Boeing awarded $18M contract for ejector housing units, raising questions about competition and value

Contract Overview

Contract Amount: $18,066,842 ($18.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-07-28

End Date: 2027-04-22

Contract Duration: 1,729 days

Daily Burn Rate: $10.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SMALL DIAMETER BOMB I EJECTOR HOUSING UNITS

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $18.1 million to THE BOEING COMPANY for work described as: SMALL DIAMETER BOMB I EJECTOR HOUSING UNITS Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract structure shifts risk to the government, especially with a long performance period. 3. Lack of competition is a significant risk indicator for potential overpayment. 4. The contract is for ammunition manufacturing, a critical defense sector. 5. Performance is tied to a specific component for a larger defense system. 6. The contract duration extends over several years, impacting long-term budget planning.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The $18 million award for ejector housing units lacks a clear comparison point to similar contracts. The firm fixed-price structure, while common, can lead to higher costs for the government when competition is absent. The long performance period of nearly five years further complicates value assessment, as market conditions and material costs can fluctuate significantly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor is the only source capable of fulfilling the requirement, often due to proprietary technology or unique expertise. The absence of multiple bidders means the government did not benefit from a competitive process to drive down prices or explore alternative solutions. This lack of competition limits the government's ability to ensure it is receiving the best possible price.

Taxpayer Impact: Taxpayers may be paying a premium for this component due to the lack of competitive pressure. Without competing bids, there is a higher risk of inflated pricing, as the contractor faces no direct incentive to offer their most competitive rate.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which will receive critical components for its operations. The contract delivers essential ejector housing units, likely for aircraft or weapon systems. The geographic impact is centered around the contractor's facility in Missouri, supporting local employment and economic activity. The contract supports specialized manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may lead to higher costs.
Long contract duration increases exposure to market volatility and potential cost overruns.
Lack of transparency in pricing due to non-competitive nature.
Reliance on a single supplier for a critical component.

Positive Signals

Firm fixed-price contract shifts some performance risk to the contractor.
Contract supports a critical defense need for the Air Force.
Award to a known defense contractor with established manufacturing capabilities.

Sector Analysis

The defense manufacturing sector is characterized by high barriers to entry, specialized knowledge, and significant government oversight. Contracts for components like ejector housing units are crucial for maintaining military readiness. The market for such specialized parts is often limited, with a few key players dominating. The $18 million award falls within the typical range for specialized defense component manufacturing, but the lack of competition is a notable factor in assessing its market positioning.

Small Business Impact

This contract does not appear to have a small business set-aside. The prime contractor, The Boeing Company, is a large aerospace and defense corporation. There is no explicit information provided regarding subcontracting plans for small businesses. Without a set-aside or clear subcontracting goals, the direct impact on the small business ecosystem for this specific award is likely minimal, though Boeing may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of Defense's existing procurement regulations and contract management processes. The Air Force is responsible for monitoring performance and ensuring compliance. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but day-to-day oversight focuses on contract delivery and quality.

Related Government Programs

Ammunition Manufacturing
Aircraft Component Manufacturing
Defense Industrial Base Contracts
Sole-Source Defense Procurements
Air Force Supply Chain Management

Risk Flags

Sole-source award
Lack of competitive bidding
Long contract duration
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.1 million to THE BOEING COMPANY. SMALL DIAMETER BOMB I EJECTOR HOUSING UNITS

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 $18.1 million.

What is the period of performance?

Start: 2022-07-28. End: 2027-04-22.

What is the historical spending pattern for similar ejector housing units?

Historical spending data for identical 'ejector housing units' is not readily available in the public domain, especially for sole-source contracts. However, analyzing past contracts for similar complex mechanical components within the defense sector could provide a benchmark. Without competitive bids, it's challenging to determine if the $18 million awarded to Boeing represents a fair market price compared to potential alternatives or previous procurements. The duration of the contract (nearly five years) also means that the price is fixed over a long period, which could be advantageous or disadvantageous depending on future market fluctuations.

What are the specific risks associated with a sole-source award for critical defense components?

Sole-source awards for critical defense components carry several significant risks. Firstly, the absence of competition can lead to inflated prices, as the government lacks the leverage to negotiate the best possible deal. Secondly, it can foster complacency in the contractor, potentially impacting innovation and quality over time. Thirdly, it creates a single point of failure; if the sole-source provider experiences production issues, supply chain disruptions, or financial instability, the defense program relying on the component could be severely jeopardized. This reliance also limits the government's flexibility to adapt to changing technological requirements or explore alternative suppliers.

How does the firm fixed-price contract type impact value for money in this context?

A firm fixed-price (FFP) contract type, while common in defense, has mixed implications for value for money in a sole-source scenario. On the positive side, it caps the government's financial liability, transferring the risk of cost overruns to the contractor. This predictability can be beneficial for budgeting. However, in the absence of competition, the contractor has less incentive to minimize costs, potentially leading to a higher initial price. The long duration of this contract (over 1700 days) means that the fixed price is locked in for an extended period. If material costs or labor rates increase significantly, the government might end up paying more than it would have under a different contract type or a competitively bid FFP contract.

What is The Boeing Company's track record with similar defense component contracts?

The Boeing Company is a major defense contractor with extensive experience in manufacturing complex aerospace and defense components. They have a long history of producing critical parts for various military platforms. While specific details on their track record for 'ejector housing units' are not publicly detailed, their overall performance in delivering defense systems and components is generally well-documented through government performance ratings and contract awards. However, past performance does not negate the inherent risks associated with a sole-source award, particularly concerning price competitiveness and potential for cost escalation over the contract's long duration.

What are the potential implications of this contract on future defense spending in this category?

This sole-source award for ejector housing units could set a precedent for future procurements of similar components if the justification for sole-sourcing is not rigorously reviewed. It may signal to other potential suppliers that the market is closed, discouraging them from developing capabilities or bidding on future opportunities. For taxpayers, it reinforces the need for strong justification and oversight for non-competitive awards to ensure that defense spending remains efficient and cost-effective. Without a competitive process, there's a risk that prices for such components could remain elevated across the defense sector.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

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: $18,061,623

Exercised Options: $18,061,623

Current Obligation: $18,066,842

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $14,099,557

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA867219D0003

IDV Type: IDC

Timeline