Navy awards $212M for C-40 aircraft manufacturing to Boeing, a sole-source contract

Contract Overview

Contract Amount: $212,426,525 ($212.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2008-12-15

End Date: 2015-12-31

Contract Duration: 2,572 days

Daily Burn Rate: $82.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY09 C-40 AIRCRAFT PROCUREMENT

Place of Performance

Location: OLYMPIA, THURSTON County, WASHINGTON, 98507, UNITED STATES OF AMERICA

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $212.4 million to THE BOEING COMPANY for work described as: FY09 C-40 AIRCRAFT PROCUREMENT Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The fixed-price contract structure shifts some risk to the government, particularly if costs escalate beyond initial estimates. 3. Long contract duration of 2572 days suggests a significant, multi-year commitment for aircraft production. 4. The contract falls under Aircraft Manufacturing, a sector with high barriers to entry and significant technological complexity. 5. Awarded by the Department of the Navy, indicating a specific defense procurement need. 6. The contractor, The Boeing Company, is a major aerospace manufacturer with extensive experience in defense contracts.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The total award of over $212 million for C-40 aircraft manufacturing suggests a substantial investment. Without comparable sole-source awards or open market data, it's difficult to definitively assess if the pricing is optimal. However, the lack of competition inherently limits the government's ability to secure the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was solicited. This approach is typically used when only one responsible source is available or when a compelling justification exists for not seeking competition. The lack of multiple bidders means there was no direct price comparison or negotiation leverage derived from a competitive environment.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

The primary beneficiaries are the Department of the Navy, which will receive C-40 aircraft for its operations. The contract delivers essential aircraft manufacturing services, contributing to national defense capabilities. The geographic impact is primarily centered around the contractor's manufacturing facilities, likely in the United States. This contract supports jobs within the aerospace manufacturing sector, specifically at The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Long contract duration increases exposure to potential cost overruns or changes in operational requirements.
Fixed-price contract, while shifting some risk, may not fully account for unforeseen production challenges.
Reliance on a single large contractor for critical defense assets can create supply chain vulnerabilities.

Positive Signals

Award to a major, experienced manufacturer like Boeing suggests a high likelihood of successful delivery.
Fixed-price contract provides cost certainty for the government, assuming the price was negotiated effectively.
The contract specifies a clear deliverable (C-40 aircraft), indicating defined performance expectations.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a highly specialized and capital-intensive industry dominated by a few large players. The market is characterized by long development cycles, significant R&D investment, and stringent regulatory requirements. Federal spending in this sector is primarily driven by defense procurement needs. Comparable spending benchmarks would involve other large military aircraft procurement contracts, which often run into hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, The Boeing Company, is a large aerospace firm. There is no explicit information regarding subcontracting plans for small businesses within this data, though large defense contracts often include subcontracting goals to promote small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the defense nature, the Department of Defense's Inspector General may also conduct audits or investigations into contract performance and financial management. Transparency is facilitated through contract databases, but the specifics of performance monitoring and accountability measures are internal to the agency and contractor.

Related Government Programs

Military Aircraft Procurement
Defense Logistics Agency
Aerospace Manufacturing Contracts
Fixed-Price Contracts
Sole-Source Procurements

Risk Flags

Sole-source award
Long contract duration
Potential for cost escalation
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $212.4 million to THE BOEING COMPANY. FY09 C-40 AIRCRAFT PROCUREMENT

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 $212.4 million.

What is the period of performance?

Start: 2008-12-15. End: 2015-12-31.

What is the historical spending pattern for C-40 aircraft procurement by the Department of the Navy?

The provided data indicates a single award of $212,426,525.13 for C-40 aircraft manufacturing to The Boeing Company, spanning from December 15, 2008, to December 31, 2015. This suggests that this specific contract represents a significant, if not the entirety, of the Navy's recent direct procurement spending for C-40 aircraft under this particular manufacturing effort. Without access to broader historical contract databases or specific program budget documents, it is difficult to ascertain if there were prior or subsequent procurements of C-40 aircraft or related services outside of this identified award. The duration and value point to a substantial, multi-year acquisition effort.

How does the awarded price compare to similar aircraft manufacturing contracts?

Direct comparison of the $212 million award for C-40 aircraft manufacturing is challenging without knowing the exact specifications, quantity, and capabilities of the aircraft procured. However, large military aircraft, especially specialized transport or multi-role variants like the C-40 (based on the Boeing 737), typically command high prices due to complex avionics, military-grade modifications, and stringent performance requirements. Awards for similar military transport aircraft can range from tens of millions to hundreds of millions of dollars per unit, depending on customization and scale. The sole-source nature of this award also complicates direct value-for-money comparisons against competitively bid programs.

What are the key risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive pressure. The government may not have achieved the most favorable price possible. Additionally, the long contract duration (2572 days) introduces risks related to technological obsolescence, changes in military requirements, and potential cost escalation if the fixed-price structure doesn't adequately account for unforeseen production challenges. Reliance on a single supplier for critical defense assets also poses a supply chain risk.

What is the track record of The Boeing Company in fulfilling large defense aircraft contracts?

The Boeing Company has a long and extensive track record of delivering large, complex defense aircraft contracts to various branches of the U.S. military and international allies. They are a primary manufacturer of military transport aircraft (e.g., C-17, KC-46), fighter jets (e.g., F-15, F/A-18), and bombers. While they have a history of successful deliveries, like many large defense contractors, they have also faced challenges with cost overruns, schedule delays, and technical issues on certain programs. However, their established infrastructure, expertise, and scale generally position them as a capable provider for contracts like the C-40.

What does the 'Aircraft Manufacturing' (NAICS 336411) sector entail in terms of market dynamics and government reliance?

The Aircraft Manufacturing sector (NAICS 336411) is characterized by high capital investment, advanced technology, complex supply chains, and significant regulatory oversight. The market is highly concentrated, with a few dominant global players, including The Boeing Company. Government reliance on this sector is substantial, particularly for defense applications, as domestic manufacturing capabilities are crucial for national security. Barriers to entry are extremely high, making new competitors rare. This concentration means the government often negotiates with a limited number of highly capable, but also powerful, suppliers.

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: N0001908R0080

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $212,426,525

Exercised Options: $212,426,525

Current Obligation: $212,426,525

Contract Characteristics

Cost or Pricing Data: NO

Timeline