Boeing awarded $327.6M for F-15 infrared search and track pods, with limited competition

Contract Overview

Contract Amount: $327,591,067 ($327.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-08-30

End Date: 2025-01-31

Contract Duration: 2,346 days

Daily Burn Rate: $139.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: F-15, ACAT II, INFRARED SEARCH AND TRACK PODS INTEGRATION AND PRODUCTION

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $327.6 million to THE BOEING COMPANY for work described as: F-15, ACAT II, INFRARED SEARCH AND TRACK PODS INTEGRATION AND PRODUCTION Key points: 1. Contract awarded to a single, established prime contractor, raising questions about competitive pricing. 2. The fixed-price incentive contract type suggests shared risk but requires careful monitoring of cost overruns. 3. Long contract duration (2018-2025) indicates a significant, ongoing program requirement. 4. Focus on integration and production of advanced sensor technology highlights critical defense capabilities. 5. The contract's value places it within a substantial spending category for aerospace and defense systems. 6. Lack of small business participation noted, potentially limiting broader economic impact.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar sole-source procurements for advanced avionics. The $327.6 million award over its period suggests a significant investment in specialized technology. While the fixed-price incentive structure aims to control costs, the absence of competition means there's less market pressure to ensure optimal value for taxpayer dollars. Further analysis of the contractor's historical performance and profit margins on similar programs would be necessary for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach is typically justified when a unique capability exists or when it's deemed not to be in the government's best interest to compete. The lack of competition limits price discovery and may result in higher costs compared to a fully competed scenario. It also bypasses the opportunity to foster innovation and potentially lower prices from a wider range of suppliers.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from competitive bidding processes. This can lead to higher overall program expenditures.

Public Impact

The primary beneficiaries are the U.S. Air Force and its F-15 fighter jet fleet, which will receive upgraded infrared search and track capabilities. This contract delivers critical sensor technology essential for air-to-air combat effectiveness and situational awareness. The geographic impact is primarily centered around Boeing's facilities involved in production and integration, likely in Missouri. Workforce implications include skilled engineering, manufacturing, and program management roles within Boeing and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Fixed-price incentive contract requires careful oversight to manage potential cost overruns.
Long-term nature of the contract necessitates sustained government oversight and performance management.
Lack of transparency inherent in sole-source procurements makes independent value assessment difficult.

Positive Signals

Award to a prime contractor with extensive experience in aerospace and defense systems.
Contract addresses a critical capability enhancement for a key fighter aircraft platform.
Fixed-price incentive contract structure aligns some risk with the contractor.
Long duration suggests a stable, long-term need for this technology.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on advanced avionics and sensor systems for military aircraft. The market for such specialized components is dominated by a few large, established defense contractors. Spending in this area is driven by modernization efforts and the need for technological superiority. Comparable spending benchmarks would involve other major platform upgrades or new system integrations for fighter jets, often involving significant R&D and production costs.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Boeing actively engages small businesses in its supply chain for this specific program. Further investigation into Boeing's subcontracting practices would be needed to assess broader implications.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the contract terms, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature. The Inspector General's office for the Department of Defense may conduct audits or investigations into the contract's execution and financial aspects.

Related Government Programs

F-15 Program Office
Air Force Avionics Modernization Programs
Advanced Sensor Development Programs
Defense Production Act Title III Programs

Risk Flags

Sole-source award
Potential for cost overruns
Limited transparency
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $327.6 million to THE BOEING COMPANY. F-15, ACAT II, INFRARED SEARCH AND TRACK PODS INTEGRATION AND PRODUCTION

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 $327.6 million.

What is the period of performance?

Start: 2018-08-30. End: 2025-01-31.

What is the specific technological advancement provided by the infrared search and track pods, and how does it enhance F-15 capabilities?

The infrared search and track (IRST) pods provide passive, long-range detection and tracking of airborne targets using infrared signatures. This technology complements radar systems by offering a stealthy means of identifying threats without emitting electronic signals, thus reducing the risk of detection. For the F-15, this enhancement significantly improves situational awareness, particularly in contested electronic warfare environments, and increases the aircraft's lethality by enabling earlier and more precise targeting of enemy aircraft.

How does the fixed-price incentive (FPI) contract type function in this context, and what are the potential risks for cost overruns?

A fixed-price incentive contract establishes a target cost, target profit, and a price ceiling. The final price is adjusted based on the contractor's performance relative to the target cost, with profit increasing as costs decrease below target and decreasing as costs increase. However, if costs exceed the ceiling, the contractor is responsible for only a portion, with the government absorbing the remainder. The risk of cost overruns exists if Boeing underestimates the complexity of integration and production, faces supply chain disruptions, or encounters unforeseen technical challenges, potentially leading to the government paying near or at the ceiling price.

Given the sole-source nature, what mechanisms are in place to ensure Boeing is not overcharging for these pods?

While direct price competition is absent, the government typically employs other methods to ensure fair and reasonable pricing in sole-source procurements. This includes detailed cost and technical analyses of the contractor's proposed pricing, review of historical pricing data for similar systems, benchmarking against industry standards, and negotiation of profit margins. The contracting officer must justify the price as fair and reasonable based on available data and market intelligence, often requiring extensive documentation and negotiation.

What is the historical spending trend for F-15 avionics upgrades or similar sensor integration programs within the Department of Defense?

Historical spending on F-15 upgrades and similar advanced avionics/sensor integration programs within the DoD has consistently been substantial, often running into hundreds of millions or even billions of dollars over the lifecycle of modernization efforts. Programs involving advanced radar, electronic warfare suites, and targeting pods typically require significant investment due to the cutting-edge technology involved and the rigorous testing and integration processes. Spending patterns are influenced by evolving threat landscapes, technological advancements, and the sustainment needs of aging platforms like the F-15.

What is Boeing's track record with the F-15 program and similar defense contracts, particularly regarding performance and cost control?

The Boeing Company has a long-standing and extensive track record as the prime contractor for the F-15 program, responsible for its production and sustainment for decades. They have successfully delivered numerous upgrades and modifications to the F-15 fleet. While generally considered a capable performer on large defense contracts, like any major defense manufacturer, Boeing has faced scrutiny and challenges on various programs related to cost overruns and schedule delays. Their experience with the F-15 specifically suggests a deep understanding of the platform, which is often a factor in sole-source justifications.

How does this contract's value compare to other major defense procurements for aircraft components or systems?

At $327.6 million, this contract is a significant but not exceptionally large award within the context of major defense procurements. Procurements for entire aircraft, major subsystems like engines, or comprehensive avionics suites for new platforms often reach billions of dollars. However, for a specific component integration and production effort like advanced sensor pods, this value is substantial and reflects the complexity and criticality of the technology involved. It aligns with the typical cost range for significant upgrades to existing major weapon systems.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134

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: $1,046,677,737

Exercised Options: $334,291,633

Current Obligation: $327,591,067

Actual Outlays: $19,683,132

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline