Boeing awarded $30.35M contract for aircraft manufacturing, with a significant portion for design and development

Contract Overview

Contract Amount: $30,350,120 ($30.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-09-30

End Date: 2026-09-30

Contract Duration: 2,557 days

Daily Burn Rate: $11.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DESIGN AND DEVELOPMENT, QUALIFICATION UNITS, VAL/VER KITS, RECURRING RETROFIT KITS

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $30.4 million to THE BOEING COMPANY for work described as: DESIGN AND DEVELOPMENT, QUALIFICATION UNITS, VAL/VER KITS, RECURRING RETROFIT KITS Key points: 1. Contract awarded to a single, established prime contractor, raising questions about competition. 2. The contract spans over six years, indicating a long-term need for these services. 3. A substantial portion of the award is allocated to design and development, suggesting upfront investment. 4. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 5. The absence of a competitive bidding process warrants scrutiny of the pricing and value. 6. This award falls under Aircraft Manufacturing, a critical sector for defense capabilities.

Value Assessment

Rating: questionable

The contract's value of $30.35 million for aircraft manufacturing components and development is difficult to benchmark without more specific details on the deliverables. As a sole-source award, there is no direct comparison to similar contracts secured through competition. The Cost Plus Fixed Fee structure introduces inherent risk for cost escalation, making a definitive value-for-money assessment challenging without detailed cost breakdowns and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to The Boeing Company. The lack of competition means there were no other bidders to provide alternative proposals or pricing. This approach may be justified by unique capabilities or existing platform integration, but it limits the government's ability to leverage market forces for potentially better pricing or innovative solutions.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive pressure. The government's negotiating position is weakened without alternative offers.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense entities requiring specialized aircraft components and development. Services delivered include design and development, qualification units, and various kits for aircraft. The geographic impact is primarily centered in Missouri, where the contractor is located. This contract supports jobs within the aerospace manufacturing sector, particularly at The Boeing Company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Cost Plus Fixed Fee contract type carries a risk of cost overruns.
Long contract duration (2019-2026) requires sustained oversight to ensure continued value.
Lack of competition may stifle innovation from other potential suppliers.

Positive Signals

Award to a major, established defense contractor suggests a high likelihood of technical capability.
Contract addresses specific needs for aircraft manufacturing, indicating alignment with defense requirements.
The contract includes provisions for qualification units and validation kits, suggesting a focus on readiness and testing.

Sector Analysis

The aerospace manufacturing sector is a critical component of the defense industrial base, characterized by high barriers to entry, significant R&D investment, and long production cycles. This contract, valued at $30.35 million, falls within this domain, specifically supporting aircraft manufacturing. Comparable spending in this sector often involves large-scale production contracts, advanced technology development, and sustainment services for military platforms. The market is dominated by a few major prime contractors, making sole-source awards, while not ideal, sometimes necessary for specialized or integrated systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor is The Boeing Company, a large aerospace firm. While large prime contractors are often required to subcontract portions of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without this information, it's difficult to assess the direct benefits or implications for small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring are crucial to manage costs and ensure deliverables are met. Transparency is limited due to the sole-source nature and lack of public detail on specific performance metrics or cost breakdowns. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Production Contracts
Defense Procurement
Aerospace Manufacturing
Naval Aviation Programs
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
Lack of detailed performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.4 million to THE BOEING COMPANY. DESIGN AND DEVELOPMENT, QUALIFICATION UNITS, VAL/VER KITS, RECURRING RETROFIT 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 $30.4 million.

What is the period of performance?

Start: 2019-09-30. End: 2026-09-30.

What is the specific nature of the 'DESIGN AND DEVELOPMENT, QUALIFICATION UNITS, VAL/VER KITS' being procured under this contract?

The provided data abbreviates the scope as 'DESIGN AND DEVELOPMENT, QUALIFICATION UNITS, VAL/VER KITS'. This suggests the contract covers not only the initial design and development phases for aircraft components or systems but also includes the production of qualification units (likely for testing and validation) and 'VAL/VER KITS' (potentially for validation and verification purposes). These kits could contain necessary parts, tools, or documentation required to validate the performance or integration of the developed design. The exact nature would depend on the specific aircraft program it supports, but it points towards a comprehensive package from initial concept through to validated prototypes or early production units.

How does the Cost Plus Fixed Fee (CPFF) contract type typically impact cost control compared to other contract types?

The Cost Plus Fixed Fee (CPFF) contract type is used when the scope of work is well-defined but the costs are uncertain. The government agrees to pay the contractor's actual costs plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost to the government can vary significantly based on the actual costs incurred. This structure incentivizes the contractor to control costs to maximize their profit margin (as the fee is a fixed percentage of the estimated cost, but the total profit is fixed). However, it places the cost risk primarily on the government, as there's less incentive for the contractor to find efficiencies beyond what's needed to achieve the fixed fee. This contrasts with fixed-price contracts where the contractor bears more cost risk and has a stronger incentive to minimize expenses to increase profit.

What are the potential risks associated with a sole-source award in federal contracting?

Sole-source awards, like the one to The Boeing Company for $30.35 million, bypass the competitive bidding process. This can lead to several risks for the government and taxpayers. Primarily, the absence of competition can result in higher prices than might be achieved through a competitive process, as there is no market pressure to drive down costs. It also limits the government's ability to explore a wider range of innovative solutions or technologies that might be offered by other potential contractors. Furthermore, it can reduce transparency and make it harder to justify the value received. While sole-source awards are sometimes necessary due to unique capabilities or urgent needs, they require strong justification and careful oversight to ensure fair pricing and appropriate value.

What is the significance of the contract duration (2,557 days) for the Department of the Navy?

The contract duration of 2,557 days, approximately 7 years (from September 30, 2019, to September 30, 2026), signifies a long-term commitment by the Department of the Navy for the specified aircraft manufacturing services. This extended period suggests that the design, development, and provision of qualification units and kits are integral to an ongoing or future naval aviation program. Such long durations often indicate complex projects requiring sustained effort and integration. For the Navy, it implies a stable, predictable supply chain for critical components or developmental work, allowing for long-range planning. However, it also necessitates continuous oversight to manage performance, costs, and evolving requirements over the contract's life.

How does the 'Aircraft Manufacturing' (NAICS 336411) sector typically involve federal spending?

The Aircraft Manufacturing sector (NAICS 336411) is a cornerstone of federal defense spending, particularly for the Department of Defense and NASA. Federal agencies procure a vast array of aircraft, from fighter jets and bombers to transport planes, helicopters, and unmanned aerial vehicles (UAVs). Spending in this sector encompasses not only the production of new aircraft but also the development of advanced technologies, manufacturing of critical components and systems (like engines, avionics, and structural parts), research and development, and sustainment/modernization programs. Contracts can range from small, specialized component orders to multi-billion dollar deals for entire weapon systems. The sector is characterized by high technological complexity, stringent quality requirements, and significant investment in research and development, often leading to large, long-term contracts with major aerospace prime contractors.

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: $30,440,120

Exercised Options: $30,350,120

Current Obligation: $30,350,120

Actual Outlays: $2,312,341

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $1,515,913

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