Boeing awarded $60M for F/A-18E/F Super Hornet sustainment, with limited competition

Contract Overview

Contract Amount: $60,065,205 ($60.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-07-25

End Date: 2025-02-25

Contract Duration: 581 days

Daily Burn Rate: $103.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: F/A-18E/F SLM

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $60.1 million to THE BOEING COMPANY for work described as: F/A-18E/F SLM Key points: 1. Contract focuses on sustainment, crucial for maintaining fleet readiness. 2. Sole-source award raises questions about price competitiveness. 3. Long-term sustainment is vital for operational effectiveness of the F/A-18E/F. 4. Performance-based contract type suggests focus on achieving specific outcomes. 5. Geographic concentration in Missouri for sustainment operations. 6. This award is part of broader naval aviation readiness efforts.

Value Assessment

Rating: fair

The contract value of $60 million for sustainment services appears reasonable given the complexity of maintaining advanced fighter aircraft. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or alternative providers. The Cost Plus Incentive Fee (CPIF) structure allows for shared savings, which can incentivize efficiency, but the absence of competition limits the government's ability to secure the lowest possible price. Further analysis of historical sustainment costs for the F/A-18E/F would be needed for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach is typically used when a specific capability or product is only available from a single source, or in cases of urgent and compelling need. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. This limits the opportunity for price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no competitive pressure to reduce costs. This can lead to higher overall spending on sustainment for the F/A-18E/F fleet.

Public Impact

The U.S. Navy benefits from the continued operational readiness of its F/A-18E/F Super Hornet fleet. Services delivered include maintenance, repair, and logistics support for the aircraft. Geographic impact is concentrated in Missouri, where Boeing's facilities are located. Workforce implications include employment for skilled technicians and engineers involved in aircraft sustainment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Reliance on a single contractor for critical sustainment could pose supply chain risks.
CPIF contract type requires careful monitoring to ensure cost control and incentive effectiveness.

Positive Signals

Contract ensures continued operational readiness of a key naval asset.
Boeing's established expertise in the F/A-18E/F platform suggests technical proficiency.
Performance-based elements in the CPIF structure can drive efficiency.

Sector Analysis

The F/A-18E/F Super Hornet is a critical component of U.S. naval aviation. The market for military aircraft sustainment is dominated by original equipment manufacturers (OEMs) like Boeing due to proprietary knowledge, specialized tooling, and complex supply chains. While third-party sustainment providers exist, they often face significant barriers to entry for advanced platforms. Spending on aircraft sustainment is a substantial portion of defense budgets, reflecting the high operational tempo and lifecycle costs of modern military hardware. This contract fits within the broader defense industrial base focused on maintaining air superiority.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the specialized requirements for F/A-18E/F sustainment, it is unlikely that small businesses would be primary contractors. However, Boeing may engage small businesses as subcontractors for specific components or services, which would need to be tracked to assess their impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates close monitoring of costs and performance against established targets to ensure the incentive mechanisms are effective. Transparency may be limited due to the sole-source nature, but contract performance reviews and financial audits are standard oversight mechanisms. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

F/A-18E/F Super Hornet Procurement
Naval Aviation Readiness Programs
Defense Contractor Sustainment Services
Aircraft Maintenance and Repair Contracts

Risk Flags

Sole-source award
Potential for cost overruns
Contractor dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.1 million to THE BOEING COMPANY. F/A-18E/F SLM

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 $60.1 million.

What is the period of performance?

Start: 2023-07-25. End: 2025-02-25.

What is Boeing's track record with F/A-18E/F sustainment contracts?

The Boeing Company has been the prime contractor for the F/A-18E/F Super Hornet since its inception, including manufacturing and sustainment. Their track record involves extensive experience with the platform's maintenance, repair, and upgrade requirements. Historically, Boeing has been responsible for ensuring the operational readiness of the Super Hornet fleet for the U.S. Navy and allied nations. While specific performance metrics for past sustainment contracts are often proprietary or embedded within broader program reviews, Boeing's continued role as the sole-source provider suggests a generally satisfactory performance history in meeting the Navy's sustainment needs. However, like many large defense contracts, there may have been instances of cost overruns or schedule delays that have been addressed through contract modifications or performance improvement initiatives.

How does the pricing of this contract compare to similar sustainment contracts for other fighter aircraft?

Directly comparing the pricing of this $60 million F/A-18E/F sustainment contract to similar contracts for other fighter aircraft is challenging without access to detailed cost breakdowns and contract specifics. Factors such as the age of the aircraft, complexity of systems, required maintenance intervals, operational tempo, and the specific scope of sustainment services (e.g., depot-level maintenance, component repair, logistics support) vary significantly between different aircraft types. Furthermore, the sole-source nature of this award prevents a direct market-based comparison. Generally, sustainment costs for advanced, frontline fighter jets are substantial and represent a significant portion of their total lifecycle cost. Benchmarking would ideally involve comparing per-flight-hour costs or total sustainment costs over a defined period for aircraft with similar capabilities and operational profiles, adjusted for inflation and specific contract terms.

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

The primary risk associated with this sole-source sustainment contract is the potential for elevated costs due to the lack of competitive pressure. Without competing bids, The Boeing Company may not be incentivized to offer the most cost-effective solutions, potentially leading to higher prices for the U.S. Navy. Another significant risk is contractor dependency; the Navy's reliance on a single provider for critical sustainment services could create vulnerabilities if Boeing experiences production issues, financial instability, or decides to discontinue support. Furthermore, the Cost Plus Incentive Fee (CPIF) structure, while designed to encourage efficiency, requires robust government oversight to ensure that costs are managed effectively and that incentives are properly aligned with desired outcomes. Failure in oversight could lead to cost overruns without corresponding performance improvements.

How effective is the Cost Plus Incentive Fee (CPIF) structure in managing costs for aircraft sustainment?

The Cost Plus Incentive Fee (CPIF) structure is designed to manage costs by sharing the risks and rewards of cost control between the government and the contractor. In this model, the final profit is adjusted based on whether the final costs are above or below a target cost. If costs are lower than the target, both the government and the contractor benefit (e.g., through reduced price for the government and higher profit for the contractor). Conversely, if costs exceed the target, the contractor's profit is reduced. For aircraft sustainment, CPIF can be effective if the target costs are realistic and the incentive sharing ratio is appropriately set to motivate the contractor to achieve efficiencies. However, its effectiveness hinges on the government's ability to accurately estimate target costs and diligently monitor performance and expenditures throughout the contract period. Without strong oversight, CPIF contracts can still lead to cost overruns.

What are the historical spending patterns for F/A-18E/F sustainment by the Department of the Navy?

Historical spending on F/A-18E/F Super Hornet sustainment by the Department of the Navy has been substantial, reflecting the operational demands placed on this critical platform. Over the lifecycle of the Super Hornet program, sustainment costs, including maintenance, repair, logistics, and upgrades, represent a significant portion of the total program expenditure. Annual spending can fluctuate based on fleet readiness requirements, depot maintenance cycles, and the introduction of new capabilities or modifications. While specific annual figures for sustainment are often aggregated within broader Navy aviation budgets, trends indicate a consistent and significant investment required to maintain a high level of operational availability for the Super Hornet fleet. This ongoing investment is necessary to ensure the aircraft remain combat-ready throughout their service life.

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

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $60,065,205

Exercised Options: $60,065,205

Current Obligation: $60,065,205

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $5,298,959

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001918D0001

IDV Type: IDC

Timeline