Department of the Navy awards $822M contract for aircraft manufacturing, with a significant portion allocated to Bell Boeing Joint Project Office

Contract Overview

Contract Amount: $822,396,261 ($822.4M)

Contractor: Bell Boeing Joint Project Office

Awarding Agency: Department of Defense

Start Date: 2004-02-23

End Date: 2025-08-15

Contract Duration: 7,844 days

Daily Burn Rate: $104.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: AMARILLO, POTTER County, TEXAS, 79111

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $822.4 million to BELL BOEING JOINT PROJECT OFFICE for work described as: Key points: 1. The contract's substantial value suggests a long-term commitment to critical defense capabilities. 2. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 3. Performance risks may be elevated due to the extended duration and specialized nature of aircraft manufacturing. 4. This contract represents a significant investment within the broader aerospace and defense sector. 5. The firm fixed-price structure aims to provide cost certainty for the government, though it may limit flexibility. 6. The absence of small business set-asides indicates a focus on large prime contractors for this specific requirement.

Value Assessment

Rating: fair

Benchmarking the value of this $822 million contract is challenging without specific details on the aircraft type and quantity. However, the long duration (over 20 years) suggests a substantial program. The firm fixed-price contract type offers cost predictability, but the lack of competition raises concerns about whether the government is achieving the best possible value. Comparing this to similar large-scale aircraft procurements would be necessary for a more definitive assessment of pricing and value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one bidder was considered capable of fulfilling the requirement. This approach is often used for highly specialized or proprietary systems where competition is not feasible. The lack of multiple bidders means there was no direct price competition, potentially leading to higher costs than if multiple firms had vied for the contract. The government likely relied on negotiation and cost analysis to ensure a fair price.

Taxpayer Impact: The sole-source award means taxpayers did not benefit from competitive pricing, potentially resulting in a higher overall expenditure for this aircraft manufacturing requirement.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational readiness, ensuring the availability of critical aircraft. The contract supports the manufacturing and sustainment of specialized aircraft, crucial for national defense missions. The geographic impact is concentrated in Texas, where the contractor is located, potentially supporting local and regional economies. This contract sustains high-skilled jobs in the aerospace manufacturing sector, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Extended contract duration increases long-term financial commitment and potential for cost overruns if not managed tightly.
Lack of small business participation may limit opportunities for smaller innovative firms in the supply chain.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Long-term award indicates a stable, ongoing need for the aircraft, ensuring operational continuity.
Award to a joint project office suggests established expertise and a proven track record in this specific aircraft domain.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a critical component of the U.S. industrial base. The market is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Major players often engage in complex, multi-year contracts with government entities. Spending in this sector is heavily influenced by national security priorities and technological advancements. Comparable spending benchmarks would involve other large-scale military aircraft procurement and sustainment contracts.

Small Business Impact

The data indicates that this contract was not set aside for small businesses and that the prime contractor is not a small business. This suggests that the requirement is likely for a large, complex system best suited for established prime contractors. While there may be subcontracting opportunities for small businesses within the supply chain, the primary award does not directly benefit them. Further analysis would be needed to determine the extent of small business subcontracting planned for this contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the significant value and duration, regular performance reviews, audits, and milestone tracking are expected. The Inspector General for the Department of Defense may also conduct audits or investigations to ensure compliance and prevent fraud. Transparency would be facilitated through contract award databases and potentially through program-specific reporting requirements.

Related Government Programs

Naval Aviation Programs
Defense Aircraft Procurement
Aerospace Manufacturing Contracts
Bell Boeing Joint Ventures
Military Helicopter Programs

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration increases long-term risk exposure.
Potential for cost growth despite fixed-price structure if not managed rigorously.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $822.4 million 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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $822.4 million.

What is the period of performance?

Start: 2004-02-23. End: 2025-08-15.

What specific aircraft or aircraft systems does this contract cover, and what is the historical performance of the Bell Boeing Joint Project Office in delivering these systems?

The provided data does not specify the exact aircraft or systems covered by this contract, only that it falls under NAICS code 336411 (Aircraft Manufacturing). The Bell Boeing Joint Project Office is a well-established entity responsible for the V-22 Osprey tiltrotor aircraft program. Historically, the V-22 program has faced developmental challenges and cost overruns, but it has also achieved significant operational milestones and demonstrated unique capabilities in various military roles. Understanding the specific components or phases of the V-22 program this contract addresses would be crucial for a detailed performance assessment.

How does the $822 million award compare to historical spending on similar aircraft manufacturing contracts by the Department of the Navy?

Without knowing the specific aircraft and quantity, a direct comparison is difficult. However, $822 million is a substantial sum, indicative of a major procurement or sustainment effort. The Department of the Navy frequently awards large contracts for aircraft, often in the hundreds of millions or billions of dollars, for both new acquisitions and long-term sustainment of platforms like the F/A-18, F-35, P-8 Poseidon, and various helicopter types. The duration of this contract (ending in 2025, awarded in 2004) suggests it might be part of a multi-year procurement or a long-term sustainment agreement for an existing platform, potentially the V-22 Osprey given the contractor.

What are the primary risks associated with a sole-source, firm-fixed-price contract of this magnitude and duration for aircraft manufacturing?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for the contractor to innovate or optimize costs. For a firm-fixed-price contract, the risk shifts more to the contractor; however, if the initial price was not adequately negotiated or if unforeseen technical challenges arise, the contractor might seek change orders or face financial distress, potentially impacting delivery schedules. The long duration (over 20 years) increases the risk of obsolescence, changing operational requirements, and the need for extensive contract management to ensure continued value and performance.

What is the expected impact of this contract on the overall defense budget and the specific sector of aircraft manufacturing?

This $822 million contract represents a significant allocation of funds within the Department of the Navy's budget, contributing to the overall defense spending. In the aircraft manufacturing sector, particularly for specialized defense platforms, such large contracts are vital for maintaining production lines, supporting a skilled workforce, and funding research and development. It signals continued government investment in specific defense capabilities and supports the business stability of the prime contractor and its extensive supply chain.

Are there any specific performance metrics or milestones tied to this contract, and how will they be monitored?

The provided data does not detail specific performance metrics or milestones. However, for a contract of this nature and duration, it is standard practice for the Department of the Navy to establish Key Performance Parameters (KPPs) and other measurable objectives related to delivery schedules, quality standards, technical specifications, and operational readiness. Monitoring would typically involve regular program reviews, technical assessments, and potentially the use of Earned Value Management (EVM) systems to track progress against cost and schedule baselines.

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

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $283,973

Exercised Options: $283,973

Current Obligation: $822,396,261

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline