DoD's $7.6B Boeing Contract for Aircraft Manufacturing: Full and Open Competition After Exclusion of Sources
Contract Overview
Contract Amount: $7,633,729,889 ($7.6B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2004-06-29
End Date: 2026-08-31
Contract Duration: 8,098 days
Daily Burn Rate: $942.7K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: COST NO FEE
Sector: Defense
Place of Performance
Location: TUKWILA, KING County, WASHINGTON, 98108
Plain-Language Summary
Department of Defense obligated $7.63 billion to THE BOEING COMPANY for work described as: Key points: 1. Significant contract value of $7.63 billion awarded to The Boeing Company. 2. Competition method is 'Full and Open Competition After Exclusion of Sources', indicating a specific procurement strategy. 3. Contract duration is substantial at 8098 days, spanning from 2004 to 2026. 4. The sector is Aircraft Manufacturing, a critical area for defense capabilities.
Value Assessment
Rating: good
The contract's 'Cost No Fee' (CPFF) pricing structure suggests that the government bears the cost risk, while the contractor is incentivized to control costs to achieve a fee. Benchmarking against similar large-scale aircraft manufacturing contracts would be necessary for a definitive assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The procurement utilized 'Full and Open Competition After Exclusion of Sources'. This implies that while competition was sought, certain sources were initially excluded, potentially impacting the breadth of price discovery and the ultimate price achieved.
Taxpayer Impact: The use of full and open competition aims to secure the best value for taxpayers, though the exclusion of sources warrants scrutiny to ensure maximum competition was indeed achieved.
Public Impact
Taxpayers are funding a significant portion of the U.S. Navy's aircraft manufacturing needs through this long-term contract. The duration of the contract suggests a sustained demand for specific aircraft, impacting long-term defense planning and budgets. The 'Cost No Fee' structure means the government absorbs costs, highlighting the importance of contractor efficiency and oversight.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for limited competition due to 'exclusion of sources'.
- Cost-plus-fee structure shifts cost risk to the government.
- Long contract duration may lead to cost overruns if not managed effectively.
Positive Signals
- Full and open competition aims for best value.
- Long-term contract provides stability for critical defense needs.
- Clear awardee (Boeing) suggests established capability.
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a high-value and technologically intensive industry critical for national defense. Spending benchmarks in this sector are typically characterized by large contract values, long development cycles, and significant R&D investment.
Small Business Impact
The data does not indicate any specific provisions or subcontracting goals for small businesses within this contract. Large prime contracts like this often have separate small business subcontracting plans negotiated, but this information is not present here.
Oversight & Accountability
The 'Cost No Fee' structure necessitates robust government oversight to monitor costs, ensure contractor performance, and prevent potential cost overruns. The long duration of the contract also requires continuous program management and accountability.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential for reduced competition due to source exclusion.
- Government bears cost risk under CPFF structure.
- Long contract duration increases risk of cost escalation and obsolescence.
- Lack of small business participation noted.
- Specifics of 'Aircraft Manufacturing' not detailed (e.g., type of aircraft).
Tags
aircraft-manufacturing, department-of-defense, wa, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $7.63 billion 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: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $7.63 billion.
What is the period of performance?
Start: 2004-06-29. End: 2026-08-31.
What specific criteria led to the exclusion of certain sources in this 'Full and Open Competition After Exclusion of Sources' procurement, and how did this impact the final contract price?
The exclusion of sources typically occurs when specific technical capabilities, security clearances, or proprietary technologies are required, limiting the pool of eligible contractors. While aiming for competition among the remaining qualified entities, this exclusion can potentially reduce price competition compared to a truly open bid, possibly leading to a higher price than might be achieved otherwise. A detailed review of the solicitation and award documents would clarify the rationale and its pricing implications.
Given the 'Cost No Fee' (CPFF) structure and the long contract duration, what mechanisms are in place to mitigate cost overrun risks and ensure contractor efficiency?
The CPFF structure places the financial risk on the government, making robust oversight crucial. Mechanisms to mitigate risk include detailed cost accounting standards, regular audits, performance metrics, and potentially incentive clauses for exceeding performance targets or achieving cost savings. The government must actively manage the contract, ensuring that the contractor's expenditures are reasonable, allocable, and necessary for contract performance throughout its 8098-day duration.
How does the $7.63 billion investment in Boeing for aircraft manufacturing align with the Department of the Navy's current and future strategic aviation needs?
This substantial investment suggests a long-term commitment to specific aircraft platforms or manufacturing capabilities deemed essential by the Navy. Alignment depends on whether these aircraft meet evolving threats, operational requirements, and technological advancements. Regular strategic reviews and potential contract modifications would be necessary to ensure the investment remains relevant and effective in addressing future defense needs.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST NO FEE (S)
Evaluated Preference: NONE
Contractor Details
Address: 20403 68TH AVE S MS 8K-10, KENT, WA, 98032
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $5,247,988
Exercised Options: $5,247,988
Current Obligation: $7,633,729,889
Actual Outlays: $7,759,280
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2004-06-29
Current End Date: 2026-08-31
Potential End Date: 2026-08-31 00:00:00
Last Modified: 2025-09-11
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