Spirit Aerosystems awarded $637M DoD contract for aircraft structure certifications, focusing on R&D

Contract Overview

Contract Amount: $6,370,415 ($6.4M)

Contractor: Spirit Aerosystems Inc

Awarding Agency: Department of Defense

Start Date: 2021-08-20

End Date: 2026-06-30

Contract Duration: 1,775 days

Daily Burn Rate: $3.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: CERTIFICATIONOF BONDED AIRCRAFT STRUCTURES BY PROCESS CONTROL

Place of Performance

Location: WICHITA, SEDGWICK County, KANSAS, 67210

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $6.4 million to SPIRIT AEROSYSTEMS INC for work described as: CERTIFICATIONOF BONDED AIRCRAFT STRUCTURES BY PROCESS CONTROL Key points: 1. Contract value of $637M over 5 years indicates significant investment in aircraft structure R&D. 2. Full and open competition suggests a robust market for these specialized services. 3. Potential risks include cost overruns given the Cost Plus Fixed Fee (CPFF) structure. 4. This contract supports advanced research in physical and engineering sciences. 5. Positioned within the aerospace and defense sector, this contract is crucial for Air Force readiness. 6. The definitive contract award implies a long-term commitment to the chosen contractor.

Value Assessment

Rating: good

The contract value of $637 million over approximately five years for aircraft structure certifications appears substantial. Benchmarking against similar R&D contracts in aerospace requires detailed analysis of scope and deliverables. However, the CPFF pricing structure introduces inherent risk for cost control, suggesting that vigilant oversight is necessary to ensure value for money. Without specific comparable contract data, a definitive value assessment is challenging, but the scale suggests a critical need and a significant investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple capable vendors were likely solicited. This approach generally fosters competitive pricing and encourages innovation. The number of bidders is not specified, but the 'full and open' designation suggests a healthy level of market interest and capability. This method is preferred for ensuring the government receives the best possible value through market forces.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and access to a wider range of innovative solutions. This process helps prevent price gouging and ensures that federal funds are used efficiently.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other branches of the DoD requiring certified aircraft structures. Services delivered include research and development related to the certification of aircraft structures. The geographic impact is centered in Kansas, where Spirit Aerosystems is headquartered, potentially creating or sustaining high-skilled jobs. Workforce implications include the need for specialized engineers, technicians, and quality assurance personnel in the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed tightly.
The long duration of the contract (over 4 years) increases the risk of scope creep or changing technological requirements.
Reliance on a single contractor for a critical function like certification could pose supply chain risks.
The R&D nature of the contract implies inherent uncertainty in outcomes and timelines.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should yield good value.
Spirit Aerosystems is an established player in the aerospace industry, implying a degree of reliability and expertise.
The contract duration suggests a stable, long-term need, allowing for focused development and process improvement.
The definitive contract award indicates a clear commitment and established relationship.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on research and development for aircraft structures. The North American Industry Classification System (NAICS) code 541715 covers R&D in physical, engineering, and life sciences. The aerospace industry is characterized by high R&D investment, stringent quality and safety standards, and significant government procurement. Comparable spending benchmarks would involve other large-scale R&D contracts for defense platforms or advanced materials.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Spirit Aerosystems is a large aerospace manufacturer. While this specific contract may not directly involve small business set-asides, large prime contractors like Spirit Aerosystems often engage small businesses as subcontractors. Analysis of subcontracting plans would be necessary to determine the extent of small business participation and its impact on the broader small business ecosystem in the aerospace supply chain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Given the CPFF structure and R&D focus, rigorous oversight of costs, progress, and adherence to technical specifications will be critical. Transparency is typically maintained through contract reporting requirements and potential reviews by the Government Accountability Office (GAO) or the Inspector General, depending on the nature of any issues that arise.

Related Government Programs

Aircraft Manufacturing
Aerospace Research and Development
Defense Procurement
Advanced Materials Research
Air Force Sustainment Programs

Risk Flags

Cost Overrun Risk (CPFF structure)
Technical Uncertainty (R&D nature)
Schedule Delay Risk (R&D complexity)
Long-term Contract Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.4 million to SPIRIT AEROSYSTEMS INC. CERTIFICATIONOF BONDED AIRCRAFT STRUCTURES BY PROCESS CONTROL

Who is the contractor on this award?

The obligated recipient is SPIRIT AEROSYSTEMS INC.

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 $6.4 million.

What is the period of performance?

Start: 2021-08-20. End: 2026-06-30.

What is Spirit Aerosystems' track record with Cost Plus Fixed Fee (CPFF) contracts, particularly with the Department of Defense?

Spirit Aerosystems has a history of working with the Department of Defense on various contracts, including those with complex pricing structures like CPFF. Analyzing their past performance on similar CPFF contracts is crucial. This involves reviewing historical data for cost overruns, schedule delays, and the effectiveness of their cost control measures. A detailed review would look at the ratio of final costs to initial estimates, the frequency of contract modifications, and any audit findings related to financial management. Their experience suggests they possess the infrastructure to manage such contracts, but vigilance in oversight remains paramount to ensure taxpayer value.

How does the $637 million contract value compare to typical R&D spending for aircraft structure certification within the DoD?

The $637 million contract value represents a significant investment in R&D for aircraft structure certification. To benchmark this, one would compare it against historical spending patterns for similar research initiatives within the Air Force or other DoD branches over comparable timeframes (e.g., 5-year periods). Factors such as the specific technologies involved, the maturity of the research, and the number of platforms or systems covered would influence this comparison. Without access to detailed historical spending databases or specific program comparisons, it's difficult to definitively state if this is high or low. However, the scale suggests it addresses a critical capability gap or a major technological advancement.

What are the primary risks associated with the 'Research and Development in the Physical, Engineering, and Life Sciences' (NAICS 541715) category for this contract?

The primary risks associated with R&D contracts in this category, particularly for aircraft structures, include technical uncertainty, schedule delays, and cost overruns. R&D inherently involves exploring the unknown, meaning outcomes are not guaranteed, and breakthroughs may take longer than anticipated or prove infeasible. For aircraft structures, safety and reliability are paramount, adding complexity and potential for costly redesigns if initial research doesn't meet stringent performance requirements. The CPFF structure, while allowing flexibility, can exacerbate cost risks if not meticulously managed, requiring robust oversight to track expenditures against progress and milestones.

What does the 'DEFINITIVE CONTRACT' award type signify in terms of flexibility and commitment for this R&D project?

A 'Definitive Contract' is a fixed-price contract or a cost-reimbursement contract that is fully determined by its terms. For this R&D project, it signifies a firm commitment from the government to procure the specified services and a commitment from Spirit Aerosystems to provide them. Unlike basic ordering agreements or other indefinite-delivery contracts, a definitive contract usually specifies all terms and conditions upfront, including price (or a formula for determining price, as in CPFF) and delivery schedules. This provides stability for long-term R&D efforts, allowing the contractor to invest resources with confidence, but it also means changes to scope or terms would likely require formal modifications.

How might the 'COST PLUS FIXED FEE' (CPFF) pricing structure impact the government's ability to control costs on this long-term R&D contract?

The CPFF structure means the government agrees to pay the contractor's actual allowable costs plus a predetermined fixed fee representing profit. While this structure is often used for R&D where cost estimation is difficult, it places a significant burden on the government to meticulously monitor and audit the contractor's costs. The risk of cost overruns lies with the government, as the contractor is incentivized to incur costs to maximize their fee (though the fee itself is fixed). Effective cost control hinges on robust government oversight, clear definition of allowable costs, and regular audits to ensure the contractor is operating efficiently and not inflating expenses. Without strong oversight, this structure can lead to significantly higher final costs than initially projected.

What is the significance of the contract being awarded to Spirit Aerosystems, a major aircraft component manufacturer, for R&D?

Awarding this R&D contract to Spirit Aerosystems, a major manufacturer of aerostructures, is significant because it leverages their existing expertise, manufacturing capabilities, and deep understanding of aircraft design and production. This integration of R&D with production knowledge can accelerate the transition of research findings into practical applications and potentially streamline the certification process. It suggests the DoD is seeking to develop or improve structures that align with current or future manufacturing realities. This approach can reduce risks associated with translating novel concepts into manufacturable and certifiable products, potentially leading to faster deployment of new technologies.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Solicitation ID: FA865018S5010

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Spirit Aerosystems Holdings, Inc.

Address: 3801 S OLIVER, WICHITA, KS, 67210

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: $6,370,415

Exercised Options: $6,370,415

Current Obligation: $6,370,415

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $813,588

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline