DoD awards Boeing $5.7B for P-8A Poseidon LRIP I, raising concerns over sole-source procurement
Contract Overview
Contract Amount: $5,699,021,641 ($5.7B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2009-04-13
End Date: 2018-07-31
Contract Duration: 3,396 days
Daily Burn Rate: $1.7M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: P-8A LRIP I LONG LEAD MATERIAL
Place of Performance
Location: TUKWILA, KING County, WASHINGTON, 98108
Plain-Language Summary
Department of Defense obligated $5.70 billion to THE BOEING COMPANY for work described as: P-8A LRIP I LONG LEAD MATERIAL Key points: 1. Significant investment of $5.7 billion in long-lead material for the P-8A aircraft. 2. Sole-source award to The Boeing Company limits competitive pricing opportunities. 3. Potential risks associated with a single supplier for critical aircraft components. 4. Spending falls within the Defense sector, specifically Aircraft Manufacturing.
Value Assessment
Rating: questionable
The contract value is substantial, but without competitive bidding, it's difficult to assess if the pricing is optimal compared to potential alternatives. The fixed-price incentive structure aims to control costs, but the lack of competition is a primary concern.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to The Boeing Company. This limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to drive down prices.
Taxpayer Impact: The absence of competition in this large contract likely results in a higher cost to taxpayers than if multiple vendors had vied for the work.
Public Impact
Taxpayers are funding a significant portion of the P-8A aircraft's development and production. The long-lead material procurement ensures the continuation of a key defense asset. The sole-source nature of the contract may impact the overall affordability of the P-8A program long-term.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source procurement
- Lack of competition
- High contract value
Positive Signals
- Procurement of critical long-lead material
- Supports a key defense platform
Sector Analysis
This contract falls under the Aircraft Manufacturing sector within the Department of Defense. Spending benchmarks for similar sole-source aircraft development contracts are difficult to establish due to the unique nature of such procurements.
Small Business Impact
The data indicates this contract was awarded to The Boeing Company and does not specify any subcontracting to small businesses. Further analysis would be needed to determine the extent of small business participation.
Oversight & Accountability
The contract was managed by the Defense Contract Management Agency, suggesting oversight exists. However, the sole-source nature raises questions about the effectiveness of competitive oversight in achieving best value.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition.
- Potential for inflated pricing due to lack of competition.
- Dependency on a single supplier.
- Limited transparency on cost justification.
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 $5.70 billion to THE BOEING COMPANY. P-8A LRIP I LONG LEAD MATERIAL
Who is the contractor on this award?
The obligated recipient is THE BOEING COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $5.70 billion.
What is the period of performance?
Start: 2009-04-13. End: 2018-07-31.
What is the justification for the sole-source award of this significant contract?
The justification for a sole-source award typically involves factors such as unique capabilities, urgent need, or lack of viable alternatives. Without specific documentation, it's presumed that Boeing possesses the exclusive rights or necessary expertise for this specific phase of the P-8A program, leading to a non-competitive procurement.
What are the long-term cost implications of relying on a sole-source supplier for P-8A components?
Sole-source contracts can lead to escalating costs over time as the supplier faces no competitive pressure to innovate or reduce prices. This can result in higher unit costs for subsequent production runs and potentially increase the overall program expenditure, impacting long-term budget planning for the P-8A fleet.
How effectively does the fixed-price incentive structure mitigate risks in a sole-source environment?
While a fixed-price incentive contract aims to share risk and reward cost savings, its effectiveness is diminished in a sole-source scenario. The government still bears the risk of paying a premium due to the lack of competition, even if Boeing achieves cost efficiencies. The incentive structure may not fully compensate for the absence of market-driven price discovery.
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
Solicitation ID: N0001909R0209
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
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: $5,719,734,145
Exercised Options: $5,717,971,112
Current Obligation: $5,699,021,641
Actual Outlays: $226,379
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2009-04-13
Current End Date: 2018-07-31
Potential End Date: 2018-07-31 00:00:00
Last Modified: 2025-01-31
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