Navy awards $5.5B for F/A-18E aircraft manufacturing to Boeing, with 1,458 contracts awarded

Contract Overview

Contract Amount: $5,496,533,531 ($5.5B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-05-08

End Date: 2028-08-31

Contract Duration: 3,768 days

Daily Burn Rate: $1.5M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: F/A-18E AIRCRAFT

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $5.50 billion to THE BOEING COMPANY for work described as: F/A-18E AIRCRAFT Key points: 1. Value for money assessed through firm-fixed-price contract type, aiming to control costs. 2. Sole-source procurement raises questions about competitive pricing and potential cost overruns. 3. Long contract duration (2018-2028) indicates a sustained need for these aircraft. 4. Performance context relies on Boeing's established role in F/A-18 production. 5. Sector positioning highlights Boeing's dominance in fighter jet manufacturing. 6. Risk indicators include potential supply chain disruptions and evolving defense needs over the contract's life.

Value Assessment

Rating: fair

The total award of over $5.5 billion for F/A-18E aircraft manufacturing represents a significant investment. While the firm-fixed-price contract type is intended to provide cost certainty, the lack of competition for this sole-source award makes direct value-for-money comparisons difficult. Benchmarking against similar sole-source defense contracts would be necessary to fully assess pricing fairness. The sheer volume of 1,458 individual awards suggests a complex and ongoing procurement relationship.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to The Boeing Company, indicating that competition was not sought. This approach is often taken for specialized defense systems where a single contractor possesses the unique capabilities and intellectual property required. The lack of multiple bidders means that price discovery through competitive bidding was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards can limit taxpayer savings by removing the downward pressure on prices that competition typically provides. This necessitates robust government oversight to ensure fair pricing.

Public Impact

The U.S. Navy is the primary beneficiary, receiving advanced F/A-18E Super Hornet fighter jets. These aircraft are crucial for maintaining air superiority and conducting strike missions. The contract supports jobs within Boeing's aerospace manufacturing facilities, primarily in Missouri. The delivery of these aircraft impacts naval aviation readiness and global force projection capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits price competition, potentially increasing costs for taxpayers.
Long-term nature of the contract exposes the government to risks of technological obsolescence.
Dependence on a single supplier can create vulnerabilities in the supply chain.
Potential for cost overruns if not rigorously managed due to lack of competitive pressure.

Positive Signals

Firm-fixed-price contract type provides cost predictability for the government.
Boeing's established expertise in F/A-18 production suggests a lower risk of technical failure.
Sustained production ensures continued availability of critical naval air assets.
Long-term award facilitates strategic planning for the Navy's fighter fleet.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. The F/A-18E Super Hornet is a key platform within this sector, and its continued production is vital for maintaining U.S. air power. Boeing is a dominant player in fighter aircraft manufacturing, and this contract represents a substantial portion of its defense revenue. Comparable spending benchmarks would likely involve other major defense aircraft procurement programs.

Small Business Impact

This contract does not appear to have a specific small business set-aside component. However, as a large prime contractor, Boeing is expected to engage small businesses as subcontractors for various components and services. The extent of subcontracting to small businesses will be a key factor in assessing the broader economic impact on the small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of Defense's contracting and program management offices. The firm-fixed-price nature shifts some risk to the contractor, but the government must still monitor performance, delivery schedules, and adherence to specifications. Transparency is facilitated through contract award databases, but detailed cost breakdowns may be limited due to the sole-source nature. Inspector General investigations could be initiated if fraud, waste, or abuse is suspected.

Related Government Programs

F/A-18 Hornet Program
Naval Air Systems Command (NAVAIR) Contracts
Defense Production Act Purchases
Major Defense Acquisition Programs

Risk Flags

Sole-source procurement
Long contract duration
High dollar value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.50 billion to THE BOEING COMPANY. F/A-18E AIRCRAFT

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 $5.50 billion.

What is the period of performance?

Start: 2018-05-08. End: 2028-08-31.

What is Boeing's historical performance record with the F/A-18 program?

Boeing has a long and established history with the F/A-18 program, having been the prime contractor for both the original F/A-18 Hornet and its successor, the F/A-18E/F Super Hornet. The company has consistently delivered aircraft that meet or exceed performance specifications, though like many large defense programs, there have been instances of schedule adjustments and cost reviews. Boeing's extensive experience provides a high degree of confidence in its ability to manage production and deliver the Super Hornets as contracted. Their track record indicates a strong understanding of the platform's complexities and the Navy's operational requirements, contributing to the sole-source justification for continued production.

How does the per-unit cost of the F/A-18E compare to similar fighter aircraft procured by the U.S. military?

Direct per-unit cost comparisons for the F/A-18E are complex due to the sole-source nature of this specific award and the varying configurations and support packages included in different contracts. However, historical data and industry analyses often place the F/A-18E/F Super Hornet in a mid-to-high cost range compared to other contemporary fighter jets. For instance, aircraft like the F-16 Fighting Falcon (in its later variants) or the F-35 Lightning II (depending on the variant and lot) can have different acquisition costs. The F-35, being a newer generation aircraft with advanced stealth capabilities, generally has a higher per-unit cost. The F/A-18E/F's cost is influenced by its specific capabilities, including carrier suitability and its role as a strike fighter, which differentiates it from air superiority or multi-role fighters.

What are the primary risks associated with a sole-source award for major defense equipment like the F/A-18E?

The primary risk associated with a sole-source award for major defense equipment like the F/A-18E is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government has less leverage to negotiate the lowest possible price. This can lead to higher costs for taxpayers over the life of the contract. Another significant risk is contractor complacency; a sole-source provider might be less incentivized to innovate or improve efficiency compared to a contractor facing competition. Furthermore, sole-source awards can create a dependency on a single supplier, making the government vulnerable to supply chain disruptions, price hikes, or the contractor's business decisions. Robust government oversight and negotiation are critical to mitigate these risks.

How does the duration of this contract (2018-2028) impact the Navy's long-term strategic planning?

The 10-year duration of this contract (2018-2028) provides the U.S. Navy with significant strategic planning stability for its carrier-based air wing. It ensures a consistent supply of F/A-18E Super Hornets, allowing the Navy to maintain its operational fleet size and capabilities without immediate concerns about aircraft availability. This long-term commitment enables better budgeting, training, and maintenance planning. It also signals a continued reliance on the Super Hornet platform for a substantial period, influencing decisions about future fighter development and procurement strategies. The extended timeframe allows for potential upgrades and modifications to be incorporated throughout the production run, keeping the aircraft relevant.

What is the historical spending trend for F/A-18 aircraft manufacturing by the Department of Defense?

Historical spending on F/A-18 aircraft manufacturing by the Department of Defense has been substantial and consistent over several decades, reflecting the platform's critical role in naval aviation. Annual spending fluctuates based on production rates, specific contract awards (including new builds, upgrades, and sustainment), and the overall defense budget. Major procurement phases for the F/A-18 and its variants have historically represented billions of dollars annually. The current contract, valued at over $5.5 billion, is indicative of the ongoing investment required to maintain and modernize the Navy's Super Hornet fleet. Trends show a sustained commitment to this aircraft type, even as newer platforms like the F-35 are introduced.

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: N0001917R0113

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: $5,497,322,798

Exercised Options: $5,496,642,531

Current Obligation: $5,496,533,531

Actual Outlays: $251,159,428

Subaward Activity

Number of Subawards: 710

Total Subaward Amount: $3,347,313,466

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline