DoD's $1B+ Aircraft Manufacturing Contract Awarded Sole-Source to Bell Boeing Joint Project Office

Contract Overview

Contract Amount: $1,004,767,140 ($1.0B)

Contractor: Bell Boeing Joint Project Office

Awarding Agency: Department of Defense

Start Date: 2003-01-03

End Date: 2010-01-31

Contract Duration: 2,585 days

Daily Burn Rate: $388.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Place of Performance

Location: AMARILLO, POTTER County, TEXAS, 79111

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $1.00 billion to BELL BOEING JOINT PROJECT OFFICE for work described as: Key points: 1. Significant investment in aircraft manufacturing, indicating a critical need for specialized capabilities. 2. Sole-source award suggests limited market availability or unique contractor qualifications. 3. Long contract duration (over 7 years) implies a sustained requirement for these aircraft. 4. Fixed Price Incentive contract type aims to balance cost control with performance incentives. 5. High dollar value warrants close scrutiny of cost-effectiveness and performance. 6. Contract awarded to a joint venture, potentially concentrating market power.

Value Assessment

Rating: questionable

The contract's value of over $1 billion over its lifespan is substantial. Without specific benchmarks for comparable aircraft manufacturing contracts or detailed cost breakdowns, it is difficult to definitively assess value for money. The sole-source nature of the award raises concerns about potential overpricing compared to a competitive environment. Further analysis would require comparing the unit costs and overall expenditure against industry standards for similar complex aircraft systems and evaluating the justification for the lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was considered. This typically occurs when a specific capability is unique to a single provider or when there are compelling reasons to avoid competition, such as national security concerns or the need for specialized expertise. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government's negotiating position is weakened without alternative offers to consider.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring the specific aircraft manufactured under this contract. Services delivered include the manufacturing and potentially sustainment of advanced aircraft. Geographic impact is primarily centered around the contractor's facilities in Texas, but the operational deployment of the aircraft will be global. Workforce implications include employment at the contractor's facilities and potentially in supporting industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in pricing due to non-competitive nature.
Long-term commitment may reduce flexibility to adapt to changing technological needs.
Concentration of significant defense spending with a single joint venture.

Positive Signals

Addresses a critical defense requirement for specialized aircraft.
Fixed Price Incentive contract structure attempts to align contractor and government interests.
Award to a joint venture may leverage combined expertise for complex manufacturing.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of the broader aerospace and defense industry. The market for advanced military aircraft is often characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors, often due to specialized technological requirements and government-specific needs. Spending in this sector is heavily influenced by defense budgets and geopolitical factors. Comparable spending benchmarks would typically involve other large-scale military aircraft procurement programs.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have explicit subcontracting requirements for small businesses mentioned. As a large sole-source award to a major joint venture, the direct impact on the small business ecosystem may be limited unless the prime contractor actively engages in subcontracting opportunities. Further investigation into subcontracting plans would be necessary to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are embedded within the Fixed Price Incentive contract type, which links contractor profit to achieving specific cost and performance targets. Transparency may be limited due to the sole-source nature, but contract modifications, performance reports, and audits would be subject to oversight.

Related Government Programs

Military Aircraft Procurement
Defense Industrial Base
Aerospace Manufacturing
Fixed-Wing Aircraft Programs

Risk Flags

Sole-source award
High contract value
Long contract duration
Potential for cost overruns
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.00 billion to BELL BOEING JOINT PROJECT OFFICE. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is BELL BOEING JOINT PROJECT OFFICE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $1.00 billion.

What is the period of performance?

Start: 2003-01-03. End: 2010-01-31.

What is the specific type of aircraft being manufactured under this contract and what is its intended operational role?

The provided data does not specify the exact type of aircraft. However, the contractor, Bell Boeing Joint Project Office, is known for producing the V-22 Osprey tiltrotor aircraft. The V-22 Osprey is a multi-mission, vertical-lift aircraft designed for expeditionary aerospace mobility, intended for roles such as troop transport, cargo lift, medical evacuation, and special operations missions. Its unique tiltrotor design allows it to take off and land like a helicopter but fly at jet-like speeds and altitudes.

What is the justification for awarding this substantial contract on a sole-source basis?

Sole-source awards are typically justified when only one responsible source is capable of meeting the government's requirements. For the Bell Boeing Joint Project Office, this likely stems from the unique technological capabilities and established production infrastructure required for the V-22 Osprey. Developing and producing such a complex aircraft requires highly specialized knowledge, extensive testing, and significant capital investment, which may not be readily available from other potential contractors. The government would have had to formally document these reasons, often involving a Justification and Approval (J&A) document, to proceed with a sole-source procurement.

How does the Fixed Price Incentive (FPI) contract type aim to manage costs and performance for this large program?

The Fixed Price Incentive (FPI) contract type establishes a target cost, a target profit, and a price ceiling. The final price is determined by the relationship between the final negotiated cost and the target cost, with adjustments to profit. If the final cost is below the target cost, both the government and contractor share in the savings (often at a predetermined ratio). If the final cost exceeds the target cost but remains below the price ceiling, the contractor's profit is reduced. If the final cost exceeds the price ceiling, the contractor is responsible for the overrun above the ceiling. This structure incentivizes the contractor to control costs while ensuring the government is protected by the price ceiling.

What are the potential risks associated with a sole-source, multi-billion dollar contract of this duration?

Several risks are associated with such a contract. Firstly, the lack of competition can lead to reduced price pressure, potentially resulting in higher costs for the government than if the contract were competed. Secondly, the government may become overly reliant on a single contractor, reducing its leverage in future negotiations and potentially hindering innovation if alternative solutions are not explored. Thirdly, long-term contracts can sometimes lock the government into specific technologies or platforms, making it difficult and costly to adapt to evolving requirements or new technological advancements. Finally, the sheer scale of the contract increases the financial exposure and the impact of any performance failures.

What is the historical spending trend for this specific contract or similar aircraft programs within the Department of Defense?

The provided data covers a specific contract award from 2003 to 2010 with a total obligation of $1,004,767,139.77. To assess historical spending trends, one would need to examine prior contracts for the same or similar aircraft (like the V-22 Osprey) awarded to Bell Boeing or its predecessors, as well as compare this spending to other major military aircraft procurement programs within the DoD over extended periods. This would reveal patterns of investment, potential cost escalations, and the overall strategic importance placed on such platforms over time.

How does the performance of the Bell Boeing Joint Project Office on previous contracts inform the assessment of this award?

Assessing the performance of the Bell Boeing Joint Project Office on previous contracts is crucial for understanding the risk and potential value of this award. Information regarding their track record on delivering similar complex aircraft on time, within budget, and to specification would be highly relevant. This includes examining past contract modifications, any incurred cost overruns, delivery delays, and the overall quality and reliability of the aircraft produced. A history of strong performance would increase confidence in the current award, while a history of significant issues would raise concerns and necessitate closer scrutiny of oversight and risk mitigation strategies.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Contractor Details

Address: 47123 BUSE RD BUILDING 227, PATUXENT RIVER, MD, 20670

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline