Boeing awarded $40.7M for aircraft engine parts, raising questions about competition and value

Contract Overview

Contract Amount: $40,744,320 ($40.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-07-23

End Date: 2023-10-31

Contract Duration: 830 days

Daily Burn Rate: $49.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY21 TRAILING EDGE FLAP REV 2 KITS

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $40.7 million to THE BOEING COMPANY for work described as: FY21 TRAILING EDGE FLAP REV 2 KITS Key points: 1. Contract awarded to a single supplier suggests potential lack of competitive pricing. 2. Fixed-price contract type offers some cost certainty but may not reflect market value. 3. Long performance period (over 2 years) could lead to price escalation risks. 4. This contract is for specific repair kits, indicating a specialized need. 5. Sole-source award warrants scrutiny for potential overpayment compared to competitive bids.

Value Assessment

Rating: questionable

The contract's value of $40.7 million for aircraft engine parts requires careful benchmarking. As a sole-source award, it's difficult to compare directly to market rates or other competitive bids. The fixed-price nature provides some cost control, but without competition, the government may not be achieving the best possible price. Further analysis of the specific parts and their necessity would be needed to fully assess value for money.

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 solicited. This significantly limits price discovery and the potential for competitive negotiation. While sole-source awards can be justified for unique capabilities or urgent needs, they often result in higher prices for the government compared to fully competed contracts.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these aircraft engine parts, as there was no market pressure to drive down costs.

Public Impact

The Department of the Navy benefits from the continued airworthiness of its aircraft fleet. Services delivered include the provision of critical repair kits for aircraft engines. The geographic impact is primarily within the operational areas of the Navy's aviation units. Workforce implications are tied to the maintenance and repair of advanced military aircraft.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in the bidding process makes it difficult to assess fair market value.
Long contract duration could expose the government to price increases over time.

Positive Signals

Fixed-price contract provides some cost predictability for the government.
Award to a known manufacturer ensures compatibility and quality for critical aircraft parts.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft components. The market for specialized aircraft engine parts is often dominated by original equipment manufacturers like Boeing due to proprietary designs and technical expertise. Spending in this sub-sector is critical for maintaining military readiness, but competitive dynamics can be limited.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a large prime contractor like Boeing typically means that direct benefits to the small business ecosystem are minimal unless specific subcontracting plans are mandated and fulfilled.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management systems. Transparency is limited due to the sole-source nature. Accountability rests with the contracting officers to ensure the necessity and fair pricing of the parts, though the lack of competition makes independent verification challenging. Inspector General involvement would be triggered by specific allegations of fraud or mismanagement.

Related Government Programs

Aircraft Parts and Auxiliary Equipment
Aircraft Engine Maintenance and Repair
Department of Defense Procurement
Naval Aviation Support

Risk Flags

Sole-source award
Potential for non-competitive pricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.7 million to THE BOEING COMPANY. FY21 TRAILING EDGE FLAP REV 2 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 $40.7 million.

What is the period of performance?

Start: 2021-07-23. End: 2023-10-31.

What is the track record of The Boeing Company in delivering similar aircraft engine parts to the Department of Defense?

The Boeing Company has a long and extensive history of supplying aircraft, components, and support services to the Department of Defense, including the Navy. They are a primary manufacturer for many military aircraft platforms and their associated systems, including engines and critical parts. Their track record generally includes large-scale production and complex engineering solutions. However, specific performance data for this particular type of repair kit and its delivery timeliness would require deeper access to contract performance reports and historical delivery metrics. Given their established role, the expectation is for reliable delivery, but the sole-source nature of this award means performance is not being tested against potential competitors.

How does the $40.7 million contract value compare to similar aircraft engine part procurements, especially those competed?

Direct comparison of the $40.7 million value is challenging due to the sole-source nature of this award. Competitive procurements for similar engine parts, if available, would likely yield a lower price point due to market forces. Without access to a competitive bidding process for these specific 'REV 2 KITS,' it's impossible to establish a precise benchmark. However, historical data on other sole-source awards for specialized aerospace components often indicates a price premium. The government's internal cost estimation and should-cost analysis would be crucial in determining if this value is reasonable in the absence of competition, but such data is not publicly available.

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

The primary risk is financial: the government may be overpaying due to the lack of competition. This is exacerbated by the fixed-price contract type over a long duration (830 days), which, while offering some cost certainty, doesn't inherently guarantee the best value. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier for critical parts, potentially limiting future negotiation leverage. Furthermore, if Boeing faces production issues or unforeseen cost increases, these could be passed on if not adequately managed through contract clauses, impacting the overall program budget.

How effective is the Department of the Navy in ensuring value for money on sole-source contracts like this one?

The effectiveness of the Department of the Navy in ensuring value for money on sole-source contracts relies heavily on robust internal processes, including thorough market research (even if ultimately leading to sole-source justification), independent cost estimates, and negotiation expertise. The Federal Acquisition Regulation (FAR) provides guidelines for justifying and negotiating sole-source awards. However, the inherent limitation of sole-source procurement is the absence of direct price competition, which is the most effective tool for driving down costs. Therefore, while the Navy aims for value, the potential for suboptimal pricing is higher compared to competed contracts. Oversight and auditing by agencies like the Government Accountability Office (GAO) can provide external validation.

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

The Department of the Navy consistently spends significant amounts on aircraft parts, including engine components, to maintain its large and diverse aviation fleet. Spending patterns are influenced by fleet size, aircraft age, operational tempo, and modernization programs. Contracts for engine parts can range from routine maintenance supplies to major overhauls and specialized kits like the 'REV 2 KITS' mentioned here. This specific contract, valued at approximately $40.7 million over roughly two years, represents a moderate but critical investment in sustaining specific aircraft engine capabilities. It aligns with the Navy's ongoing need for parts to ensure operational readiness, but its sole-source nature makes it an outlier compared to potentially larger, competed contracts for more common parts.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts 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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JAMES S 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: $40,744,320

Exercised Options: $40,744,320

Current Obligation: $40,744,320

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $7,129,241

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001921G0006

IDV Type: BOA

Timeline