Boeing awarded $125M for tail kits, impacting FMS requirements for various countries

Contract Overview

Contract Amount: $125,218,781 ($125.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2025-02-28

End Date: 2027-02-28

Contract Duration: 730 days

Daily Burn Rate: $171.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: THE PURPOSE OF THIS SUPPLEMENTAL AGREEMENT IS TO PLACE ORDERS ON THE LATEST LOT29/LOT13 FOR TAIL KITS. FMS REQUIREMENT VARIOUS COUNTRIES.

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $125.2 million to THE BOEING COMPANY for work described as: THE PURPOSE OF THIS SUPPLEMENTAL AGREEMENT IS TO PLACE ORDERS ON THE LATEST LOT29/LOT13 FOR TAIL KITS. FMS REQUIREMENT VARIOUS COUNTRIES. Key points: 1. Contract awarded to a single, established supplier, raising questions about competitive pricing. 2. The fixed-price incentive structure aims to balance cost control with performance. 3. Long-term delivery orders suggest sustained demand for these critical components. 4. The contract's scope extends to international military sales, indicating global reliance. 5. Potential for cost overruns exists if performance targets are not met efficiently.

Value Assessment

Rating: fair

The contract value of $125.2 million for tail kits over two years appears substantial. Without specific benchmarks for tail kit production or comparable international sales, a precise value-for-money assessment is challenging. The fixed-price incentive (FPI) contract type suggests an attempt to control costs while incentivizing performance, but the lack of competition could lead to less favorable pricing than a fully competed award. Further analysis would require understanding the unit costs and the specific incentives tied to performance metrics.

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, intellectual property, or when urgency dictates a rapid award. However, the absence of competition limits price discovery and may result in higher costs for the government compared to a scenario with multiple bidders vying for the contract. The justification for a sole-source award would need to be thoroughly reviewed to ensure it aligns with procurement regulations.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the best possible price for these tail kits. Without competitive pressure, the contractor has less incentive to offer the lowest possible cost, potentially leading to increased government expenditure.

Public Impact

Foreign military sales (FMS) programs for various allied nations will benefit from the supply of these tail kits. The contract ensures the continued availability of critical aircraft components for international partners. The geographic impact is global, supporting the defense capabilities of multiple countries. The contract supports manufacturing jobs within The Boeing Company, likely in Missouri where the facility is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices for taxpayers.
Sole-source awards can reduce transparency in pricing and cost justification.
Reliance on a single supplier could create supply chain vulnerabilities.

Positive Signals

The fixed-price incentive contract type aims to control costs while rewarding performance.
The contract supports critical defense needs for multiple allied nations through FMS.
Long-term delivery orders indicate a stable and predictable demand for the product.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, specifically related to aircraft components. The aerospace and defense manufacturing industry is characterized by high barriers to entry, significant R&D investment, and often long production cycles. Spending in this sector is driven by national security requirements and international defense cooperation. Comparable spending benchmarks would typically involve analyzing historical awards for similar aircraft components or weapon systems, considering factors like technological complexity and production volume.

Small Business Impact

The data indicates that small business participation is not a primary focus of this specific award, as the 'sb' (small business set-aside) field is false. There is no explicit mention of subcontracting goals for small businesses within the provided data. This suggests that the primary contractor, Boeing, will likely handle the majority of the work, with limited direct opportunities for small businesses unless they are part of Boeing's established supply chain for this specific product. The impact on the small business ecosystem is likely minimal for this particular contract.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force, given their role as the procuring agency. The fixed-price incentive contract type includes performance metrics that will be monitored to ensure value for money and timely delivery. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract execution.

Related Government Programs

Foreign Military Sales (FMS)
Aircraft Component Manufacturing
Defense Logistics Agency (DLA) Contracts
Air Force Sustainment Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for higher costs due to lack of competition.
Dependence on a single supplier creates supply chain risk.
International sales component adds complexity to oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $125.2 million to THE BOEING COMPANY. THE PURPOSE OF THIS SUPPLEMENTAL AGREEMENT IS TO PLACE ORDERS ON THE LATEST LOT29/LOT13 FOR TAIL KITS. FMS REQUIREMENT VARIOUS COUNTRIES.

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 $125.2 million.

What is the period of performance?

Start: 2025-02-28. End: 2027-02-28.

What is the historical spending pattern for tail kits or similar aircraft components by the Department of Defense?

Analyzing historical spending on tail kits and related aircraft components by the Department of Defense (DoD) is crucial for context. While specific data for 'tail kits' alone is not readily available in aggregated public databases, spending on aircraft parts and manufacturing falls under broader categories. For instance, the DoD's annual spending on aircraft components and systems can run into billions of dollars, supporting a vast array of platforms. Historically, contracts for such components are often awarded through competitive processes, but sole-source awards do occur for specialized or proprietary items. Examining past contracts for similar components, like control surfaces or structural elements, awarded to Boeing or its competitors, could reveal pricing trends and typical contract durations. Fluctuations in spending are often tied to modernization programs, operational tempo, and international sales requirements. Without detailed historical data specific to this type of tail kit, a precise comparison is difficult, but the general trend indicates significant and sustained investment in aircraft sustainment and upgrades.

How does the unit cost of these tail kits compare to market rates or similar contracts?

Determining the precise unit cost and comparing it to market rates or similar contracts is challenging without access to the detailed pricing structure of this specific award, including the base price, incentive targets, and ceiling prices. The total award of $125.2 million over two years, for an unspecified number of tail kits, makes calculating a definitive per-unit cost difficult. However, given that this is a sole-source award to The Boeing Company, there is a heightened risk that the unit cost may be higher than if the contract had been competitively bid. Market rates for specialized aircraft components can vary significantly based on complexity, materials, and production volume. To perform a robust comparison, one would need to identify comparable tail kits for similar aircraft platforms, ideally from contracts that were competitively awarded, and analyze their unit prices. Benchmarking against internal Boeing costs for similar components, if that data were available, would also be informative. The absence of this comparative data makes a definitive assessment of value for money challenging.

What are the specific performance metrics and incentives tied to this fixed-price incentive contract?

The provided data indicates this is a Fixed-Price Incentive (FPI) contract, which means the final price is determined by the contractor's performance against agreed-upon targets. While the specific performance metrics and incentive clauses are not detailed in the summary data, FPI contracts typically link the final price to factors such as cost, schedule, and performance quality. For this contract, potential performance metrics could include meeting delivery schedules for the tail kits, achieving specific quality standards (e.g., defect rates), and potentially cost-sharing arrangements where the contractor benefits from cost savings below a target or shares in costs exceeding a target. The 'incentive' aspect suggests that exceeding certain performance thresholds could lead to a higher profit margin for Boeing, while failing to meet them could reduce profit or even result in a price reduction. A thorough review of the contract's Statement of Work (SOW) and the contract clauses would be necessary to understand the exact nature of these incentives and their potential impact on the final cost to the government.

What is Boeing's track record with similar defense contracts, particularly sole-source awards?

The Boeing Company has an extensive and long-standing track record of supplying defense products and services to the U.S. Department of Defense and international customers. They are a major prime contractor for numerous aircraft platforms and associated systems. Regarding sole-source awards, Boeing, like other large defense contractors, has received such contracts when specific expertise, proprietary technology, or unique manufacturing capabilities are required, or in situations where competition is deemed impractical or not in the government's best interest. Analyzing Boeing's historical performance on similar sole-source contracts would involve reviewing contract award histories for specific components or sustainment services, looking at on-time delivery rates, cost performance relative to initial estimates, and any instances of contract disputes or overruns. Generally, major defense contractors like Boeing are expected to have robust quality control and program management systems, but the lack of competition in sole-source scenarios necessitates careful government oversight to ensure fair pricing and effective execution.

What are the potential risks associated with relying on a single supplier for these critical aircraft components?

Relying on a single supplier, as is the case with this sole-source award to The Boeing Company, introduces several potential risks. Firstly, there is the risk of 'vendor lock-in,' where the government becomes heavily dependent on one supplier, potentially limiting future flexibility and negotiation power. Secondly, the lack of competition can lead to higher prices over the contract's lifecycle, as the supplier faces less pressure to innovate or reduce costs. Thirdly, supply chain disruptions, whether due to geopolitical events, natural disasters, or internal company issues at Boeing, could have a significant impact on the availability of these critical tail kits, potentially affecting the operational readiness of aircraft for multiple countries. Lastly, without competitive benchmarking, it can be more challenging for the government to ensure it is receiving the best value for its investment. Mitigation strategies often involve robust contract management, clear performance expectations, and potentially developing alternative sourcing options for the future.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JAMES S 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: $125,218,781

Exercised Options: $125,218,781

Current Obligation: $125,218,781

Subaward Activity

Number of Subawards: 26

Total Subaward Amount: $32,562,173

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA821324DB002

IDV Type: IDC

Timeline