Boeing awarded $1.12B for F/A-18 Super Hornet non-recurring engineering, impacting aircraft manufacturing
Contract Overview
Contract Amount: $1,122,466,004 ($1.1B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2018-03-30
End Date: 2023-12-31
Contract Duration: 2,102 days
Daily Burn Rate: $534.0K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: NON-RECURRING ENGINEERING AND AAE ITEMS IN SUPPORT OF KUWAIT VARIANT OF F/A-18 SUPER HORNET
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $1.12 billion to THE BOEING COMPANY for work described as: NON-RECURRING ENGINEERING AND AAE ITEMS IN SUPPORT OF KUWAIT VARIANT OF F/A-18 SUPER HORNET Key points: 1. Contract focuses on specialized engineering and development for a specific aircraft variant. 2. Significant investment in non-recurring engineering suggests a long-term commitment to the F/A-18 platform. 3. The fixed-price incentive structure aims to balance cost control with contractor performance. 4. Sole-source nature raises questions about potential cost efficiencies through broader competition. 5. This award is a key component of the Navy's ongoing sustainment and modernization efforts for its fighter fleet. 6. The duration of the contract indicates a substantial, multi-year effort.
Value Assessment
Rating: fair
The total award of over $1.12 billion for non-recurring engineering and associated items for the F/A-18 Super Hornet variant is substantial. Benchmarking this specific type of engineering effort is challenging due to its specialized nature. However, the fixed-price incentive (FPI) contract type suggests an attempt to manage costs by linking contractor profit to performance targets. Without detailed breakdowns of the engineering tasks and market rates for similar specialized development, a precise value-for-money assessment is difficult, but the scale implies significant technical complexity and investment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating that only one responsible source, The Boeing Company, was determined to be capable of meeting the government's requirements. This approach is often used for highly specialized or proprietary systems where competition is not feasible or would not be cost-effective. The lack of competition means that price discovery through market forces was limited, and the government relied on negotiation and oversight to ensure a fair price.
Taxpayer Impact: The sole-source award means taxpayers did not benefit from competitive bidding, which typically drives down prices. The government had to rely on its negotiation power and internal cost analysis to secure a reasonable price for these specialized engineering services.
Public Impact
The primary beneficiaries are the U.S. Navy and potentially allied nations operating the F/A-18 Super Hornet, receiving enhanced capabilities through specialized engineering. The contract delivers critical non-recurring engineering and associated items necessary for the Kuwait variant of the F/A-18 Super Hornet. Geographic impact is concentrated around Boeing's facilities involved in aircraft manufacturing and engineering, primarily in Missouri. Workforce implications include employment for engineers, technicians, and manufacturing personnel within The Boeing Company and its supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
- The substantial dollar amount requires diligent oversight to ensure funds are used efficiently and effectively.
- Complexity of non-recurring engineering can introduce risks of cost overruns if not managed tightly.
Positive Signals
- Fixed-price incentive contract type incentivizes performance and cost control.
- Award to a sole-source provider suggests specialized expertise critical for the F/A-18 variant.
- Long contract duration (2102 days) indicates a sustained effort to enhance a key defense asset.
Sector Analysis
This contract falls within the aerospace and defense sector, specifically aircraft manufacturing and modification. The market for specialized non-recurring engineering for advanced fighter jets is highly concentrated, with a few prime contractors like Boeing dominating. Spending in this area is driven by the need for continuous platform upgrades, modernization, and adaptation to evolving threats and operational requirements. Comparable spending benchmarks would typically involve other major defense aircraft development or upgrade programs, which often run into hundreds of millions or billions of dollars.
Small Business Impact
This contract does not appear to have specific small business set-aside provisions mentioned. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely through subcontracting opportunities. Boeing will need to manage its supply chain effectively to ensure small businesses have a role, but the primary contract structure does not prioritize direct small business awards.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the significant value and sole-source nature, robust oversight mechanisms, including regular performance reviews, financial audits, and technical progress monitoring, are expected. The Defense Contract Management Agency (DCMA) would likely play a role in contract administration and surveillance. Transparency is facilitated through contract award databases, but detailed project-specific reporting may be limited.
Related Government Programs
- F/A-18 Super Hornet Program
- Naval Aviation Modernization Programs
- Aerospace Engineering Services Contracts
- Defense Aircraft Manufacturing Contracts
Risk Flags
- Sole-source award
- High contract value
- Specialized engineering services
Tags
defense, department-of-defense, department-of-the-navy, aircraft-manufacturing, non-recurring-engineering, fa-18-super-hornet, missouri, definitive-contract, fixed-price-incentive, sole-source, large-business
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.12 billion to THE BOEING COMPANY. NON-RECURRING ENGINEERING AND AAE ITEMS IN SUPPORT OF KUWAIT VARIANT OF F/A-18 SUPER HORNET
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 $1.12 billion.
What is the period of performance?
Start: 2018-03-30. End: 2023-12-31.
What is the historical spending trend for non-recurring engineering on the F/A-18 Super Hornet program?
Analyzing historical spending trends for non-recurring engineering (NRE) on the F/A-18 Super Hornet program requires access to detailed contract data beyond this single award. NRE typically involves upfront, one-time costs for design, development, testing, and tooling. For a mature platform like the Super Hornet, significant NRE spending would likely have occurred during its initial development and major upgrade phases. Subsequent awards for specific variants or modifications, such as the Kuwait variant addressed here, represent continued investment in the platform's lifecycle. Without a comprehensive review of all prior contracts related to F/A-18 NRE, it's difficult to establish a precise trend, but this $1.12 billion award indicates substantial ongoing investment in specialized engineering for this aircraft.
How does the pricing structure of this Fixed Price Incentive (FPI) contract compare to other defense engineering contracts?
The Fixed Price Incentive (FPI) contract is a common type in defense acquisition, designed to share risks and rewards between the government and the contractor. In an FPI contract, the final price is determined by the contractor's performance against target cost and target profit objectives. If the contractor achieves lower costs, both share in the savings (cost underrun); if costs exceed the target, both share in the overruns up to a ceiling price. This structure incentivizes efficiency more than a firm-fixed-price (FFP) contract but offers more cost certainty to the government than a cost-plus contract. Compared to other defense engineering contracts, FPI is often used for development or modification efforts where cost targets can be reasonably estimated but some uncertainty remains. Its effectiveness hinges on well-defined performance metrics and realistic cost targets, which are crucial for ensuring value for money in this $1.12 billion award.
What are the specific risks associated with a sole-source award for complex engineering services like this?
Sole-source awards for complex engineering services, such as the non-recurring engineering for the F/A-18 Super Hornet variant, carry inherent risks. The primary risk is the potential for inflated pricing due to the absence of competitive pressure. Without competing bids, the government relies heavily on its negotiation capabilities and the contractor's cost proposals, which may not always reflect the most economical price. Another risk is reduced innovation, as the sole provider may have less incentive to explore novel or more cost-effective solutions compared to a competitive environment. Furthermore, the government's leverage in managing scope changes or addressing performance issues can be diminished. Diligent oversight, robust negotiation, and thorough cost analysis are critical to mitigating these risks.
What is Boeing's track record with F/A-18 Super Hornet development and manufacturing contracts?
The Boeing Company has an extensive and long-standing track record with the F/A-18 Super Hornet program, having served as the prime contractor for its development, production, and sustainment for decades. Boeing has successfully delivered numerous Super Hornet variants to the U.S. Navy and international customers. Their experience encompasses various phases of the aircraft lifecycle, including initial design, advanced capabilities integration, and ongoing manufacturing. While specific performance metrics for all past contracts are not publicly detailed, Boeing's continued role as the sole-source provider for critical engineering and manufacturing tasks for this platform suggests a generally positive performance history and established expertise recognized by the Department of the Navy.
How does this contract contribute to the overall sustainment and modernization strategy of the U.S. Navy's fighter fleet?
This contract is a crucial element of the U.S. Navy's strategy to sustain and modernize its F/A-18 Super Hornet fleet. The non-recurring engineering (NRE) and associated items are specifically for the Kuwait variant, implying an effort to enhance or adapt the aircraft to meet specific operational requirements, potentially for a foreign military sale or a specialized U.S. Navy role. Such investments in engineering are vital for extending the service life of existing platforms, integrating new technologies, improving performance, and ensuring the fleet remains capable against evolving threats. By investing in NRE, the Navy ensures that its Super Hornets can continue to serve effectively for years to come, complementing or bridging the gap until newer platforms are fully fielded.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
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: $1,122,466,004
Exercised Options: $1,122,466,004
Current Obligation: $1,122,466,004
Subaward Activity
Number of Subawards: 135
Total Subaward Amount: $467,686,122
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-03-30
Current End Date: 2023-12-31
Potential End Date: 2023-12-31 00:00:00
Last Modified: 2025-12-09
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