Navy awards $49M for P-8A aircraft engine components, a sole-source contract to Boeing Distribution

Contract Overview

Contract Amount: $48,950,388 ($49.0M)

Contractor: Boeing Distribution, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-08-29

End Date: 2023-09-05

Contract Duration: 1,833 days

Daily Burn Rate: $26.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF P-8A QUICK ENGINE CHANGE (QEC)/ENGINE BUILD-UP (EBU) COMPONENTS AND MATING OF SAID QEC/EBU COMPONENTS TO P-8A CORE ENGINES

Place of Performance

Location: DALLAS, DALLAS County, TEXAS, 75261

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $49.0 million to BOEING DISTRIBUTION, INC. for work described as: PROCUREMENT OF P-8A QUICK ENGINE CHANGE (QEC)/ENGINE BUILD-UP (EBU) COMPONENTS AND MATING OF SAID QEC/EBU COMPONENTS TO P-8A CORE ENGINES Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. The contract covers engine build-up components for the P-8A Poseidon aircraft. 3. Long contract duration of 1833 days suggests a sustained need for these parts. 4. The firm-fixed-price structure aims to control costs, but competition is absent. 5. Awarded to Boeing Distribution, Inc., the original equipment manufacturer's distributor. 6. The contract value is substantial, reflecting the specialized nature of military aircraft parts.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized components involved. Without competitive bids, it's difficult to ascertain if the $48.95 million awarded represents optimal value for money. However, the firm-fixed-price (FFP) contract type provides some cost certainty for the Navy. The duration of the contract (over five years) suggests a consistent need, and the price reflects the complexity and specific requirements of P-8A engine components.

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 approach is typically used when a specific vendor possesses unique capabilities, intellectual property, or is the sole authorized distributor for essential parts. The lack of competition means the Navy did not benefit from price discovery through a bidding process, potentially leading to higher costs than if multiple suppliers had vied for the contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of a competitive bidding process. Without competing offers, there is less pressure on the contractor to offer the lowest possible price for these critical aircraft components.

Public Impact

The primary beneficiaries are the U.S. Navy's P-8A Poseidon maritime patrol aircraft fleet, ensuring operational readiness. Services delivered include the provision of critical engine build-up (EBU) and quick engine change (QEC) components. The geographic impact is national, supporting naval aviation readiness across various bases. Workforce implications are indirect, supporting the manufacturing and distribution jobs associated with these specialized aircraft parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in pricing due to no competitive bidding process.
Long contract duration could mask inefficiencies if not closely monitored.
Reliance on a single distributor may create supply chain vulnerabilities.

Positive Signals

Firm-fixed-price contract provides cost certainty for the procuring agency.
Award to an established distributor ensures access to specific, potentially proprietary, components.
Supports the sustainment of a critical military asset (P-8A aircraft).

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412). This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements, particularly for defense applications. The P-8A Poseidon is a key platform for naval surveillance and anti-submarine warfare, making the reliable supply of its components crucial. Spending in this area is often concentrated among a few large aerospace manufacturers and their authorized distributors due to the specialized nature of the products and the need for interoperability and certification.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large distributor (Boeing Distribution, Inc.), the direct impact on the small business ecosystem is likely minimal. However, the prime contractor may engage small businesses indirectly through its broader supply chain, though this is not explicitly detailed.

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 might focus on justification for the non-competitive nature and ensuring fair pricing within the FFP structure. Transparency is limited by the lack of public bid data. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

P-8A Poseidon Aircraft Sustainment
Naval Aviation Component Procurement
Aerospace Manufacturing and Distribution
Defense Logistics Agency (DLA) Support Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.0 million to BOEING DISTRIBUTION, INC.. PROCUREMENT OF P-8A QUICK ENGINE CHANGE (QEC)/ENGINE BUILD-UP (EBU) COMPONENTS AND MATING OF SAID QEC/EBU COMPONENTS TO P-8A CORE ENGINES

Who is the contractor on this award?

The obligated recipient is BOEING DISTRIBUTION, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $49.0 million.

What is the period of performance?

Start: 2018-08-29. End: 2023-09-05.

What is the justification for awarding this contract on a sole-source basis?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For specialized aircraft components like P-8A QEC/EBU parts, this could be due to proprietary technology, unique manufacturing capabilities held by a single entity, or the contractor being the sole authorized distributor for the original equipment manufacturer (OEM). Without specific documentation, the exact justification remains unconfirmed, but it likely relates to the unique nature of the components and the established supply chain for the P-8A platform, which is heavily integrated with Boeing.

How does the firm-fixed-price (FFP) structure benefit the Navy in this sole-source scenario?

The firm-fixed-price (FFP) contract structure is beneficial because it shifts the risk of cost overruns from the government to the contractor. For the Navy, this means the price is set at the time of award, and the contractor is obligated to complete the work for that price, regardless of their actual costs. While this doesn't guarantee the lowest possible price in a sole-source situation, it provides budget certainty and simplifies financial management compared to cost-reimbursement contracts. It incentivizes the contractor to manage their own costs efficiently to maximize profit.

What is the typical market structure for P-8A engine components, and why might Boeing Distribution be the sole source?

The market for components of advanced military aircraft like the P-8A is typically highly concentrated. Boeing, as the prime integrator and manufacturer of the P-8A, likely controls the supply chain for critical systems. Boeing Distribution, Inc. would act as an authorized distributor, potentially holding exclusive rights or possessing the necessary certifications and technical data to supply these specific QEC/EBU components. Other potential suppliers might lack the required specifications, certifications, or the established relationship and logistical infrastructure to meet the Navy's needs reliably.

What are the potential risks associated with a long-duration, sole-source contract for aircraft components?

Long-duration, sole-source contracts carry several risks. Firstly, the lack of competition can lead to inflated prices over the contract's life, as the contractor faces no external pressure to reduce costs. Secondly, it can foster complacency, potentially leading to reduced innovation or responsiveness from the contractor. Thirdly, it creates a dependency on a single supplier, making the supply chain vulnerable to disruptions (e.g., financial instability of the supplier, geopolitical issues, or natural disasters). Finally, without regular re-competition, there's less opportunity to reassess market prices or explore alternative, potentially more cost-effective solutions.

How does this contract's value compare to other P-8A sustainment or component procurements?

Direct comparison is difficult without access to a broader database of P-8A component procurements, especially sole-source awards. However, $48.95 million spread over approximately five years (1833 days) suggests an average annual value of roughly $9.8 million. This figure seems reasonable for specialized, high-value components for a major military aircraft platform. Sustainment costs for complex platforms like the P-8A are significant, and component procurement forms a substantial part of that overall expenditure. Further analysis would require benchmarking against similar sole-source awards for comparable aircraft parts.

What is the historical spending trend for P-8A engine components, and does this contract represent an increase or decrease?

The provided data only details this specific contract award from 2018 to 2023. To assess historical spending trends, data from previous contracts for P-8A engine components would be necessary. Without that historical context, it's impossible to determine if this $48.95 million award represents an increase, decrease, or continuation of prior spending levels. Analyzing past awards, including their values, durations, and competition levels, would be crucial for identifying trends and understanding the long-term investment in P-8A engine sustainment.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001918R0069

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company

Address: 2750 REGENT BLVD, DFW AIRPORT, TX, 75261

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

Financial Breakdown

Contract Ceiling: $48,950,388

Exercised Options: $48,950,388

Current Obligation: $48,950,388

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline