Boeing awarded $17M for F-15 aircraft manufacturing, a sole-source contract with a fixed fee

Contract Overview

Contract Amount: $16,958,904 ($17.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-09-27

End Date: 2022-09-30

Contract Duration: 1,464 days

Daily Burn Rate: $11.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F-15, MIDS JTRS

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $17.0 million to THE BOEING COMPANY for work described as: F-15, MIDS JTRS Key points: 1. Contract awarded to a single, established provider for specialized aircraft manufacturing. 2. Pricing structure includes cost-plus-fixed-fee, requiring careful monitoring of expenditures. 3. Contract duration spans over four years, indicating a long-term need. 4. The contract is for aircraft manufacturing, a critical component of defense readiness. 5. Geographic focus on Missouri for contract performance. 6. No small business set-aside was applied to this contract.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee structure necessitates close oversight to ensure value. Without competitive bidding, it's challenging to benchmark pricing against market alternatives. The fixed fee component provides some cost certainty, but the variable cost component requires diligent management to prevent overruns. Comparing this to similar sole-source aircraft manufacturing contracts would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach is often used when a specific contractor possesses unique capabilities or when urgency precludes a full and open competition. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding, as the government did not benefit from potential price reductions offered by multiple bidders.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, ensuring the availability of F-15 aircraft. Services delivered include the manufacturing of F-15 aircraft, crucial for national defense. Geographic impact is concentrated in Missouri, where the contract is performed. Workforce implications include employment opportunities within the aerospace manufacturing sector in Missouri.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure requires robust cost monitoring.
Long contract duration increases exposure to potential cost escalations.

Positive Signals

Award to a single, experienced contractor (Boeing) suggests a focus on reliability and expertise.
Fixed fee component provides a degree of cost predictability.
Contract supports critical defense assets (F-15 aircraft).

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a key segment of the broader aerospace and defense industry. The market is characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors capable of producing complex military aircraft. Spending in this sector is heavily influenced by defense budgets and geopolitical factors. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for major defense platforms.

Small Business Impact

This contract did not include a small business set-aside. Given the nature of large-scale aircraft manufacturing, it is unlikely that small businesses would be the primary performers, though they may participate as subcontractors. The absence of a set-aside means opportunities for small business prime contracting were not explicitly pursued in this award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures would be tied to the cost-plus-fixed-fee structure, requiring detailed reporting and auditing of costs. Transparency is generally limited in sole-source awards, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight.

Related Government Programs

F-15 Program
Aircraft Procurement
Defense Manufacturing Contracts
Air Force Aviation Support

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to THE BOEING COMPANY. F-15, MIDS JTRS

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 $17.0 million.

What is the period of performance?

Start: 2018-09-27. End: 2022-09-30.

What is the historical spending trend for F-15 aircraft manufacturing by the Department of Defense?

Historical spending on F-15 aircraft manufacturing by the Department of Defense has been substantial over the decades, reflecting the platform's long service life and ongoing modernization efforts. While specific figures for recent years fluctuate based on production runs and upgrade cycles, the F-15 program has consistently represented a significant portion of the Air Force's procurement budget. Data from previous contract awards and budget requests would show periods of high expenditure during initial production and lower, but consistent, spending for sustainment, upgrades, and spare parts. Analyzing trends requires looking at multi-year procurement plans and individual contract values awarded for different F-15 variants and support services. The current contract, valued at approximately $17 million, is likely for a specific production lot or modification, rather than a full aircraft program restart, indicating a more targeted expenditure within the broader F-15 lifecycle.

How does the cost-plus-fixed-fee (CPFF) pricing structure compare to other contract types for aircraft manufacturing?

The Cost-Plus-Fixed-Fee (CPFF) structure, used in this F-15 contract, is common for complex projects where the scope or costs are not fully defined at the outset, such as research and development or specialized manufacturing. Under CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. This contrasts with Fixed-Price contracts, where the price is set regardless of actual costs, offering greater cost certainty to the buyer but placing more risk on the contractor. Cost-Plus-Incentive-Fee (CPIF) contracts share costs and profits based on performance targets, encouraging efficiency. For aircraft manufacturing, especially for established platforms like the F-15, fixed-price or CPIF contracts might be preferred if cost control is paramount and the scope is well-defined. However, CPFF can be advantageous when dealing with unique modifications or unforeseen technical challenges inherent in advanced manufacturing, though it requires stringent oversight to manage costs effectively.

What are the primary risks associated with sole-source contracts in defense manufacturing?

Sole-source contracts in defense manufacturing carry several inherent risks. The most significant is the lack of price competition, which can lead to inflated costs for the government as the contractor faces no market pressure to offer the lowest possible price. This can result in reduced value for taxpayer money. Another risk is contractor complacency; without the threat of losing future business to competitors, the sole-source provider may have less incentive to innovate, improve efficiency, or maintain high service levels. Furthermore, reliance on a single supplier can create supply chain vulnerabilities and reduce flexibility if the contractor experiences production issues, financial instability, or strategic shifts. Finally, the absence of competitive benchmarking makes it harder to objectively assess whether the awarded price is fair and reasonable, increasing the potential for cost overruns and inefficient resource allocation.

What is the typical performance period for contracts of this nature (aircraft manufacturing)?

The performance period for aircraft manufacturing contracts can vary significantly depending on the scope of work. For the production of new aircraft or major sub-assemblies, contracts can span several years, often aligning with multi-year procurement strategies or specific production lot schedules. The provided data indicates a duration of 1464 days, which is approximately four years, for this specific F-15 contract. This duration is typical for contracts involving the manufacturing of a defined number of aircraft or significant component sets, allowing for production planning, assembly, testing, and delivery. Shorter durations might be associated with specific upgrades, modifications, or repair services, while longer-term contracts could encompass full-rate production over many years, often with options for extension. The four-year timeframe suggests a substantial manufacturing effort rather than a short-term service or repair task.

How does the geographic location of contract performance (Missouri) impact the overall contract value and execution?

The geographic location of contract performance, in this case, Missouri, can influence several aspects of the contract's value and execution. For the contractor, performing work in Missouri may leverage existing infrastructure, a skilled workforce familiar with aerospace manufacturing, and potentially favorable state-level incentives or tax structures. This can contribute to cost efficiencies that are factored into the contract's pricing. For the government, performance in a specific location can have implications for logistics, oversight, and economic impact. Having a concentration of work in one area can streamline government oversight efforts but also concentrates risk if disruptions occur at that site. Furthermore, awarding contracts to specific regions contributes to the distribution of defense spending and supports regional economies and employment, which is often a secondary consideration in defense procurement.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

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: $36,017,991

Exercised Options: $18,108,904

Current Obligation: $16,958,904

Actual Outlays: $343,723

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $560,122

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA863417D2696

IDV Type: IDC

Timeline