NASA awards $10.1 billion contract to Boeing for aircraft engine parts, spanning over 8 years
Contract Overview
Contract Amount: $10,145,145 ($10.1M)
Contractor: THE Boeing Company
Awarding Agency: National Aeronautics and Space Administration
Start Date: 2001-08-08
End Date: 2009-09-17
Contract Duration: 2,962 days
Daily Burn Rate: $3.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 11
Pricing Type: COST PLUS INCENTIVE
Sector: Defense
Place of Performance
Location: SEATTLE, KING County, WASHINGTON, 98101
Plain-Language Summary
National Aeronautics and Space Administration obligated $10.1 million to THE BOEING COMPANY for work described as: Key points: 1. Contract value represents a significant investment in aviation sustainment. 2. Sole-source award raises questions about competition and potential cost efficiencies. 3. Long duration suggests a critical, ongoing need for these specialized parts. 4. Boeing's established role in aerospace likely influenced this award. 5. Performance-based contract structure aims to incentivize quality and timely delivery. 6. Potential for cost overruns exists given the 'Cost Plus Incentive' pricing model.
Value Assessment
Rating: fair
The $10.1 billion award to Boeing for aircraft engine parts is substantial. Benchmarking this against similar long-term sustainment contracts for complex aerospace components is challenging due to unique specifications and market dynamics. The 'Cost Plus Incentive' pricing structure, while allowing for flexibility, inherently carries a higher risk of exceeding initial cost estimates compared to fixed-price contracts. Without detailed cost breakdowns and performance metrics, a definitive value-for-money assessment is difficult, but the scale suggests a critical need and reliance on Boeing's specialized capabilities.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating that NASA determined only one responsible source, The Boeing Company, was capable of fulfilling the requirement. This approach bypasses the standard competitive bidding process, which typically involves multiple bidders vying for the contract. While sole-source awards can expedite procurement for highly specialized or critical needs, they limit price discovery and may result in higher costs for the government compared to a fully competed contract.
Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from robust competition among multiple suppliers.
Public Impact
Benefits NASA's aviation research and operational capabilities by ensuring a steady supply of critical engine parts. Supports the continued operation and maintenance of NASA's aircraft fleet. Impacts the aerospace manufacturing workforce, particularly those involved in engine component production at Boeing. Ensures the availability of specialized parts essential for unique aerospace applications.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source nature limits competitive pressure, potentially leading to higher costs.
- Cost-plus incentive fee structure can incentivize cost growth if not tightly managed.
- Long contract duration increases exposure to market fluctuations and technological obsolescence.
- Dependence on a single supplier creates supply chain risk.
- Lack of transparency in sole-source justification requires careful scrutiny.
Positive Signals
- Boeing's established expertise in aircraft engine manufacturing ensures high-quality components.
- Long-term nature of the contract provides stability for critical supply chains.
- Performance incentives are included to drive contractor efficiency and quality.
- Contract supports advanced aerospace technology development and sustainment.
Sector Analysis
The aerospace industry, particularly the segment focused on aircraft engine manufacturing and parts, is characterized by high barriers to entry, significant R&D investment, and stringent quality requirements. This contract falls within the 'Aircraft Engine and Engine Parts Manufacturing' sector, a critical component of the broader aerospace ecosystem. Spending in this area is often driven by defense, commercial aviation, and government research needs. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of NASA's requirements, but large-scale sustainment contracts for complex aerospace systems can run into billions of dollars over their lifecycle.
Small Business Impact
This contract does not appear to have a specific small business set-aside component. Given the sole-source nature and the specialized requirements for aircraft engine parts, it is unlikely that significant subcontracting opportunities for small businesses will be mandated within the primary contract structure. However, Boeing may engage small businesses as part of its broader supply chain for raw materials or less specialized components, but this is not explicitly detailed in the award information.
Oversight & Accountability
Oversight for this contract will primarily be managed by the National Aeronautics and Space Administration (NASA). Given the 'Cost Plus Incentive' structure, NASA will need robust mechanisms to monitor Boeing's costs, performance against milestones, and adherence to quality standards. Transparency will be crucial, and NASA's Inspector General may conduct audits to ensure fiscal responsibility and program effectiveness. Regular reporting requirements from Boeing will be essential for accountability.
Related Government Programs
- NASA Aircraft Operations
- Aerospace Component Procurement
- Defense Logistics Agency (DLA) Aviation Contracts
- General Services Administration (GSA) Federal Supply Schedule
Risk Flags
- Sole-source award limits competition.
- Cost-plus pricing structure carries inherent cost overrun risk.
- Long contract duration increases exposure to market volatility.
- Dependence on a single supplier poses supply chain risks.
Tags
nasa, boeing, aircraft-engine-parts, sustainment, sole-source, cost-plus-incentive, long-term-contract, aerospace, federal-spending, defense-adjacent
Frequently Asked Questions
What is this federal contract paying for?
National Aeronautics and Space Administration awarded $10.1 million to THE BOEING COMPANY. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is THE BOEING COMPANY.
Which agency awarded this contract?
Awarding agency: National Aeronautics and Space Administration (National Aeronautics and Space Administration).
What is the total obligated amount?
The obligated amount is $10.1 million.
What is the period of performance?
Start: 2001-08-08. End: 2009-09-17.
What is the historical spending pattern for aircraft engine parts by NASA?
Historical spending data for aircraft engine parts by NASA is not readily available in a consolidated public format. However, NASA operates a diverse fleet of aircraft for research, transport, and specialized missions, necessitating ongoing procurement and sustainment of engine components. Major awards in this category are typically long-term and substantial, reflecting the high cost and critical nature of aerospace hardware. Analyzing past contracts for similar aircraft types or engine platforms could provide context, but direct comparisons are often limited by unique mission requirements and technological specifications. The current $10.1 billion award suggests a significant, long-term commitment to maintaining specific aircraft engine capabilities within NASA's operational framework.
How does the 'Cost Plus Incentive Fee' (CPIF) pricing structure compare to other contract types for similar procurements?
The 'Cost Plus Incentive Fee' (CPIF) pricing structure is common for complex procurements where precise cost estimation is difficult, such as advanced research and development or long-term sustainment of specialized equipment like aircraft engines. Under CPIF, the contractor is reimbursed for allowable costs plus a fee that is adjusted based on performance against pre-determined targets (e.g., cost, schedule, performance). This differs from fixed-price contracts, where the price is set upfront, offering greater cost certainty but less flexibility. It also differs from 'Cost Plus Fixed Fee' (CPFF), where the fee remains constant regardless of performance. CPIF aims to incentivize efficiency and cost control by sharing potential savings or cost overruns between the government and the contractor, making it a middle ground between fixed-price and pure cost-reimbursement contracts.
What are the specific performance metrics and targets associated with this contract?
The specific performance metrics and targets for this $10.1 billion NASA contract with Boeing are not publicly detailed in the award announcement. However, for a 'Cost Plus Incentive Fee' contract involving aircraft engine parts, typical performance metrics would likely include factors such as on-time delivery rates, defect rates, component reliability, adherence to technical specifications, and potentially cost reduction initiatives. The 'incentive' aspect implies that achieving or exceeding these targets would result in a higher fee for Boeing, while failing to meet them could lead to a reduced fee. NASA's contracting officers would establish these metrics and their associated target costs and fee adjustments prior to or during the contract's execution.
What is Boeing's track record with NASA on similar large-scale sustainment contracts?
The Boeing Company has a long and extensive track record of contracting with NASA, spanning decades and encompassing a wide range of aerospace programs, including spacecraft, aircraft, and related support services. For sustainment contracts, particularly those involving critical components like aircraft engines, Boeing's history generally reflects a strong capability to deliver complex systems and parts. While specific details on past performance for identical engine part sustainment contracts are not readily available, Boeing's overall relationship with NASA suggests a high level of trust and proven technical expertise. Any significant performance issues or successes on prior large-scale contracts would typically inform NASA's decision-making process for subsequent awards.
What is the potential risk of cost overruns given the sole-source and CPIF nature of this award?
The combination of a sole-source award and a 'Cost Plus Incentive Fee' (CPIF) structure presents a notable risk of cost overruns. A sole-source award inherently lacks the downward price pressure that competition provides. The CPIF model, while designed to incentivize cost control, still allows for costs to exceed initial estimates, with the government sharing in those overruns based on performance incentives. If the performance targets are not sufficiently aggressive, or if unforeseen technical challenges arise, the total cost to NASA could escalate significantly beyond initial projections. Robust oversight, stringent auditing, and clear, well-defined performance metrics are critical to mitigating these risks.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › Space R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 11
Pricing Type: COST PLUS INCENTIVE (V)
Contractor Details
Address: 100 NORTH RIVERSIDE, #105, CHICAGO, IL, 90
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $58,480,932
Exercised Options: $58,480,932
Current Obligation: $10,145,145
Timeline
Start Date: 2001-08-08
Current End Date: 2009-09-17
Potential End Date: 2009-09-17 00:00:00
Last Modified: 2009-09-18
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