Boeing awarded $51.7M contract for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $51,700,000 ($51.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-09-19

End Date: 2026-01-31

Contract Duration: 1,230 days

Daily Burn Rate: $42.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACMC USN (ECP-6459) AVC-5926

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $51.7 million to THE BOEING COMPANY for work described as: ACMC USN (ECP-6459) AVC-5926 Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The firm-fixed-price structure offers some cost certainty but may not reflect market dynamics. 3. Lack of competition is a significant risk indicator for potential overpayment. 4. Contract duration extends over three years, impacting long-term budget predictability. 5. The specific aircraft parts are crucial for fleet readiness, indicating a critical need. 6. Boeing's established role as a prime contractor suggests a reliance on existing relationships.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The $51.7 million price tag for aircraft parts needs comparison against similar sole-source procurements or independent cost estimates. The firm-fixed-price contract type provides some predictability, but the absence of competition raises concerns about whether the government is receiving the best possible price. Further analysis of the specific parts and their market value is required to definitively assess value.

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 approach bypasses the standard competitive bidding process, which typically involves multiple vendors vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium, as there was no market pressure to drive down prices. This could result in a less efficient use of public funds compared to a competitively awarded contract.

Public Impact

The primary beneficiaries are the Department of the Navy and its aviation fleet, ensuring operational readiness. Services delivered include the provision of critical aircraft parts, essential for maintaining aircraft in service. The geographic impact is primarily within the United States, supporting domestic defense manufacturing and supply chains. Workforce implications include continued employment for personnel at Boeing involved in manufacturing and supplying these parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to inflated costs.
Lack of transparency in the procurement process due to no-bid award.
Reliance on a single contractor can create supply chain vulnerabilities.
Contract duration of over three years may not align with evolving technological needs.
No clear indication of small business subcontracting opportunities.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Boeing is a known entity with established production capabilities for these parts.
Contract supports critical defense needs for aircraft parts.
Awarded to a major defense contractor with a track record in aerospace.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often dominated by a few large manufacturers due to high barriers to entry, including complex engineering, stringent quality control, and established relationships with defense agencies. Spending in this category is significant, driven by the continuous need to maintain and upgrade military aviation fleets. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition contracts for similar high-value aircraft components.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, there is a potential for limited subcontracting opportunities for small businesses. The prime contractor, Boeing, may have existing relationships with large subcontractors, or the specialized nature of the parts might limit the pool of eligible small business suppliers. Further investigation into Boeing's subcontracting plan would be necessary to assess the actual impact on the small business ecosystem.

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 firm-fixed-price structure, which obligates Boeing to deliver the specified parts at the agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Aircraft Parts Manufacturing
Defense Procurement
Naval Aviation Support
Sole-Source Contracts
Aerospace Components

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.7 million to THE BOEING COMPANY. ACMC USN (ECP-6459) AVC-5926

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 $51.7 million.

What is the period of performance?

Start: 2022-09-19. End: 2026-01-31.

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

Boeing has a long-standing and extensive track record with the Department of the Navy, serving as a prime contractor for numerous aircraft platforms and their associated components. This includes a history of delivering complex systems and parts for naval aviation. While specific data on past sole-source awards for identical or highly similar parts is not provided, Boeing's overall performance with the Navy is generally characterized by its capability to meet demanding specifications and delivery schedules. However, the absence of competition in this specific instance warrants scrutiny, as past performance alone does not guarantee optimal value in a non-competitive environment. Analyzing historical contract values, delivery performance metrics, and any past disputes or contract modifications for similar procurements would provide a more comprehensive picture of their track record in this specific context.

How does the $51.7 million contract value compare to market rates for similar aircraft parts?

Directly comparing the $51.7 million contract value to market rates for similar aircraft parts is challenging without more specific details on the components being procured. As a sole-source award, there is no direct market comparison from competing bids. To assess value, one would typically look at independent cost estimates, prices paid by other government agencies or commercial entities for comparable parts, or historical pricing trends for these specific components. Given that this is a sole-source award to a major manufacturer like Boeing, the price may reflect proprietary technology, specialized manufacturing processes, and the lack of competitive pressure. A thorough value analysis would require access to detailed specifications of the parts and potentially classified or proprietary pricing data to establish a robust benchmark.

What are the primary risks associated with awarding this contract on a sole-source basis?

The primary risk associated with awarding this contract on a sole-source basis is the potential for inflated pricing due to the absence of competition. Without multiple bidders vying for the contract, the government loses the benefit of price discovery and market forces that typically drive down costs. This can lead to the government paying more than necessary for the aircraft parts. Another significant risk is reduced innovation and efficiency, as the sole contractor may have less incentive to improve processes or offer cost-saving alternatives. Furthermore, sole-source awards can sometimes indicate a lack of available qualified suppliers or a reliance on a single source, which can create supply chain vulnerabilities and limit the government's negotiating leverage in the future. There's also a risk of contractor complacency or reduced responsiveness when competition is not a factor.

What is the expected program effectiveness or impact of receiving these aircraft parts?

The expected program effectiveness and impact of receiving these aircraft parts are directly tied to maintaining and enhancing the operational readiness of the Department of the Navy's aviation fleet. These parts are critical for the upkeep, repair, and potentially the upgrade of naval aircraft. By ensuring a steady supply of necessary components, the Navy can minimize aircraft downtime, sustain flight operations, and ensure that its air assets are available for their intended missions, whether for training, power projection, or other strategic objectives. The timely delivery of these parts contributes to the overall reliability and safety of the fleet, directly supporting national defense capabilities. The effectiveness is measured by the continued availability and performance of the aircraft that utilize these components.

How does this contract's value and nature compare to historical spending patterns for aircraft parts by the Department of the Navy?

The $51.7 million value for this specific contract is a significant but not necessarily anomalous figure within the context of the Department of the Navy's overall spending on aircraft parts. The Navy operates a vast and complex aviation fleet, requiring continuous investment in maintenance, repair, and overhaul, which includes the procurement of numerous parts. Historical spending patterns reveal substantial outlays for aircraft components, often involving large-dollar, long-term contracts, many of which are awarded to major aerospace manufacturers like Boeing. The 'sole-source' nature of this award, however, is a key characteristic that warrants comparison. While the Navy does engage in competitive procurements, sole-source awards are also utilized, particularly for unique or proprietary components where only one supplier can meet the requirements. Analyzing historical data would reveal the frequency and average value of such sole-source awards versus competitive ones for similar categories of parts to understand if this contract represents a deviation or a continuation of established procurement practices.

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: N0001920R0065

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: $51,700,000

Exercised Options: $51,700,000

Current Obligation: $51,700,000

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $34,792,232

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline