTIAL AIRCRAFT RECAPITALIZATION

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 $3.85 billion.

What is the period of performance?

Start: 2016-01-04. End: 2027-08-31.

What is the historical spending trend for Presidential Aircraft Recapitalization, and how does this award compare?

Historical spending on presidential aircraft recapitalization has been significant, often involving multi-year procurements and sustainment contracts. Programs like the VC-25A (the current Air Force One fleet) involved substantial investments over their lifecycle. The $3.8 billion award for the recapitalization program represents a major capital investment, likely encompassing the acquisition and initial outfitting of new airframes, as well as modifications and sustainment. Without specific historical data points for this exact recapitalization effort, a direct comparison is difficult, but it aligns with the high-cost nature of maintaining and modernizing the presidential air fleet, which is subject to unique security, technological, and operational requirements.

What are the specific risks associated with a sole-source, cost-plus-fixed-fee contract for a program of this magnitude?

A sole-source award eliminates the competitive pressure that typically drives down costs and encourages innovation. This means the government relies heavily on the contractor's proposed pricing and cost management. The cost-plus-fixed-fee (CPFF) contract type allows the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. While the fixed fee provides some incentive for cost control (as it doesn't increase with costs), there remains a risk of cost overruns if initial estimates are inaccurate or if unforeseen issues arise during performance. Robust government oversight, detailed cost audits, and stringent change control processes are critical to mitigate these risks and ensure value for money.

How does the 'Aircraft Manufacturing' Product Service Code (PSC) relate to the specific needs of presidential aircraft?

The 'Aircraft Manufacturing' PSC (NAICS code 336411) broadly covers the production of aircraft, engines, and parts. For presidential aircraft, this PSC signifies the core activity of building or significantly modifying aircraft to meet highly specialized requirements. This includes integrating advanced communication systems, defensive countermeasures, secure interiors, life support, and robust command-and-control capabilities. It implies that the contract likely involves the assembly of new airframes or extensive structural modifications to existing ones, tailored specifically for the unique mission profile and security demands of the presidential fleet, going far beyond standard aircraft production.

What is the significance of the 'ACAT I' designation for this contract?

The 'ACAT I' designation signifies that this is a major defense acquisition program, representing the highest category of defense spending. ACAT I programs are subject to the most stringent oversight, review, and reporting requirements within the Department of Defense. This includes mandatory reviews at key milestones by the Defense Acquisition Board (DAB), extensive documentation, and congressional notification. The designation underscores the program's strategic importance, high cost, and potential impact on national security, necessitating a rigorous management and oversight approach throughout its lifecycle.

What are the implications of the contract duration (4257 days) for program management and cost control?

A contract duration of 4257 days, approximately 11.7 years, indicates a long-term commitment to the Presidential Aircraft Recapitalization program. Such extended durations are common for complex acquisition programs involving significant development, manufacturing, and sustainment phases. For program management, it necessitates sustained focus, adaptability to evolving requirements, and robust long-term planning. From a cost control perspective, a long duration increases the risk of cost escalation due to inflation, changes in labor rates, and potential technological obsolescence. It also requires continuous oversight to prevent scope creep and ensure that the program remains aligned with its objectives and budget throughout its extended lifecycle.

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

Solicitation ID: FA862516R6599

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $4,312,421,056

Exercised Options: $4,312,421,056

Current Obligation: $3,847,538,056

Actual Outlays: $180,026,786

Subaward Activity

Number of Subawards: 372

Total Subaward Amount: $714,006,215

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline