Boeing awarded $25.7M follow-on contract for P-8A Poseidon logistics support, raising questions about competition

Contract Overview

Contract Amount: $25,657,294 ($25.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-09-15

End Date: 2024-09-14

Contract Duration: 365 days

Daily Burn Rate: $70.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: P-8A INTEGRATED LOGISTICS SUPPORT (ILS) FOLLOW-ON SUSTAINMENT.

Place of Performance

Location: TUKWILA, KING County, WASHINGTON, 98108

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $25.7 million to THE BOEING COMPANY for work described as: P-8A INTEGRATED LOGISTICS SUPPORT (ILS) FOLLOW-ON SUSTAINMENT. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Follow-on nature suggests a reliance on incumbent contractor, potentially hindering new market entrants. 3. Cost-plus-fixed-fee structure may incentivize higher spending, requiring robust oversight. 4. Focus on integrated logistics support is critical for maintaining operational readiness of the P-8A fleet. 5. Contract duration of one year indicates a need for regular re-evaluation of support requirements. 6. The specific PSC code is missing, making direct comparison to similar contracts challenging.

Value Assessment

Rating: fair

The contract value of $25.7 million for one year of integrated logistics support for the P-8A Poseidon appears to be within a reasonable range for complex aircraft sustainment. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or alternative providers. The cost-plus-fixed-fee (CPFF) contract type means that costs are reimbursed, plus a fixed fee, which can sometimes lead to higher overall spending if not managed carefully. The absence of a specific PSC code hinders a direct comparison to similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, The Boeing Company, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in situations where only one source is capable of meeting the requirement. The lack of competition means that taxpayers do not benefit from the potential cost savings that can arise from a competitive bidding process, where multiple companies vie for the contract.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price and value, potentially leading to higher expenditures for taxpayers. It also bypasses opportunities to foster innovation and competition within the defense industrial base.

Public Impact

The primary beneficiaries are the U.S. Navy and its P-8A Poseidon maritime patrol and reconnaissance aircraft fleet, ensuring operational readiness. Services delivered include integrated logistics support, crucial for maintaining the availability and performance of these advanced aircraft. The geographic impact is primarily within the United States, supporting naval aviation bases where the P-8A operates. Workforce implications include the continued employment of skilled personnel at Boeing responsible for logistics and sustainment of the P-8A.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee structure requires diligent oversight to control costs.
Follow-on nature may indicate a lack of market research for alternative solutions.
Short one-year duration may lead to frequent, potentially less efficient, contract renewals.

Positive Signals

Boeing is the original equipment manufacturer, possessing unique knowledge of the P-8A.
Integrated logistics support is essential for maintaining high operational availability of a critical defense asset.
The contract ensures continuity of essential services for the P-8A fleet.

Sector Analysis

The P-8A Poseidon is a key component of naval aviation, operating in the maritime patrol and reconnaissance sector. This sector is characterized by high technological complexity and significant barriers to entry, often dominated by large aerospace and defense contractors. Integrated logistics support is a critical, albeit less visible, aspect of maintaining the readiness of such advanced platforms. Spending on aircraft sustainment and logistics is a substantial portion of defense budgets, with contracts often being long-term and awarded to original equipment manufacturers due to specialized knowledge and support requirements.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. As a sole-source award to a large prime contractor, the primary impact on small businesses would be through potential subcontracting opportunities. However, without a competitive solicitation, the extent to which small businesses will be engaged is not explicitly defined or driven by set-aside goals within this specific award. Further analysis would be needed to determine if Boeing has existing subcontracting plans that prioritize small businesses for this work.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of the Navy's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight is crucial to ensure that costs are reasonable and allowable, and that the fixed fee is earned. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) would be standard oversight mechanisms. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

P-8A Poseidon Aircraft
Naval Aviation Sustainment Programs
Defense Logistics Support Contracts
Aircraft Engine and Engine Parts Manufacturing

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of publicly available performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.7 million to THE BOEING COMPANY. P-8A INTEGRATED LOGISTICS SUPPORT (ILS) FOLLOW-ON SUSTAINMENT.

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 $25.7 million.

What is the period of performance?

Start: 2023-09-15. End: 2024-09-14.

What is Boeing's track record in providing integrated logistics support for the P-8A Poseidon program?

Boeing, as the original equipment manufacturer (OEM) of the P-8A Poseidon, has been the primary provider of integrated logistics support (ILS) since the aircraft's inception. Their track record involves managing the complex supply chain, maintenance, repair, and overhaul (MRO) services, and technical data necessary to keep the P-8A fleet operational. This includes ensuring the availability of spare parts, developing and maintaining technical manuals, and providing training for maintenance personnel. While specific performance metrics for this follow-on contract are not publicly detailed, Boeing's long-standing role suggests a deep understanding of the aircraft's sustainment needs. However, the sole-source nature of this award means that performance has not been recently tested against competitive alternatives.

How does the pricing of this contract compare to similar logistics support contracts for other maritime patrol aircraft?

Directly comparing the pricing of this $25.7 million contract for one year of ILS for the P-8A Poseidon to similar contracts is challenging due to several factors. Firstly, the P-8A is a relatively modern and advanced platform, and its support requirements may differ significantly from older or less complex aircraft. Secondly, the contract is sole-source, meaning its pricing is not benchmarked against competitive bids. Thirdly, the specific details of the services included within the 'integrated logistics support' can vary widely between contracts. Generally, sustainment costs for advanced military aircraft can be substantial, often running into millions of dollars annually per aircraft. Without access to detailed cost breakdowns and comparable contract data, a precise value-for-money assessment against peers is not feasible.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for aircraft logistics support?

The primary risks associated with this contract structure are twofold. For a sole-source award, the main risk is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for the contractor to innovate or improve efficiency. The government may not be getting the best possible value. For a cost-plus-fixed-fee (CPFF) contract, the risk lies in potential cost overruns. While the fee is fixed, the contractor is reimbursed for allowable costs. If costs escalate due to inefficiencies, poor management, or unforeseen issues, the total contract value increases, potentially exceeding initial estimates. This structure requires robust government oversight to scrutinize costs and ensure efficient performance. The combination means the government bears the cost risk while receiving limited benefit from competition.

What is the historical spending pattern for P-8A Integrated Logistics Support, and how does this award fit within that trend?

Historical spending on P-8A Integrated Logistics Support (ILS) has been substantial, reflecting the complexity and operational tempo of this critical naval asset. The P-8A program has seen significant investment in sustainment and readiness over its lifecycle. This $25.7 million award for a one-year follow-on sustainment contract fits within the established pattern of ongoing, significant expenditure required to maintain the P-8A fleet. Previous contracts for ILS have also been awarded to Boeing, often through sole-source or limited competition due to its OEM status. This award represents a continuation of that trend, focusing on ensuring the availability of parts, maintenance, and technical support necessary for the aircraft's mission readiness, rather than a deviation from historical spending levels.

Are there any specific performance metrics or key performance indicators (KPIs) associated with this contract that are publicly available?

Specific performance metrics or Key Performance Indicators (KPIs) associated with this particular $25.7 million follow-on contract for P-8A Integrated Logistics Support are not publicly detailed in the award notice. Typically, such contracts include clauses related to delivery schedules for parts, response times for technical support, aircraft availability rates, and maintenance turnaround times. However, the level of detail shared publicly for individual contract awards, especially sole-source ones, is often limited. Robust performance monitoring would be conducted internally by the Department of the Navy, likely involving metrics tied to mission capability and operational readiness of the P-8A fleet, but these are not typically disclosed in public contract announcements.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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 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: $30,323,848

Exercised Options: $25,894,397

Current Obligation: $25,657,294

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $123,240

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