Boeing awarded $122.6M for aircraft manufacturing, with a fixed-price incentive contract type
Contract Overview
Contract Amount: $122,650,948 ($122.7M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2018-10-24
End Date: 2026-03-31
Contract Duration: 2,715 days
Daily Burn Rate: $45.2K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: UPGRADE IRST BLOCK I PODS
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $122.7 million to THE BOEING COMPANY for work described as: UPGRADE IRST BLOCK I PODS Key points: 1. Contract value of $122.6 million indicates significant investment in aircraft manufacturing capabilities. 2. The fixed-price incentive contract type suggests a shared risk between the government and contractor to control costs while achieving performance targets. 3. The contract duration of over 2700 days points to a long-term strategic need for these aircraft components or services. 4. The absence of a small business set-aside suggests the primary contractor, Boeing, is expected to fulfill the majority of the work. 5. The 'MISSOURI' location for the contractor may have implications for regional economic impact and workforce development. 6. The contract's focus on 'Aircraft Manufacturing' places it within a critical sector for national defense and aerospace.
Value Assessment
Rating: fair
Benchmarking the value of this $122.6 million contract is challenging without specific details on the aircraft components or services procured. However, for large-scale aircraft manufacturing, this figure appears within a reasonable range for specialized components or modifications. The fixed-price incentive structure aims to provide value by incentivizing cost control, but the ultimate value depends on performance against targets. Further analysis would require comparing the unit costs or scope of work to similar contracts for comparable aircraft systems.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded as 'NOT COMPETED,' indicating a sole-source or limited competition procurement. This approach is often used when a specific contractor possesses unique capabilities, proprietary technology, or when urgent needs arise that preclude a full and open competition. The lack of competition means that price discovery through market forces was limited, potentially leading to higher costs than if multiple bidders had participated.
Taxpayer Impact: For taxpayers, a sole-source award means there was no opportunity to benefit from competitive bidding, which typically drives down prices. The government relies on negotiation and oversight to ensure a fair price in such cases.
Public Impact
The primary beneficiaries are likely the Department of the Navy and potentially other branches of the military requiring these specific aircraft manufacturing capabilities. The services delivered are related to aircraft manufacturing, which could include production, modification, or sustainment of aircraft components. The geographic impact is concentrated in Missouri, where the contractor, The Boeing Company, is located, potentially supporting local jobs and the regional economy. Workforce implications include the employment of skilled labor in aerospace manufacturing within the specified region.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may result in higher costs for taxpayers.
- Sole-source awards can limit innovation by excluding potential new entrants.
- Long contract duration increases exposure to potential cost overruns or scope creep if not managed effectively.
Positive Signals
- Boeing is a major defense contractor with extensive experience, suggesting a high likelihood of successful delivery.
- Fixed-price incentive contracts align contractor and government interests in cost control.
- The contract addresses a specific need within the Department of Defense, indicating strategic importance.
Sector Analysis
The aerospace and defense manufacturing sector is characterized by high barriers to entry, complex supply chains, and significant government investment. This contract, valued at over $122 million, falls within the substantial spending typical for major defense platforms. The 'Aircraft Manufacturing' classification (NAICS 336411) encompasses establishments primarily engaged in manufacturing aircraft, aircraft parts, and related equipment. Spending in this sector is often driven by national security requirements and technological advancements, with large, established companies like Boeing dominating.
Small Business Impact
This contract does not appear to have a small business set-aside (SS=false, SB=false). As a sole-source award to a large prime contractor like Boeing, the primary focus is on the prime's capabilities. There may be opportunities for small businesses to participate as subcontractors to Boeing, but this is not explicitly detailed in the provided data. The absence of a set-aside means direct contracting opportunities for small businesses are limited for this specific award.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the sole-source nature, robust negotiation and detailed performance monitoring are crucial. Transparency may be limited due to the non-competitive award, but contract modifications, performance reports, and payment milestones would be subject to internal review. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any issues arise.
Related Government Programs
- F/A-18 Super Hornet Program
- Naval Aviation Sustainment
- Aircraft Component Production
- Defense Manufacturing Contracts
Risk Flags
- Sole-source award limits price competition.
- Long contract duration increases exposure to market changes.
- Fixed-price incentive requires careful monitoring of cost and performance.
Tags
defense, department-of-defense, department-of-the-navy, aircraft-manufacturing, fixed-price-incentive, sole-source, large-contract, missouri, long-term-contract, boeing
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $122.7 million to THE BOEING COMPANY. UPGRADE IRST BLOCK I PODS
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 $122.7 million.
What is the period of performance?
Start: 2018-10-24. End: 2026-03-31.
What specific aircraft components or manufacturing services are being procured under this $122.6 million contract?
The provided data indicates the contract is for 'Aircraft Manufacturing' (NAICS 336411) and is a delivery order under a larger contract. However, the specific components or services are not detailed. This could range from the production of new aircraft parts, modification of existing airframes, or specialized manufacturing processes integral to naval aircraft. Without further details, it's difficult to ascertain the exact nature of the work, but it is clearly tied to the operational readiness and capabilities of the Department of the Navy's aviation assets.
How does the fixed-price incentive (FPI) contract type function in this context, and what are its implications for cost control?
A Fixed-Price Incentive (FPI) contract establishes a target cost, a target profit, and a price ceiling. The final price is determined by the contractor's actual costs, with the government and contractor sharing any savings below the target cost or any cost overruns above the target cost, up to the price ceiling. In this $122.6 million contract, the FPI structure incentivizes Boeing to control costs to achieve a higher profit margin, as they share in any savings. Conversely, if costs exceed the target, both parties bear a portion of the overrun, but the government's liability is capped at the price ceiling. This aims to balance cost efficiency with performance assurance.
What is the historical spending pattern for aircraft manufacturing with The Boeing Company by the Department of the Navy?
Historical spending data for aircraft manufacturing between The Boeing Company and the Department of the Navy would reveal trends in contract awards, types, and values over time. Given Boeing's long-standing role as a major defense contractor, it is highly probable that there have been numerous contracts for various aircraft platforms and components. Analyzing this history would show if this $122.6 million award is consistent with past investments, if there's an increasing or decreasing trend in spending for similar services, and how this specific contract fits into the broader strategic procurement landscape for naval aviation.
What are the potential risks associated with a sole-source award for aircraft manufacturing, and how are they mitigated?
Sole-source awards, like this one, carry inherent risks, primarily the potential for inflated pricing due to the lack of competitive pressure. There's also a risk of complacency from the contractor, as there's no immediate threat of losing future business to competitors. Mitigation strategies employed by the government typically include rigorous price negotiation, detailed cost analysis, establishing clear performance metrics, and robust contract oversight. For this contract, the Department of the Navy would need to ensure that the negotiated price is fair and reasonable based on market data, historical costs, and the contractor's proposed cost breakdown. Continuous monitoring of performance and adherence to contract terms are also critical.
What is the significance of the contract duration (2715 days) in relation to the contract value ($122.6M)?
A duration of 2715 days (approximately 7.4 years) for a $122.6 million contract suggests a long-term, strategic requirement for the aircraft manufacturing services or components being procured. This extended timeline allows for phased production, integration, and potential sustainment activities. It also implies a stable demand for the product or service, reducing the need for frequent re-competition. For taxpayers, a longer duration can sometimes lead to better economies of scale and more predictable budgeting, but it also necessitates sustained oversight to manage risks like inflation, technological obsolescence, and potential shifts in program priorities over the contract's life.
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: 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: $122,650,948
Exercised Options: $122,650,948
Current Obligation: $122,650,948
Actual Outlays: $9,935,227
Subaward Activity
Number of Subawards: 5
Total Subaward Amount: $74,559,600
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
Start Date: 2018-10-24
Current End Date: 2026-03-31
Potential End Date: 2026-03-31 00:00:00
Last Modified: 2025-07-03
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