Boeing awarded $27M contract for aircraft conversion kits and installation by the Department of the Navy

Contract Overview

Contract Amount: $26,999,083 ($27.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2014-08-25

End Date: 2022-06-30

Contract Duration: 2,866 days

Daily Burn Rate: $9.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF THIS FOLLOW-ON CONTRACT IS FOR THE BUILDING OF CONVERSION KITS, INSTALLATION OF THE KITS, AND THE PROCUREMENT OF RELATED SPARES AND COMPONENT UPGRADES.

Place of Performance

Location: TUKWILA, KING County, WASHINGTON, 98108

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $27.0 million to THE BOEING COMPANY for work described as: THE PURPOSE OF THIS FOLLOW-ON CONTRACT IS FOR THE BUILDING OF CONVERSION KITS, INSTALLATION OF THE KITS, AND THE PROCUREMENT OF RELATED SPARES AND COMPONENT UPGRADES. Key points: 1. Contract focuses on conversion kits, installation, and related spares, indicating a need for fleet modernization or upgrades. 2. The award to The Boeing Company suggests a reliance on established prime contractors for specialized aerospace manufacturing. 3. A firm fixed-price contract type aims to control costs and provide predictability for the government. 4. The long duration of the contract (over 8 years) points to a significant, multi-year program requirement. 5. The absence of competition raises questions about potential cost efficiencies and market engagement. 6. This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, highlighting its specific industrial focus.

Value Assessment

Rating: fair

The contract value of $26.99 million over nearly 8 years averages to approximately $3.4 million per year. Without specific details on the number of kits or installation complexity, a direct value-for-money assessment is challenging. However, given the sole-source nature, it's difficult to benchmark against competitive pricing. The firm fixed-price structure provides cost certainty, but the lack of competition may have led to a higher price than a competed contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential offerors. This approach is typically used when only one source is capable of meeting the government's needs, often due to proprietary technology, unique capabilities, or urgent requirements. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, potentially leading to a higher overall cost for these conversion kits and installation services.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving modernized aircraft capabilities. Services delivered include the manufacturing of conversion kits, their installation onto aircraft, and the procurement of necessary spares. The geographic impact is likely concentrated around Navy aviation depots or facilities where the installation work is performed. Workforce implications include skilled labor in aerospace manufacturing, engineering, and installation specialists at The Boeing Company and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for the government.
Long contract duration could mask inefficiencies if not closely monitored.
Reliance on a single contractor may create vendor lock-in and reduce future flexibility.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to a major defense contractor like Boeing suggests access to specialized expertise and established supply chains.
Focus on conversion kits and installation addresses specific fleet upgrade needs.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and modifications. The market for such specialized components and services is often dominated by a few large, established prime contractors due to high barriers to entry, including technological expertise, regulatory compliance, and significant capital investment. Spending in this area is driven by military modernization programs and the need to maintain and upgrade existing fleets.

Small Business Impact

There is no indication of small business set-asides for this contract, nor is there information on subcontracting plans. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Boeing actively engages small businesses for specific components or services. Further analysis would be needed to determine if subcontracting opportunities were pursued.

Oversight & Accountability

The contract is a firm fixed-price type, which inherently provides some cost control. Oversight would typically be managed by the contracting officer and program management teams within the Department of the Navy. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Modification and Repair Services
Aerospace Component Manufacturing
Defense Logistics and Sustainment
Naval Aviation Programs

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.0 million to THE BOEING COMPANY. THE PURPOSE OF THIS FOLLOW-ON CONTRACT IS FOR THE BUILDING OF CONVERSION KITS, INSTALLATION OF THE KITS, AND THE PROCUREMENT OF RELATED SPARES AND COMPONENT UPGRADES.

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 $27.0 million.

What is the period of performance?

Start: 2014-08-25. End: 2022-06-30.

What specific aircraft platform is this contract for, and what are the technical details of the conversion kits?

The provided data does not specify the exact aircraft platform for which these conversion kits are intended. The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' and the description 'building of conversion kits, installation of the kits, and the procurement of related spares and component upgrades' suggest a modification or upgrade to an existing fleet. Technical details of the kits, such as their function, performance enhancements, or integration requirements, are not publicly available in this summary. This information would typically be found in the detailed contract statement of work (SOW) and technical specifications, which are often considered sensitive or proprietary.

Why was this contract awarded on a sole-source basis, and were there any attempts to explore other potential sources?

The data indicates this contract was 'NOT COMPETED,' signifying a sole-source award. The justification for sole-sourcing is not provided in the summary. Common reasons for sole-source awards in defense contracting include unique technical capabilities, proprietary technology, urgent and compelling needs where only one source can reasonably fulfill the requirement, or when a previous contract was awarded competitively and the follow-on work is only available from the original contractor. Without the specific justification document (e.g., a Justification and Approval for Other Than Full and Open Competition), it's impossible to determine the precise rationale or if alternative sources were considered and deemed unsuitable.

How does the $26.99 million contract value compare to similar aircraft modification contracts awarded by the Navy or other branches?

Benchmarking this $26.99 million contract value against similar aircraft modification contracts is challenging without more specific details. The contract covers kit production, installation, and spares over nearly eight years. A direct comparison would require identifying contracts for the same or similar aircraft platforms, involving comparable modification scope (e.g., avionics upgrades, structural enhancements, mission system integration), and with similar contract durations and pricing structures. Given the sole-source nature, it's difficult to establish a competitive market price. However, large-scale fleet modification programs can easily run into tens or hundreds of millions of dollars, making this contract appear moderate in scale within that context, but potentially high on a per-unit basis due to lack of competition.

What is the historical spending pattern for this specific type of aircraft conversion or modification by the Department of the Navy?

The provided data summary does not include historical spending patterns for this specific type of aircraft conversion or modification by the Department of the Navy. To analyze historical spending, one would need to access contract databases and search for previous awards related to the same aircraft platform, the same or similar conversion kits, and the same contractor (The Boeing Company) or its competitors. This would involve looking at contract obligations, award amounts, and durations over several fiscal years to identify trends, budget allocations, and the overall investment in fleet modernization or upgrades for the relevant aircraft type.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

A sole-source contract of this magnitude ($26.99 million) and duration (nearly 8 years) carries several risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process, as the government cannot leverage market forces to drive down costs. Secondly, there's a risk of contractor complacency or reduced incentive to innovate or maintain high performance standards, as there is no immediate threat of losing the contract to a competitor. Thirdly, the government may become overly reliant on a single supplier, creating vendor lock-in and potentially limiting flexibility in future procurements or upgrades. Finally, without competitive pressure, there's a heightened need for robust government oversight to ensure fair pricing and satisfactory performance.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001913R0020

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7755 E MARGINAL WAY S, SEATTLE, WA, 98108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $30,993,107

Exercised Options: $26,999,083

Current Obligation: $26,999,083

Actual Outlays: $196,305

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $9,651,534

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline