Boeing awarded $66.3M for aircraft manufacturing, with a significant portion for retrofitting

Contract Overview

Contract Amount: $66,284,029 ($66.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2017-06-29

End Date: 2025-02-28

Contract Duration: 2,801 days

Daily Burn Rate: $23.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RETROFIT DESIGN&DEVELOPMENT

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $66.3 million to THE BOEING COMPANY for work described as: RETROFIT DESIGN&DEVELOPMENT Key points: 1. Contract focuses on aircraft retrofitting and development, indicating a need for modernization. 2. Sole-source award suggests limited market alternatives or specific contractor capabilities. 3. Long duration of 2801 days points to a complex, multi-year project. 4. Firm Fixed Price contract type shifts risk to the contractor. 5. Delivery Order under an existing contract streamlines procurement. 6. High dollar value signifies a substantial investment in aircraft sustainment or upgrade.

Value Assessment

Rating: fair

The contract value of $66.3 million for retrofitting and development is substantial. Without specific benchmarks for similar retrofitting projects or detailed cost breakdowns, a precise value-for-money assessment is challenging. However, the firm fixed-price nature of the contract implies that the contractor bears the risk of cost overruns, which can be a positive indicator for the government if managed effectively. The long duration suggests potential for cost efficiencies through sustained effort, but also carries the risk of price escalation if not carefully managed.

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 vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means the government did not benefit from price reductions or innovative solutions that might arise from a competitive bidding process. This approach can lead to higher prices than might be achieved in a competitive environment.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing for taxpayers. This can result in a higher overall cost for the retrofitting services.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving modernized aircraft. Services delivered include design and development for retrofitting existing aircraft. The geographic impact is likely concentrated where the Navy operates and maintains its aircraft. Workforce implications include skilled labor for aircraft modification and engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing benefits for taxpayers.
Long contract duration increases potential for cost creep if not managed.
Lack of detailed public cost breakdown hinders value assessment.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Boeing's established expertise in aircraft manufacturing suggests technical capability.
Delivery Order mechanism implies an existing framework for efficient procurement.

Sector Analysis

The aircraft manufacturing sector is a critical component of the defense industrial base, characterized by high barriers to entry, significant R&D investment, and long product lifecycles. This contract falls within the sustainment and modernization segment of the sector, where existing platforms are upgraded to maintain operational relevance. Spending in this area is often driven by evolving threats and technological advancements. Comparable spending benchmarks would typically involve other major aircraft modification and upgrade programs within the Department of Defense.

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 specific award. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, though Boeing's overall subcontracting practices may involve small businesses on other programs.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, scrutiny may be higher to ensure fair and reasonable pricing. Transparency is limited by the sole-source nature and the absence of a competitive bidding process. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse, with the Defense Contract Audit Agency (DCAA) likely involved in financial oversight.

Related Government Programs

Aircraft Modernization Programs
Defense Logistics Agency (DLA) Support Contracts
Naval Air Systems Command (NAVAIR) Contracts
Aerospace Engineering Services
Aircraft Component Manufacturing

Risk Flags

Sole Source Justification
Long Contract Duration
Potential for Scope Creep in Development Phase

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.3 million to THE BOEING COMPANY. RETROFIT DESIGN&DEVELOPMENT

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 $66.3 million.

What is the period of performance?

Start: 2017-06-29. End: 2025-02-28.

What is Boeing's track record with similar sole-source aircraft retrofitting contracts for the Department of Defense?

Boeing has a long history of sole-source and competitively awarded contracts with the Department of Defense for aircraft manufacturing, sustainment, and modernization. For retrofitting specific platforms, their track record often involves proprietary knowledge and unique integration challenges that can lead to sole-source justifications. Analyzing past sole-source awards for similar retrofitting efforts would reveal patterns in pricing, performance, and potential cost overruns. While specific data on past sole-source retrofitting contracts is not provided here, Boeing's extensive experience suggests a high level of technical capability, but also necessitates careful oversight to ensure fair pricing and value, especially when competition is absent.

How does the $66.3 million value compare to typical aircraft retrofitting projects of this scale?

The $66.3 million value for retrofitting and development is significant, but its comparability depends heavily on the specific aircraft type, the complexity of the modifications, and the scope of work (e.g., number of aircraft, systems involved). Aircraft retrofitting can range from minor avionics upgrades to complete structural overhauls. Without knowing the specific platform and the nature of the 'design & development' for the retrofit, it's difficult to benchmark against industry averages. However, for major platform upgrades involving advanced systems integration, this figure could represent a reasonable investment, especially given the long duration. A more precise comparison would require access to data on similar retrofitting programs for comparable aircraft within the DoD.

What are the primary risks associated with this sole-source, firm-fixed-price contract?

The primary risks associated with this contract stem from its sole-source nature and the firm-fixed-price (FFP) structure. For the government, the main risk of a sole-source award is the potential for paying a premium due to the lack of competition, which can lead to suboptimal value for money. The FFP structure shifts cost overrun risk to the contractor, Boeing. However, if Boeing underestimated the costs or encounters unforeseen technical challenges, they might cut corners on quality or seek change orders, which can negate the FFP benefit. The long duration (2801 days) also introduces risks related to obsolescence of technology, changes in requirements, and potential for contractor performance degradation over time if not actively managed.

How effective is the firm-fixed-price contract type in ensuring program effectiveness for aircraft retrofitting?

The firm-fixed-price (FFP) contract type is generally intended to promote cost control and efficiency by placing the financial risk on the contractor. For aircraft retrofitting, an FFP contract can incentivize the contractor to complete the work within budget and on schedule to maximize profit. This can lead to effective execution if the scope of work is well-defined and stable. However, retrofitting projects, especially those involving 'design and development,' can be prone to scope creep and unforeseen technical issues. If the initial scope is not precisely defined or if significant design challenges emerge, the FFP contract might lead the contractor to resist necessary changes or deliver a less-than-optimal solution to avoid cost overruns, potentially impacting the overall effectiveness of the retrofit.

What are historical spending patterns for aircraft retrofitting and development within the Department of the Navy?

Historical spending patterns for aircraft retrofitting and development within the Department of the Navy typically show consistent investment in maintaining and upgrading aging fleets. These expenditures are driven by the need to extend the service life of aircraft, incorporate new technologies, and adapt platforms to evolving mission requirements and threat environments. The Navy often procures these services through a mix of competitive bids and sole-source awards, particularly when specific expertise or proprietary systems are involved. Analyzing historical data would reveal trends in contract values, durations, and the types of retrofitting activities undertaken, providing context for the current $66.3 million award.

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: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134

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: $67,901,203

Exercised Options: $67,901,203

Current Obligation: $66,284,029

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $61,325,663

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001916G0001

IDV Type: BOA

Timeline