DoD awards $52.9M to Boeing for aircraft engine parts, with no competition

Contract Overview

Contract Amount: $52,903,569 ($52.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-09-30

End Date: 2026-07-31

Contract Duration: 1,400 days

Daily Burn Rate: $37.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IRST

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $52.9 million to THE BOEING COMPANY for work described as: IRST Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery. 2. Long performance period (2022-2026) suggests a sustained need for these parts. 3. The contract type is Firm Fixed Price, which can limit cost overruns but may inflate initial pricing without competition. 4. Boeing is a major defense contractor, indicating a reliance on established suppliers for critical components. 5. The contract value is significant, representing a substantial investment in aircraft sustainment. 6. The absence of small business set-asides suggests this contract is not structured to benefit smaller enterprises.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. Without comparison to other suppliers or proposals, it's difficult to ascertain if the $52.9 million price represents fair market value. The firm fixed-price structure offers cost certainty but could mask inefficiencies or premium pricing typical of sole-source awards. Further analysis would require access to historical pricing for similar components or independent cost estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor, The Boeing Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. While sole-source awards can be justified for unique capabilities or existing systems, they limit the government's ability to leverage market competition to drive down prices and ensure the best value.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft engine parts due to the lack of competition. Without competing bids, there is less pressure on the contractor to offer the lowest possible price, potentially leading to higher overall spending.

Public Impact

The Department of Defense benefits from the continued availability of critical aircraft engine parts, ensuring operational readiness. This contract supports the sustainment of military aircraft, crucial for national security operations. The primary beneficiaries are the military branches relying on the aircraft powered by these engines. The contract has implications for the aerospace manufacturing workforce, particularly at Boeing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award limits transparency in price determination.
Long-term nature of the contract could mask inefficiencies over time.

Positive Signals

Award to a major, established defense contractor suggests reliability and expertise.
Firm Fixed Price contract provides cost certainty for the government.
Ensures continued availability of critical aircraft components for military operations.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government reliance. Contracts for aircraft engine parts are critical for maintaining fleet readiness and represent a substantial portion of defense spending. This contract fits within the broader category of aircraft manufacturing and sustainment, where established players like Boeing often dominate due to specialized knowledge and existing infrastructure. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar engine components across different military branches.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there an indication of subcontracting goals for small businesses. The award to a large prime contractor like Boeing suggests that the primary focus is on direct procurement from the original equipment manufacturer. This approach typically limits opportunities for small businesses to participate directly in the contract's value chain, potentially impacting the small business ecosystem within the aerospace supply sector.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which aims to hold the contractor responsible for delivering within the agreed-upon cost. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics
Aerospace Sustainment
Military Aircraft Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for premium pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.9 million to THE BOEING COMPANY. IRST

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 $52.9 million.

What is the period of performance?

Start: 2022-09-30. End: 2026-07-31.

What is Boeing's track record with similar sole-source contracts for aircraft engine parts?

Boeing, as a major defense contractor, has a long history of receiving sole-source awards, particularly for proprietary components or when fulfilling sustainment requirements for platforms they manufacture. Analyzing their past performance on similar contracts would involve reviewing historical contract data for on-time delivery, quality compliance, and any cost overruns or disputes. Without specific data on this contract's predecessors, it's difficult to provide a precise track record, but their established position suggests a generally reliable, albeit potentially more expensive, supplier for critical aerospace components.

How does the $52.9 million value compare to market rates for similar aircraft engine parts?

Direct comparison to market rates for this specific contract is challenging due to its sole-source nature. Typically, competitive bidding allows for price discovery against multiple market participants. In the absence of competition, the government relies on internal cost estimates, historical pricing, or data from similar, though not identical, contracts. Without access to these internal benchmarks or a broader market analysis of comparable engine parts, it's difficult to definitively state if $52.9 million is above, below, or at market rate. However, sole-source awards often carry a premium.

What are the primary risks associated with this sole-source award?

The primary risk is financial: the government may be paying a higher price than necessary due to the lack of competitive pressure. There's also a risk of reduced innovation or efficiency from the contractor, as the incentive to optimize costs is lessened without market comparison. Furthermore, reliance on a single source can create supply chain vulnerabilities if Boeing faces production issues. Finally, the lack of transparency inherent in sole-source awards can make it harder to identify potential waste or inefficiencies.

How does this contract contribute to the overall effectiveness of military aircraft operations?

This contract is crucial for ensuring the operational readiness and sustainment of military aircraft. By providing necessary engine parts, it directly supports the maintenance and repair of these vital assets. The timely availability of these components prevents aircraft downtime, allowing military units to maintain their operational tempo and fulfill their mission requirements. The effectiveness is measured by the continued airworthiness and availability of the aircraft fleet that relies on these specific engine parts.

What are historical spending patterns for aircraft engine parts by the Department of Defense?

The Department of Defense historically spends billions of dollars annually on aircraft parts, including engines and their components. This spending is driven by the large size and operational tempo of the U.S. military's aviation assets. Spending patterns often reflect a mix of competitive procurements for common parts and sole-source awards for proprietary or specialized components, particularly from major manufacturers like Boeing and GE Aviation. Analyzing historical data would reveal trends in contract types, average values, and the proportion allocated to sustainment versus new procurement.

What is the potential impact of this contract on future defense procurement strategies?

This contract, awarded sole-source, may reinforce a trend of relying on incumbent contractors for sustainment, especially for complex systems. While efficient in the short term, it could disincentivize new entrants and limit future competition. Defense procurement strategies are increasingly scrutinized for value and cost-effectiveness, so a pattern of sole-source awards like this could face pressure for greater justification or a push towards more competitive strategies where feasible, particularly for components with broader applicability or potential for alternative sourcing.

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: $52,903,569

Exercised Options: $52,903,569

Current Obligation: $52,903,569

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $14,963,160

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