McDonnell Douglas Corporation awarded $296.8M contract for F-18 Hornet airframes and spares, with a 2471-day duration

Contract Overview

Contract Amount: $296,827,736 ($296.8M)

Contractor: Mcdonnell Douglas Corporation

Awarding Agency: Department of Defense

Start Date: 2000-06-02

End Date: 2007-03-09

Contract Duration: 2,471 days

Daily Burn Rate: $120.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 200011!1700!000859!AA4M0 !NAVAL AIR SYSTEMS COMMAND !N0001900C0367 !A!*!* !20000602!20010930!161213269!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !P.O. BOX 516 !SAINT LOUIS !MO!63166!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !0001!+000279343365!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !2AFX!F-18 HORNET !3721!1!*!*!*!B!A!*!D !N!L!1!001!N!1A!A!N!F!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $296.8 million to MCDONNELL DOUGLAS CORPORATION for work described as: 200011!1700!000859!AA4M0 !NAVAL AIR SYSTEMS COMMAND !N0001900C0367 !A!*!* !20000602!20010930!161213269!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !P.O. BOX 516 !SAINT LOUIS !MO!63166!65000!510!29!ST. LOUIS !ST.… Key points: 1. This contract represents a significant investment in maintaining and supplying critical components for the F-18 Hornet fleet. 2. The fixed-price incentive contract type suggests a shared risk between the government and contractor, aiming for cost efficiency. 3. The long duration of the contract (2471 days) indicates a sustained need for these aircraft parts. 4. The award to a single, established contractor like McDonnell Douglas may limit immediate cost-saving opportunities through broad competition. 5. Performance context is crucial to ensure the delivered airframes and spares meet stringent military specifications. 6. The contract's value places it within the larger context of defense procurement for tactical aircraft.

Value Assessment

Rating: fair

The total contract value of $296.8 million over approximately 6.7 years suggests a substantial but not exceptionally high annual spend for a major aircraft component contract. Benchmarking this against similar contracts for F-18 sustainment or other tactical aircraft would be necessary for a precise value-for-money assessment. The fixed-price incentive (FPI) structure implies that cost overruns are shared, which can incentivize efficiency but also carries risks if initial estimates are inaccurate. Without detailed cost breakdowns or comparisons to other F-18 sustainment efforts, it's difficult to definitively assess if this represents excellent value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was awarded as 'NOT COMPETED,' indicating a sole-source or limited competition scenario. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole manufacturer of the required item. While this ensures access to specialized expertise, it limits the potential for price reductions that could arise from a competitive bidding process. The absence of multiple bidders means the government did not benefit from the downward pressure on pricing that typically accompanies open market competition.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not achieve the most favorable pricing compared to a fully competed contract. This necessitates robust negotiation and oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are the U.S. Navy and Marine Corps, who rely on the F-18 Hornet for tactical air operations. The contract delivers essential airframes and spare parts, ensuring the operational readiness and longevity of the F-18 fleet. The geographic impact is primarily centered around the contractor's facilities in St. Louis, Missouri, and the operational bases of the U.S. Navy and Marine Corps. Workforce implications include employment at McDonnell Douglas and its supply chain, supporting skilled labor in aerospace manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing for taxpayers.
Long contract duration increases exposure to potential cost escalations or changes in operational requirements.
Reliance on a single source for critical components can create supply chain vulnerabilities.

Positive Signals

Award to an experienced contractor (McDonnell Douglas) suggests a high likelihood of meeting technical specifications.
Fixed-price incentive contract type can align contractor and government interests in cost control.
Sustained award indicates a consistent and critical need for these F-18 components.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on aircraft manufacturing and sustainment. The market for tactical aircraft components is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long development cycles. Spending in this area is driven by military readiness needs and the lifecycle management of existing platforms like the F-18. Comparable spending benchmarks would involve analyzing other contracts for major aircraft systems, engine components, or airframe structures for similar military aircraft.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss=false, sb=false). As a sole-source award to a large prime contractor, it is unlikely to have direct subcontracting opportunities specifically mandated for small businesses within the contract terms, although the prime contractor may engage small businesses in their broader supply chain. The absence of a small business set-aside means the direct economic benefit to the small business ecosystem from this specific award is likely minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance, quality, and compliance with contract terms. Accountability measures are embedded in the fixed-price incentive structure, which links contractor profit to performance against cost targets. Transparency is generally maintained through contract databases like FPDS, though detailed cost breakdowns may be proprietary. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

F/A-18 Hornet Program
Naval Air Systems Command (NAVAIR) Procurement
Tactical Aircraft Sustainment Contracts
Aerospace Component Manufacturing
Fixed-Price Incentive Contracts

Risk Flags

Sole-source award limits price competition.
Long contract duration increases risk exposure.
Fixed-price incentive contracts require careful cost monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $296.8 million to MCDONNELL DOUGLAS CORPORATION. 200011!1700!000859!AA4M0 !NAVAL AIR SYSTEMS COMMAND !N0001900C0367 !A!*!* !20000602!20010930!161213269!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !P.O. BOX 516 !SAINT LOUIS !MO!63166!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !0001!+000279343365!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !2AFX!F-18 HORNET !3721!1!*!*!*!B!A!*!D !N!L!

Who is the contractor on this award?

The obligated recipient is MCDONNELL DOUGLAS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $296.8 million.

What is the period of performance?

Start: 2000-06-02. End: 2007-03-09.

What is the historical spending trend for F-18 Hornet airframes and spares with McDonnell Douglas (and its successors)?

Analyzing historical spending requires accessing broader contract data beyond this single award. However, the significant value of this $296.8 million contract, awarded in 2000 for a duration extending to 2007, suggests a substantial and ongoing investment in the F-18 platform. McDonnell Douglas, later acquired by Boeing, has been a primary contractor for the F-18 program since its inception. Historical data would likely show consistent, multi-year funding streams for sustainment, upgrades, and new production of F-18 components. Trends would reflect fleet size, operational tempo, and modernization efforts. Without access to a comprehensive database of all F-18 related contracts awarded to McDonnell Douglas/Boeing, a precise trend analysis is not possible from this single data point, but the scale of this award indicates a significant historical commitment.

How does the pricing of this contract compare to similar F-18 sustainment contracts awarded around the same period?

Direct comparison of pricing for similar F-18 sustainment contracts is challenging without access to detailed cost breakdowns and a comprehensive database of contemporaneous awards. This contract, valued at approximately $296.8 million, was awarded in 2000. The 'NOT COMPETED' status suggests that a competitive bidding process, which typically drives down prices, was not utilized. Therefore, the pricing might be higher than what could have been achieved through full and open competition. Benchmarking would require identifying contracts for comparable airframe and spare parts for the F-18 or similar aircraft platforms awarded during the same timeframe, ideally through competitive means, to establish a fair market price range. The fixed-price incentive (FPI) nature also complicates direct comparisons, as it includes shared risk and potential for cost adjustments.

What are the key performance indicators (KPIs) and risks associated with this fixed-price incentive contract?

For a Fixed-Price Incentive (FPI) contract like this one for F-18 components, key performance indicators (KPIs) would likely revolve around meeting delivery schedules, achieving specified quality standards (e.g., defect rates, material certifications), and adhering to cost targets. The FPI structure inherently involves cost-sharing: if the final cost exceeds the target cost, both the government and the contractor absorb a portion of the overrun, up to a ceiling price. Conversely, if the cost is below the target, profits are shared. Key risks include the contractor failing to meet performance standards, leading to delays or subpar quality, and the risk of cost overruns exceeding the target cost, increasing the government's expenditure. Inaccurate initial cost estimations by the contractor also pose a significant risk, potentially leading to suboptimal pricing for the government if the final costs are substantially lower than anticipated, yet the contractor still achieves a high profit margin.

What is the strategic importance of this contract for the F-18 Hornet program and naval aviation readiness?

This contract is strategically vital for maintaining the operational readiness and extending the service life of the F-18 Hornet fleet, a cornerstone of U.S. naval aviation. The F-18, in its various models (A-D, E/F Super Hornet, and Growler variants), serves as a primary strike fighter and electronic attack aircraft for the Navy and Marine Corps. Ensuring a steady supply of airframes and critical spare parts directly impacts the number of aircraft available for training, deployment, and combat operations. Given the long operational lifespan of these aircraft, sustainment contracts like this are crucial for managing fleet readiness, mitigating obsolescence, and ensuring that naval aviation maintains its capability to project power. The contract's significant value and duration underscore the ongoing commitment to the F-18 platform.

What oversight mechanisms are in place to ensure contractor performance and prevent cost overruns on this sole-source award?

Oversight for this sole-source contract would primarily be managed by the Defense Contract Management Agency (DCMA), which is responsible for monitoring contractor performance, ensuring compliance with contract terms, and verifying the quality of delivered goods. Given the Fixed-Price Incentive (FPI) nature, specific oversight would focus on tracking the contractor's costs against the established target cost. This involves reviewing cost accounting data, auditing expenditures, and ensuring adherence to the negotiated sharing formula for cost overruns or underruns. Preventative measures against cost overruns include rigorous negotiation of the target cost and ceiling price, clear definition of performance requirements, and regular progress reviews. The contract's structure itself incentivizes the contractor to manage costs effectively to maximize their profit share.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: P.O. BOX 516, SAINT LOUIS, MO, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline