Navy awards $86.7M contract for F/A-18 TEFR Kits to Boeing, a sole-source procurement

Contract Overview

Contract Amount: $86,658,624 ($86.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-06-27

End Date: 2022-06-01

Contract Duration: 1,070 days

Daily Burn Rate: $81.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: PROCUREMENT OF F/A-18 TEFR KITS

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: PROCUREMENT OF F/A-18 TEFR KITS Key points: 1. The contract value of $86.7 million for TEFR kits represents a significant investment in maintaining the F/A-18 fleet. 2. Sole-source procurement raises questions about potential price inflation and lack of competitive pressure. 3. The fixed-price incentive contract type suggests an attempt to control costs while incentivizing performance. 4. The duration of the contract (1070 days) indicates a substantial and ongoing need for these kits. 5. The absence of small business set-aside flags suggests this procurement did not prioritize small business participation. 6. The procurement falls under the Aircraft Manufacturing NAICS code, highlighting its specific industrial sector.

Value Assessment

Rating: fair

Benchmarking the value of these TEFR kits is challenging without specific performance metrics or comparable contract data. The fixed-price incentive structure aims to balance cost control with contractor motivation. However, the sole-source nature limits direct price comparisons to the open market, making it difficult to definitively assess if the $86.7 million represents optimal value for money. Further analysis would require understanding the specific components and complexity of the TEFR kits.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to The Boeing Company. This indicates that the government determined Boeing was the only source capable of providing the required F/A-18 TEFR kits. The lack of competition means that pricing was not subjected to market forces, potentially leading to higher costs than if multiple bidders had participated. The rationale for sole-source procurement, such as unique technical capabilities or proprietary technology, would need to be examined.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, there is less assurance that the government secured the best possible price for these essential aircraft components.

Public Impact

The primary beneficiaries are the U.S. Navy's F/A-18 fleet, ensuring operational readiness and safety through the provision of critical TEFR kits. These kits are essential for maintaining the airworthiness and performance capabilities of the F/A-18 Super Hornet and Growler aircraft. The contract supports jobs within The Boeing Company's aerospace manufacturing facilities, likely in Missouri where the contract is managed. The successful delivery of these kits directly impacts the U.S. Navy's ability to conduct its missions effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Fixed-price incentive contracts can sometimes lead to cost overruns if not managed carefully.
No explicit mention of small business subcontracting goals.

Positive Signals

Contract awarded to a known, established prime contractor with extensive experience in F/A-18 systems.
Fixed-price incentive contract structure aims to align contractor and government interests on cost and performance.
Contract duration suggests a stable, long-term need for these critical components.
The procurement supports the sustainment of a key naval aviation platform.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and component supply. The F/A-18 TEFR kits are specialized parts crucial for the operational integrity of a major military aircraft platform. The market for such specialized components is often dominated by a few large, established manufacturers like Boeing, due to the high barriers to entry, including technical expertise, manufacturing capabilities, and existing relationships with the prime aircraft manufacturer. Comparable spending benchmarks would likely be found within other sustainment contracts for major defense platforms.

Small Business Impact

This contract does not appear to have a small business set-aside (ss=false, sb=false). The sole-source nature of the award further suggests that opportunities for small businesses to participate directly as prime contractors were not pursued. While Boeing may utilize small business subcontractors, the contract details provided do not indicate specific subcontracting plans or goals, leaving the direct impact on the small business ecosystem unclear.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The fixed-price incentive contract type implies performance monitoring to ensure delivery and quality standards are met. Transparency regarding the sole-source justification and any subsequent modifications or performance reviews would be key to assessing accountability. The Inspector General for the Department of Defense may also have jurisdiction for audits and investigations.

Related Government Programs

F/A-18 Super Hornet Sustainment
Naval Aviation Readiness Programs
Aircraft Component Manufacturing
Defense Logistics Agency (DLA) Support

Risk Flags

Sole-source procurement may lead to higher costs.
Lack of competition limits price discovery.
Potential for contractor lock-in.
Limited transparency on justification for sole-source award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $86.7 million to THE BOEING COMPANY. PROCUREMENT OF F/A-18 TEFR KITS

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: 2019-06-27. End: 2022-06-01.

What is the specific function and criticality of the F/A-18 TEFR Kits?

TEFR stands for 'Tactical Electronic Warfare Receiver' or similar electronic warfare system components. These kits are critical for the F/A-18 aircraft's electronic warfare capabilities, which are essential for detecting, identifying, and countering enemy radar and missile threats. They play a vital role in survivability and mission effectiveness in contested airspace. The criticality stems from their direct impact on the aircraft's ability to operate safely and achieve its objectives in modern combat environments. Without these kits, the F/A-18's electronic warfare suite would be compromised, significantly reducing its operational utility and increasing risk to aircrews.

What is the justification for the sole-source procurement of these TEFR kits?

The justification for a sole-source procurement typically involves demonstrating that only one responsible source can provide the required supplies or services. For specialized aircraft components like TEFR kits, this could be due to proprietary technology, unique manufacturing processes, extensive integration with the existing aircraft systems, or specific performance requirements that only one contractor can meet. The Department of the Navy would have a formal justification document (e.g., a Justification and Approval - J&A) outlining these reasons. Without access to this document, it's difficult to definitively assess the validity of the sole-source determination, but it implies that Boeing possesses unique capabilities or intellectual property related to these specific kits.

How does the Fixed Price Incentive (FPI) contract type aim to manage costs and performance?

A Fixed Price Incentive (FPI) contract establishes a target cost, a target profit, and a price ceiling. The final price is determined by the relationship between the final negotiated cost and the target cost, with incentives for the contractor to control costs. If the final cost is below the target cost, both the government and the contractor share in the savings according to a pre-negotiated formula. Conversely, if the final cost exceeds the target cost, the contractor's profit is reduced, and the government's share of the cost increases up to the price ceiling. This structure incentivizes the contractor to perform efficiently and effectively to achieve a lower final cost, thereby benefiting both parties, while also setting a limit on the government's maximum liability.

What is the historical spending trend for F/A-18 TEFR kits or similar components?

Analyzing historical spending trends for F/A-18 TEFR kits specifically is challenging with the provided data. However, the F/A-18 platform has been in service for decades, undergoing continuous upgrades and sustainment. Spending on components like TEFR kits is likely to be cyclical, influenced by fleet readiness requirements, upgrade programs, and the overall lifecycle of the aircraft. Given the platform's longevity and the critical nature of electronic warfare systems, consistent annual spending on sustainment and upgrades for these components can be expected. The $86.7 million awarded in this single delivery order suggests a significant, albeit potentially episodic, investment in maintaining this capability.

What are the potential risks associated with a sole-source procurement for critical aircraft components?

The primary risk of a sole-source procurement for critical aircraft components is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price. Other risks include reduced innovation, as the sole provider may have less incentive to invest in process improvements or alternative solutions. There's also a dependency risk; if the sole source encounters production issues or goes out of business, the government could face significant supply chain disruptions for essential equipment. Ensuring robust oversight and negotiation is crucial to mitigate these risks.

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: 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: $86,658,624

Exercised Options: $86,658,624

Current Obligation: $86,658,624

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $12,604,605

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