Department of the Navy awards $86.7M contract to The Boeing Company for aircraft parts, utilizing a sole-source approach

Contract Overview

Contract Amount: $86,687,291 ($86.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-09-20

End Date: 2023-08-31

Contract Duration: 1,441 days

Daily Burn Rate: $60.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACMC

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $86.7 million to THE BOEING COMPANY for work described as: ACMC Key points: 1. Contract awarded to a single, established provider suggests potential for higher costs due to limited negotiation leverage. 2. Sole-source procurement raises questions about the availability of competitive alternatives and potential cost savings. 3. The contract's duration of over 4 years indicates a long-term need for these specific aircraft parts. 4. Fixed-price contract structure shifts cost overrun risk to the contractor, but initial pricing is key. 5. The absence of small business set-asides may limit opportunities for smaller firms in this procurement. 6. Geographic location of performance in Missouri could have localized economic impacts.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar aircraft parts. The fixed-price nature provides some cost certainty, but the lack of competition means the government may not have secured the lowest possible price. Further analysis would require understanding the specific nature of the aircraft parts and the market for their production. Without competitive bids, it's difficult to definitively assess if the pricing reflects fair market value.

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 is typically used when only one responsible source is available or when there is a compelling justification for not seeking competition. The lack of multiple bidders means there was no direct price comparison or negotiation leverage derived from a competitive bidding process, potentially impacting the final price achieved.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically seen in competitive environments. This limits the government's ability to ensure it is receiving the best possible value for its investment.

Public Impact

The primary beneficiary is the Department of the Navy, ensuring the continued operational readiness of its aircraft fleet. Services delivered include the provision of essential aircraft parts, crucial for maintenance and repair operations. The geographic impact is concentrated in Missouri, where the contractor is located, potentially supporting local jobs and the regional economy. Workforce implications may include sustained employment for skilled labor at The Boeing Company's facilities in Missouri.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the justification for sole-sourcing requires further scrutiny.
Absence of small business participation may overlook opportunities for economic inclusion.
Long contract duration could mask inefficiencies if not closely monitored.
Specific part details are not provided, hindering a precise value assessment.

Positive Signals

Contract awarded to a major defense contractor with a known track record.
Fixed-price contract shifts some financial risk to the contractor.
Ensures continued availability of critical aircraft components for military operations.
Performance is tied to a specific location, potentially benefiting a regional economy.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such components is often characterized by high barriers to entry due to specialized technology, stringent quality requirements, and established relationships with prime contractors. Spending in this area is critical for maintaining national defense capabilities. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of specific aircraft parts and the sole-source award.

Small Business Impact

This contract does not appear to include a small business set-aside. The award to a large prime contractor like The Boeing Company suggests that subcontracting opportunities may exist for small businesses within their supply chain. However, without specific subcontracting plans or goals mandated within this award, the direct impact on the small business ecosystem is uncertain and relies on the prime contractor's internal policies.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the contract terms, particularly the fixed-price structure. Transparency is limited due to the sole-source nature of the award; the justification for this approach would be a key area for oversight. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Component Manufacturing
Defense Procurement
Sole-Source Defense Contracts
Department of the Navy Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for uncompetitive pricing.
Limited transparency on specific part details.
Absence of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $86.7 million to THE BOEING COMPANY. ACMC

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 $86.7 million.

What is the period of performance?

Start: 2019-09-20. End: 2023-08-31.

What is The Boeing Company's track record with the Department of the Navy for similar aircraft parts?

The Boeing Company has a long-standing and extensive relationship with the Department of the Navy, serving as a major defense contractor. They are involved in the production of various aircraft platforms and their associated components. While specific data on past performance for this exact part is not detailed here, Boeing's history includes numerous large-scale contracts for military aircraft, engines, and parts. Their track record generally indicates significant experience and capability in meeting the stringent requirements of naval aviation. However, performance can vary across different contracts, and a deeper dive into past delivery schedules, quality metrics, and cost performance for analogous contracts would be necessary for a comprehensive assessment.

How does the $86.7 million value compare to similar aircraft parts contracts, especially those competed openly?

Direct comparison of the $86.7 million value is difficult due to the sole-source nature of this award and the specificity of the aircraft parts. Competitively procured contracts for similar components often yield lower prices due to the bidding process driving down costs. Sole-source awards, by definition, lack this competitive pressure. To benchmark effectively, one would need to identify comparable parts (in terms of complexity, material, and function) that have been procured competitively by the Navy or other military branches. Without such comparable data, it's challenging to definitively state whether this $86.7 million represents a fair market price or if significant savings were foregone due to the lack of competition.

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

The primary risk is the potential for inflated pricing due to the absence of competitive bidding. The government has limited leverage to negotiate the best possible price when only one vendor is considered. Another risk is the potential for complacency from the contractor, as the lack of competition reduces the incentive to innovate or improve efficiency to secure future business. Furthermore, if there are unforeseen technical issues or delays, the sole-source nature might complicate finding alternative solutions quickly. Dependence on a single supplier also poses a supply chain risk; any disruption at The Boeing Company could directly impact naval readiness.

How effective is the fixed-price contract type in ensuring value for money in this specific context?

The Firm Fixed Price (FFP) contract type is generally effective in controlling costs for the government, as it places the responsibility for cost overruns on the contractor. This means the $86.7 million ceiling is the maximum the government is obligated to pay, assuming no contract modifications. However, the effectiveness in ensuring *value for money* is heavily dependent on the initial price negotiation. Since this is a sole-source award, the initial price might not reflect the lowest achievable cost. While FFP provides cost certainty, it doesn't guarantee the best possible price if competition is absent. The government must still ensure the initial price is fair and reasonable through robust cost analysis, which is more challenging without market comparisons.

What are the historical spending patterns for aircraft parts by the Department of the Navy, and how does this contract fit?

The Department of the Navy consistently spends billions of dollars annually on aircraft parts, reflecting the extensive size and operational tempo of its aviation fleet. Spending patterns are driven by the types of aircraft in service, their maintenance schedules, and modernization programs. Contracts for aircraft parts range from small, routine orders to large, multi-year procurements for specific platforms or components. This $86.7 million contract for 'Other Aircraft Parts and Auxiliary Equipment' fits within the broader category of sustainment spending, aimed at keeping existing aircraft operational. Its sole-source nature suggests it might be for specialized or proprietary parts where competition is deemed impractical or unavailable, a common occurrence in defense procurement for unique systems.

What is the justification provided for awarding this contract as sole-source instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED' and is 'SOLE SOURCE'. While the specific justification is not detailed in the abbreviated data, common reasons for sole-source awards in defense contracting include: (1) only one responsible source is available (e.g., proprietary technology, unique manufacturing capability); (2) urgent and compelling need where competition is not feasible; or (3) specific statutory authority allowing for non-competitive procurement. For aircraft parts, it often relates to proprietary designs, unique tooling, or integration with existing complex systems where only the original manufacturer can provide the necessary components without compromising safety, performance, or interoperability. A formal justification document (e.g., Justification and Approval - J&A) would typically exist within the agency.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001917R0040

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: $86,687,291

Exercised Options: $86,687,291

Current Obligation: $86,687,291

Actual Outlays: $15,914,772

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $69,472,090

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline