Boeing awarded $1.5B contract for 28 F/A-18E/F aircraft and related components

Contract Overview

Contract Amount: $1,518,660,771 ($1.5B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-06-27

End Date: 2026-06-30

Contract Duration: 2,925 days

Daily Burn Rate: $519.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 28 KUWAIT KAF-18E/F AIRCRAFT AND 56 COMMERCIAL PXMC CARDS

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $1.52 billion to THE BOEING COMPANY for work described as: 28 KUWAIT KAF-18E/F AIRCRAFT AND 56 COMMERCIAL PXMC CARDS Key points: 1. Contract awarded for advanced fighter aircraft, indicating significant defense spending. 2. Sole-source award suggests limited market alternatives or specific contractor capabilities. 3. Long contract duration implies a sustained need for these aircraft. 4. Fixed-price incentive contract type aims to balance cost control with performance. 5. Contract awarded by the Department of Defense, a major federal spender. 6. Aircraft manufacturing sector sees substantial investment through this award.

Value Assessment

Rating: fair

The contract value of $1.52 billion for 28 F/A-18E/F aircraft and associated components appears substantial. Benchmarking against historical F/A-18 procurements is necessary for a precise value-for-money assessment. Given the sole-source nature, direct price comparisons are difficult, but the fixed-price incentive structure suggests an attempt to manage costs while ensuring delivery. The base award amount of $519.2 million for the aircraft alone warrants further scrutiny against industry averages for similar platforms.

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, intellectual property, or when there are no viable alternatives. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement. The justification for this sole-source award would need to be thoroughly reviewed to ensure it aligns with federal acquisition regulations.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government's ability to negotiate the best possible price is diminished in sole-source situations.

Public Impact

The U.S. Navy is the primary beneficiary, receiving advanced fighter aircraft essential for national defense. Services delivered include the manufacturing and delivery of 28 F/A-18E/F aircraft and 56 commercial PXMC cards. The geographic impact is primarily within the United States, supporting domestic manufacturing and defense capabilities. This contract supports jobs within the aerospace and defense manufacturing sector, particularly at The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Long-term contract duration of nearly 2925 days requires ongoing oversight to manage performance and costs.
Fixed-price incentive contract type can lead to cost overruns if not managed carefully.
Reliance on a single contractor for critical defense assets poses a strategic risk.

Positive Signals

Awarding contract for advanced F/A-18E/F aircraft ensures continued modernization of naval air power.
The Boeing Company has a long-standing track record in producing this aircraft type.
Fixed-price incentive contract structure provides incentives for contractor performance and cost control.
Contract duration aligns with the expected service life and operational tempo of these aircraft.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long production cycles. This contract falls within the aircraft manufacturing sub-sector, a critical component of national defense industrial base. The F/A-18E/F Super Hornet is a key platform for the U.S. Navy. Spending in this area is often driven by strategic defense needs and technological advancements, with major players like Boeing dominating the market for specific platforms.

Small Business Impact

This contract does not appear to include specific small business set-asides, as indicated by 'sb: false'. The primary contractor, The Boeing Company, is a large aerospace firm. While Boeing may engage small businesses as subcontractors, the direct award does not prioritize small business participation. Further analysis of Boeing's subcontracting plan would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Defense, potentially through the Defense Contract Management Agency (DCMA). Accountability measures are embedded within the fixed-price incentive contract type, which links contractor profit to performance and cost targets. Transparency may be limited due to the sole-source nature of the award, but contract modifications and performance reports should be available through federal procurement databases.

Related Government Programs

F/A-18 Hornet Program
Naval Aviation Procurement
Defense Aircraft Manufacturing
Fixed-Price Incentive Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Potential for cost overruns
Long contract duration
Reliance on single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.52 billion to THE BOEING COMPANY. 28 KUWAIT KAF-18E/F AIRCRAFT AND 56 COMMERCIAL PXMC CARDS

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $1.52 billion.

What is the period of performance?

Start: 2018-06-27. End: 2026-06-30.

What is The Boeing Company's track record with F/A-18 aircraft production and delivery?

The Boeing Company has a long and extensive history with the F/A-18 program, having been the prime contractor for various iterations of the aircraft, including the F/A-18E/F Super Hornet. They have consistently delivered these aircraft to the U.S. Navy and international partners. Their track record includes managing complex production lines, integrating advanced avionics and weapons systems, and meeting delivery schedules, although like any large defense program, there have been instances of schedule adjustments and cost reviews over the decades. The company's deep experience with this specific platform suggests a high likelihood of successful execution for this new contract, barring unforeseen production challenges or supply chain disruptions.

How does the value of this contract compare to previous F/A-18E/F procurements?

Directly comparing the $1.52 billion contract value for 28 aircraft to previous F/A-18E/F procurements requires careful consideration of inflation, contract scope, and specific configurations. The base award for the aircraft alone is $519.2 million, which translates to approximately $18.5 million per aircraft before accounting for the PXMC cards and other components. Historical data suggests that unit costs for the Super Hornet have varied significantly based on the specific block number, quantity ordered, and economic conditions at the time of procurement. Without detailed historical unit cost data adjusted for inflation and scope, a precise comparison is challenging. However, the current award appears to be within the expected range for advanced fighter aircraft procurement, though the sole-source nature warrants scrutiny for potential price inflation compared to a competitive scenario.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract stem from the lack of competition. This can lead to reduced price negotiation leverage for the government, potentially resulting in higher costs than if the contract were competed. There's also a risk of complacency from the contractor, as there is no direct competitive pressure to innovate or improve efficiency. Furthermore, reliance on a single supplier for critical defense assets like the F/A-18E/F creates a strategic vulnerability. Any production delays, quality issues, or supply chain disruptions experienced by Boeing could have significant impacts on naval readiness. The government must implement robust oversight to mitigate these risks.

How effective is the fixed-price incentive (FPI) contract type in managing costs for this program?

The Fixed-Price Incentive (FPI) contract type aims to provide a middle ground between fixed-price and cost-plus contracts, offering incentives for both the contractor and the government. In an FPI contract, the final price is adjusted based on the contractor's performance against target cost and target profit goals. If the contractor achieves lower costs than targeted, both parties share in the savings. Conversely, if costs exceed targets, the contractor bears a portion of the overrun, up to a ceiling price. This structure incentivizes the contractor to control costs and perform efficiently. However, the effectiveness hinges on realistic target setting and diligent government oversight to ensure the contractor is genuinely motivated to meet or beat targets, rather than simply passing on costs.

What are the historical spending patterns for F/A-18E/F aircraft procurement by the Department of Defense?

Historical spending patterns for F/A-18E/F aircraft procurement by the Department of Defense show a consistent, albeit fluctuating, investment over the past two decades. The U.S. Navy has been the primary customer, procuring these aircraft in various blocks and configurations. Annual spending has varied based on budget allocations, production rates, and specific fleet modernization needs. Major procurement contracts have been awarded to The Boeing Company, often through multi-year agreements to achieve economies of scale. While specific dollar amounts fluctuate year-to-year, the F/A-18E/F program represents a significant and ongoing expenditure within the Navy's aviation budget, reflecting its importance as a frontline fighter and attack aircraft.

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

Solicitation ID: N0001918R1060

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: $1,518,660,771

Exercised Options: $1,518,660,771

Current Obligation: $1,518,660,771

Subaward Activity

Number of Subawards: 127

Total Subaward Amount: $720,304,451

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline