Boeing awarded $16M for aircraft manufacturing support, a sole-source contract with a long duration

Contract Overview

Contract Amount: $16,024,075 ($16.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-09-05

End Date: 2021-09-30

Contract Duration: 1,121 days

Daily Burn Rate: $14.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

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 $16.0 million to THE BOEING COMPANY for work described as: RETROFIT DESIGN&DEVELOPMENT Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competition. 2. The contract's duration of over three years suggests a long-term need for these services. 3. Cost-plus-fixed-fee pricing structure can incentivize cost overruns. 4. The absence of small business participation is noted. 5. This contract falls under aircraft manufacturing, a critical defense sector.

Value Assessment

Rating: fair

The total award of $16,024,074.75 for aircraft manufacturing support appears to be a significant investment. Without specific benchmarks for 'RETROFIT DESIGN&DEVELOPMENT' services, a direct value-for-money assessment is challenging. However, the sole-source nature of the award means there was no direct price competition to establish a market-based rate. The cost-plus-fixed-fee (CPFF) contract type, while allowing flexibility, can sometimes lead to higher costs compared to fixed-price contracts if not managed diligently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities, urgent needs), they limit the opportunity for price discovery through market competition and may result in higher prices than if multiple vendors had competed.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from a competitive bidding process, potentially leading to a less efficient use of public funds.

Public Impact

The primary beneficiary of this contract is the Department of the Navy, receiving design and development support for aircraft. Services delivered include retrofit design and development, crucial for maintaining and upgrading military aircraft. The contract is associated with Missouri (SN: MISSOURI), indicating a potential geographic impact on the local workforce and economy. The contract supports specialized roles within the aerospace and defense industry, likely impacting engineers and technical staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type carries inherent risk of cost escalation.
Long contract duration (1121 days) requires sustained oversight.
No small business set-aside indicates limited opportunities for smaller firms in this specific award.

Positive Signals

Award to a major defense contractor (Boeing) suggests access to established expertise and infrastructure.
Contract addresses a specific need within aircraft manufacturing, indicating strategic alignment.
Delivery order structure implies flexibility in tasking and execution.

Sector Analysis

The aircraft manufacturing sector is a cornerstone of the defense industrial base, characterized by high barriers to entry, significant R&D investment, and long production cycles. This contract, focused on retrofit design and development, fits within the broader ecosystem of aircraft sustainment and modernization. Spending in this area is critical for maintaining fleet readiness and incorporating technological advancements. Comparable spending benchmarks are difficult to ascertain without detailed service scope, but large sole-source awards to prime contractors are common for specialized defense needs.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. The award to a large prime contractor like Boeing suggests that any small business involvement would likely be through lower-tier subcontracts, the details of which are not specified here. This limits direct opportunities for small businesses to compete for the prime contract itself.

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 be higher to ensure the justification for non-competition is valid and that the contractor is delivering services effectively and efficiently. The cost-plus-fixed-fee structure necessitates close monitoring of costs to ensure they remain within reasonable bounds and align with the fixed fee. Transparency is generally maintained through contract databases, but detailed performance metrics may be less public.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Engineering Services
Defense Contractor Support
Military Aircraft Modernization
Naval Aviation Programs

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.0 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 $16.0 million.

What is the period of performance?

Start: 2018-09-05. End: 2021-09-30.

What is the specific nature of the 'RETROFIT DESIGN&DEVELOPMENT' services being procured?

The provided data indicates the contract is for 'RETROFIT DESIGN&DEVELOPMENT' within the Aircraft Manufacturing sector (NAICS 336411) for the Department of the Navy. While the exact technical specifications are not detailed, 'retrofit' implies modifications or upgrades to existing aircraft systems or structures. 'Design and development' suggests that the contractor, The Boeing Company, is responsible for conceptualizing, engineering, and potentially prototyping these modifications. This could range from avionics upgrades, structural enhancements, or integration of new mission equipment. The 'COST PLUS FIXED FEE' (CPFF) contract type suggests that the government reimburses the contractor for allowable costs plus a predetermined fixed fee representing profit.

How does the $16 million award compare to typical spending on similar aircraft retrofit services?

Direct comparison of the $16 million award for 'RETROFIT DESIGN&DEVELOPMENT' to similar contracts is challenging without more specific details on the scope of work, the specific aircraft platforms involved, and the duration of comparable projects. However, given that this is a sole-source award to a major defense contractor (Boeing) for a period exceeding three years (1121 days), the amount appears substantial but not necessarily outside the norm for complex defense modification programs. The absence of competition means there's no direct market benchmark from this specific award. Analysis would require benchmarking against other Navy or DoD contracts for similar aircraft modernization efforts, considering factors like platform type, system complexity, and contractor overhead rates.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for aircraft development?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates the downward price pressure that competition provides. This means the government may pay a higher price than if multiple vendors had competed. Secondly, the Cost-Plus-Fixed-Fee (CPFF) structure, while providing flexibility, can incentivize the contractor to incur higher costs, as the fee (profit) is fixed regardless of the final cost. The government bears the risk of cost overruns. Effective oversight, detailed cost tracking, and robust performance management are crucial to mitigate these risks and ensure value for taxpayer money. The long duration also increases the potential for cost changes and scope creep if not managed tightly.

What is Boeing's track record with the Department of Defense, particularly on aircraft manufacturing contracts?

The Boeing Company has an extensive and long-standing track record as a major defense contractor for the Department of Defense (DoD) and its various branches, including the Department of the Navy. They are a primary manufacturer of numerous military aircraft platforms and provide extensive support services, including design, development, sustainment, and upgrades. Historically, Boeing has been awarded numerous large-dollar contracts for aircraft production, modification, and maintenance. While generally considered a capable provider, like any large contractor, they have faced scrutiny and challenges on specific programs related to cost, schedule, and performance. Their deep integration into the defense supply chain means they are frequently a sole-source or prime contractor for specialized or unique requirements.

How has federal spending on aircraft manufacturing support evolved over the past five years?

Federal spending on aircraft manufacturing support, particularly within the Department of Defense, has remained substantial over the past five years, driven by the need to maintain and modernize aging fleets and develop next-generation platforms. While specific figures for 'retrofit design and development' are granular, overall defense spending on aircraft procurement, modification, and sustainment has been robust. Factors influencing this spending include geopolitical tensions, technological advancements, and strategic priorities. Contracts like this one, awarded on a sole-source basis to major primes like Boeing, represent a significant portion of this spending, especially for specialized or unique upgrade requirements where competition is limited. Trends often show a continued emphasis on upgrades and sustainment for existing platforms alongside investments in new capabilities.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $44,573,303

Exercised Options: $16,024,075

Current Obligation: $16,024,075

Actual Outlays: $169,905

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $17,390,474

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