Department of the Navy awards $211M contract to Boeing for aircraft manufacturing, with no competition

Contract Overview

Contract Amount: $211,210,494 ($211.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-02-08

End Date: 2022-11-30

Contract Duration: 1,756 days

Daily Burn Rate: $120.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NON-RECURRING ENGINEERING

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $211.2 million to THE BOEING COMPANY for work described as: NON-RECURRING ENGINEERING Key points: 1. Significant investment in aircraft manufacturing capabilities. 2. Sole-source award raises questions about price discovery and potential for overpayment. 3. Contract duration of 1756 days suggests a long-term need for these services. 4. The 'NON-RECURRING ENGINEERING' designation implies upfront development or setup costs. 5. Boeing's established role in defense manufacturing suggests a degree of performance reliability. 6. Lack of competition limits opportunities for other manufacturers and potentially higher innovation.

Value Assessment

Rating: questionable

The contract value of $211 million for aircraft manufacturing is substantial. Without competitive bidding, it is difficult to benchmark the value for money. The cost-plus-fixed-fee (CPFF) contract type can incentivize contractors to increase costs, as the government ultimately bears them, though the fixed fee provides some incentive for efficiency. Further analysis would require comparing the scope of work and deliverables to similar sole-source contracts awarded to Boeing or other major defense contractors.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was considered. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified vendors. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price competition and may result in higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from a competitive bidding process. This can lead to higher overall expenditure for the government on this contract.

Public Impact

The Department of the Navy benefits from the acquisition of critical aircraft manufacturing capabilities. This contract supports the production or modification of aircraft essential for naval operations. The geographic impact is primarily centered around Boeing's facilities in Missouri, supporting local employment and the regional economy. The contract likely impacts a specialized workforce within the aerospace and defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source awards can stifle innovation by not encouraging new market entrants.
The CPFF contract type carries inherent risks of cost overruns if not closely managed.

Positive Signals

Boeing is a major, established defense contractor with significant experience in aircraft manufacturing.
The contract is for a specific need within the Department of the Navy's operational requirements.
The fixed fee component of the contract provides some level of cost certainty for the government.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of the broader aerospace and defense industry. The market is dominated by a few large, established players like Boeing and Lockheed Martin. Spending in this sector is heavily influenced by government defense budgets and strategic priorities. Benchmarking this contract's value is challenging without competitive data, but it represents a significant investment in specialized manufacturing capabilities.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false. This suggests that small businesses are unlikely to be directly involved as prime contractors or through mandatory subcontracting plans on this specific award, potentially limiting opportunities for the small business ecosystem in this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Defense Contract Management Agency (DCMA) likely provides quality assurance and performance oversight. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Aviation Programs
Aircraft Procurement
Defense Manufacturing Contracts
Non-Recurring Engineering Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of small business subcontracting

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $211.2 million to THE BOEING COMPANY. NON-RECURRING ENGINEERING

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 $211.2 million.

What is the period of performance?

Start: 2018-02-08. End: 2022-11-30.

What is the specific nature of the 'NON-RECURRING ENGINEERING' (NRE) work being performed under this contract?

Non-Recurring Engineering (NRE) typically refers to the one-time costs associated with the design, development, and testing of a new product or system, or significant modifications to an existing one. For this $211 million Department of the Navy contract with Boeing, the NRE likely pertains to the initial engineering efforts required for the manufacturing of specific aircraft or aircraft components. This could include activities such as detailed design, prototyping, tooling development, and initial testing phases. The 'NON-RECURRING ENGINEERING' designation suggests that these costs are not expected to be repeated for each unit produced, distinguishing them from recurring manufacturing costs. The substantial value allocated to NRE indicates a significant upfront investment in the foundational engineering required for the aircraft program.

How does the cost-plus-fixed-fee (CPFF) contract type typically influence contractor behavior and government cost exposure?

The Cost-Plus-Fixed-Fee (CPFF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to complete the work efficiently to control costs, as the fee remains constant regardless of the final cost. However, it also shifts much of the cost risk to the government, as any cost overruns beyond the estimated amount are borne by the government. For the contractor, the primary motivation is to earn the fixed fee, which can sometimes lead to a focus on meeting the minimum requirements rather than exceeding them, unless other performance incentives are in place. Effective government oversight is crucial in CPFF contracts to ensure costs are reasonable and allocable.

What are the potential risks associated with awarding a contract of this magnitude on a sole-source basis?

Awarding a contract of this magnitude ($211 million) on a sole-source basis carries several potential risks. Primarily, the absence of competition can lead to a lack of price discipline, potentially resulting in the government paying a higher price than if multiple bids were solicited. This can reduce the overall value for taxpayer money. Furthermore, sole-source awards can limit opportunities for innovation and market entry for other capable companies, potentially hindering the development of a more robust and competitive industrial base. It may also signal a lack of proactive market research by the agency to identify alternative sources. Without competitive pressure, there's also a reduced incentive for the sole-source provider to achieve maximum efficiency or offer innovative solutions beyond the minimum contract requirements.

What is Boeing's historical performance record with the Department of the Navy, particularly on similar aircraft manufacturing contracts?

Boeing has a long-standing and extensive history of contracting with the Department of the Navy, serving as a primary supplier for numerous naval aircraft platforms. Historically, Boeing has delivered a wide range of aircraft, including fighters, maritime patrol aircraft, and helicopters, often under complex, multi-year contracts. While specific performance metrics for individual contracts are often proprietary or require deep database access, Boeing's continued selection for major programs suggests a generally satisfactory performance record in terms of meeting technical specifications and delivery schedules, albeit with occasional challenges common in large-scale defense programs. The Department of the Navy relies heavily on Boeing's specialized manufacturing capabilities and established production lines for critical assets.

How does this contract's value and duration compare to other recent aircraft manufacturing awards by the Department of Defense?

The $211 million value and 1756-day (approximately 4.8 years) duration of this contract are substantial, placing it among significant investments within the Department of Defense's aircraft manufacturing portfolio. While specific comparisons require access to detailed contract databases, awards in this range are typical for major aircraft modifications, specialized component production, or the initial phases of new aircraft development or sustainment programs. Contracts for entirely new aircraft platforms or large fleet procurements often run into billions of dollars and span many years. This particular award, designated for 'NON-RECURRING ENGINEERING,' suggests a focus on upfront development or specialized manufacturing rather than mass production, making direct comparisons challenging without knowing the precise scope of work.

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

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: $211,210,494

Exercised Options: $211,210,494

Current Obligation: $211,210,494

Subaward Activity

Number of Subawards: 29

Total Subaward Amount: $112,755,438

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