Boeing awarded $55M for F-15 sustainment, with limited competition impacting price discovery

Contract Overview

Contract Amount: $54,988,358 ($55.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-03-01

End Date: 2027-10-31

Contract Duration: 1,339 days

Daily Burn Rate: $41.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: F-15 MUOS/SATURN PHASE 1

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $55.0 million to THE BOEING COMPANY for work described as: F-15 MUOS/SATURN PHASE 1 Key points: 1. Contract awarded to a single, established prime contractor for specialized aircraft manufacturing. 2. Limited competition suggests potential for higher costs due to lack of market pressure. 3. Fixed Price Incentive contract type aims to balance cost control with performance incentives. 4. Long performance period (over 3 years) requires careful monitoring of cost and schedule. 5. Contract focuses on sustainment, indicating ongoing operational needs for the F-15 fleet. 6. Geographic concentration in Missouri for contract performance.

Value Assessment

Rating: fair

The $55 million award for F-15 sustainment to Boeing appears to be a standard, albeit significant, investment in maintaining a key defense asset. Without specific benchmarks for F-15 sustainment per aircraft or per flight hour, a direct value-for-money assessment is challenging. However, the fixed-price incentive structure suggests an attempt to manage costs while ensuring performance. The lack of competition is a primary concern regarding potential overpricing compared to a more open market scenario. Further analysis would require detailed cost breakdowns and comparisons to similar sustainment contracts for other major aircraft platforms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to The Boeing Company. This approach is often taken when a specific contractor possesses unique capabilities, intellectual property, or is the original equipment manufacturer, making competition impractical or excessively costly. The absence of multiple bidders means there was no direct price comparison or negotiation driven by market forces, which can limit the government's ability to secure the lowest possible price.

Taxpayer Impact: The lack of competition means taxpayers may not be benefiting from the most cost-effective solution. Without competitive pressure, the awarded price might be higher than what could have been achieved through an open bidding process.

Public Impact

The primary beneficiaries are the U.S. Air Force and its F-15 fighter jet fleet, ensuring operational readiness. Services delivered include sustainment activities critical for maintaining the airworthiness and performance of the aircraft. Geographic impact is concentrated in Missouri, where the contract performance is based. Workforce implications include continued employment for skilled personnel in aircraft manufacturing and maintenance within Boeing's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potentially increases costs for taxpayers.
Fixed Price Incentive contract requires careful monitoring to ensure contractor doesn't excessively profit from cost overruns.
Long contract duration increases the risk of scope creep or unforeseen cost increases.
Lack of competition may stifle innovation from potential alternative sustainment providers.

Positive Signals

Award to incumbent prime contractor ensures continuity of support for a critical defense asset.
Fixed Price Incentive contract aligns contractor and government interests in achieving performance targets.
Sustainment focus addresses essential operational needs for the F-15 fleet.
Contract performance in Missouri supports regional employment in aerospace.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Sustainment contracts, like this one for the F-15, represent a substantial portion of defense spending, focusing on maintaining the operational readiness of existing platforms. The market is dominated by a few large prime contractors, including Boeing, who possess the specialized knowledge and manufacturing capabilities. Comparable spending benchmarks for aircraft sustainment can vary widely based on aircraft type, age, and complexity, but typically represent billions annually across the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. The prime contractor, Boeing, is a large aerospace company. While large prime contractors are often required to subcontract portions of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without this information, it's difficult to assess the direct benefit or implications for small businesses in this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force and potentially the Department of Defense's acquisition and sustainment oversight bodies. Accountability measures are embedded within the Fixed Price Incentive contract terms, linking contractor profit to performance and cost targets. Transparency is generally maintained through contract award databases, though detailed cost breakdowns and performance metrics may be considered sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

F-15 Aircraft Sustainment Programs
Air Force Logistics and Maintenance Contracts
Defense Production and Manufacturing
Aerospace Component Manufacturing
Fixed-Wing Aircraft Support Services

Risk Flags

Sole-source award
Potential for cost overruns
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.0 million to THE BOEING COMPANY. F-15 MUOS/SATURN PHASE 1

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 $55.0 million.

What is the period of performance?

Start: 2024-03-01. End: 2027-10-31.

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

Historical spending on F-15 sustainment by the Department of Defense has been substantial, reflecting the long service life of the aircraft and the ongoing need for maintenance, repair, and upgrades. While specific figures fluctuate annually based on operational tempo, modernization efforts, and budget allocations, the DoD consistently allocates billions of dollars towards the sustainment of its fighter fleets, including the F-15. This particular contract, valued at approximately $55 million over its performance period, represents a segment of that larger sustainment expenditure. Analyzing trends requires examining multi-year spending data, which often shows cyclical patterns related to major maintenance intervals and fleet readiness initiatives. Factors such as depot maintenance cycles, spare parts procurement, and contractor support services all contribute to the overall sustainment cost.

How does the Fixed Price Incentive (FPI) contract type typically perform in terms of cost control compared to other contract types for aircraft sustainment?

Fixed Price Incentive (FPI) contracts aim to provide a middle ground between fixed-price and cost-reimbursement contracts, offering potential cost savings while ensuring contractor motivation. In FPI contracts, the final price is adjusted based on the contractor's performance against target cost and target profit objectives. If the contractor achieves lower costs than targeted, both the government and contractor share in the savings (cost underrun). Conversely, if costs exceed the target, the contractor's profit is reduced, and in some cases, the government may share in the overruns up to a ceiling price. For aircraft sustainment, FPI can be effective if the target cost and profit are well-defined and achievable, incentivizing efficiency. However, poorly set targets can lead to either excessive contractor profit or government cost sharing on overruns. Compared to Firm Fixed Price (FFP), FPI offers more flexibility for complex projects where cost certainty is difficult, but less cost certainty for the government. Compared to Cost Plus Incentive Fee (CPIF), FPI provides a stronger incentive for the contractor to control costs as their profit is directly linked to cost performance.

What are the risks associated with a sole-source award for critical defense systems like the F-15?

Sole-source awards for critical defense systems, such as the F-15 sustainment contract, carry several inherent risks. The most significant is the potential for inflated pricing due to the absence of competitive pressure. Without competing bids, the government may pay more than necessary, as the contractor faces less incentive to offer the most cost-effective solution. Another risk is reduced innovation; a sole-source provider may have less motivation to invest in process improvements or alternative solutions when their market position is guaranteed. Furthermore, dependence on a single supplier can create vulnerabilities in the supply chain and increase risks associated with contractor performance issues, such as delays or quality problems, as there are limited alternative options for the government. This can also lead to a loss of organic government capability or knowledge in sustainment, increasing long-term reliance on the sole provider.

What is Boeing's track record with F-15 sustainment contracts?

Boeing has a long-standing and extensive track record with F-15 sustainment contracts, as they are the original equipment manufacturer (OEM) of the F-15 aircraft. This deep historical involvement means they possess the proprietary knowledge, technical data, and established infrastructure necessary for supporting the fleet. Their track record generally includes successfully delivering sustainment services, managing complex logistics, and providing engineering support for various F-15 variants over decades. However, like any large defense contractor managing numerous complex contracts, there can be instances of performance challenges, cost overruns, or disputes that are typical within the defense industry. Specific performance metrics and historical issues would require a detailed review of past contract performance reports and government accountability data related to Boeing's F-15 sustainment portfolio.

How does the geographic location of contract performance (Missouri) impact the overall cost and efficiency of this F-15 sustainment contract?

The geographic location of contract performance in Missouri can influence the overall cost and efficiency of the F-15 sustainment contract in several ways. Firstly, it impacts labor costs, as wages and benefits in Missouri may differ from other regions, potentially affecting the contractor's overall labor expenses. Secondly, proximity to F-15 operational bases or depots could reduce transportation costs for parts and personnel, enhancing logistical efficiency. Conversely, if key suppliers or specialized facilities are located elsewhere, transportation costs could increase. The presence of a skilled aerospace workforce in Missouri could also contribute to efficiency and quality. Furthermore, state and local economic factors, such as taxes and incentives, might play a role in the contractor's cost structure. Without comparative data from other potential performance locations, it's difficult to definitively state whether Missouri offers a cost advantage or disadvantage, but it is a factor considered in the contractor's pricing and operational planning.

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: 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: $55,330,786

Exercised Options: $55,067,663

Current Obligation: $54,988,358

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $2,905,095

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