Navy awards $94.5M for aircraft flap kits to Boeing, citing sole-source justification

Contract Overview

Contract Amount: $94,521,598 ($94.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-03-01

End Date: 2027-12-31

Contract Duration: 1,400 days

Daily Burn Rate: $67.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF TRAILING EDGE FLAP REVISION 2 A1 KITS (LH) AND A2 KITS (RH)

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $94.5 million to THE BOEING COMPANY for work described as: PROCUREMENT OF TRAILING EDGE FLAP REVISION 2 A1 KITS (LH) AND A2 KITS (RH) Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price competition. 2. Significant award for aircraft parts manufacturing, indicating ongoing sustainment needs for naval aviation. 3. Long performance period (2024-2027) suggests a sustained requirement for these specific components. 4. Firm Fixed Price contract type aims to control costs, but sole-source nature limits benchmarking. 5. Boeing, as the incumbent and likely sole developer, holds a strong position in this niche market. 6. The award is a delivery order under an existing contract, implying prior justification and oversight.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific, proprietary nature of the aircraft parts. Without competitive bids, it's difficult to assess if the $94.5 million represents optimal value for money. The firm fixed price structure provides some cost certainty, but the lack of competition means the government cannot leverage market forces to drive down prices. Comparisons to similar trailing edge flap kits are limited as these are specific to certain Boeing aircraft platforms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple offerors. This typically occurs when only one responsible source is available or when a compelling justification, such as proprietary data or unique capabilities, exists. The lack of competition means there were no other bidders to compare against, potentially limiting the government's ability to secure the most favorable pricing through market dynamics.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government cannot rely on competitive pressures to ensure the lowest possible price. This necessitates robust internal cost analysis and negotiation by the contracting agency.

Public Impact

Naval aviation readiness and operational capability are directly supported by the provision of these critical aircraft components. The contract ensures the continued availability of essential parts for specific Boeing aircraft operated by the U.S. Navy. The primary beneficiaries are the U.S. Navy's fleet maintenance and operational units responsible for aircraft sustainment. Workforce implications are likely concentrated within Boeing's manufacturing facilities, particularly in Missouri where the contract is managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of open competition makes it difficult to independently verify fair and reasonable pricing.
Dependence on a single supplier (Boeing) for critical aircraft components creates supply chain risk.
Proprietary nature of the parts may restrict future competition or alternative sourcing options.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award is a delivery order under an existing contract, suggesting prior review and justification.
Boeing is a long-standing, experienced defense contractor with a proven track record in aircraft manufacturing.
The contract addresses a clear and ongoing need for aircraft sustainment, crucial for military readiness.

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412), a critical segment of the aerospace and defense industry. The market is characterized by high barriers to entry, significant R&D investment, and a concentration of large, established players like Boeing. Spending in this sector is driven by military aircraft sustainment, modernization programs, and new platform development. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of trailing edge flap kits, but overall defense spending on aircraft parts is substantial, often running into billions annually.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the prime contractor being The Boeing Company, it is unlikely that significant subcontracting opportunities for small businesses are mandated within this specific award. However, Boeing's broader subcontracting policies and existing relationships with small businesses in the aerospace supply chain may indirectly benefit small firms, though not directly driven by this particular contract's structure.

Oversight & Accountability

As a delivery order under an existing contract, oversight is likely managed through the Department of the Navy's contracting and program management offices. The firm fixed price structure provides a degree of financial oversight by setting a ceiling on costs. Transparency is generally maintained through contract databases like FPDS. Specific Inspector General (IG) jurisdiction would depend on the nature of any potential issues, but the DoD IG typically oversees defense procurements for waste, fraud, and abuse.

Related Government Programs

Aircraft Parts Manufacturing
Naval Aviation Sustainment
Boeing Commercial Airplanes
Defense Logistics Agency (DLA) Aviation
Air Force Life Cycle Management Center (AFLCMC)

Risk Flags

Sole-source award
Lack of competitive benchmarking
Potential for higher costs
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.5 million to THE BOEING COMPANY. PROCUREMENT OF TRAILING EDGE FLAP REVISION 2 A1 KITS (LH) AND A2 KITS (RH)

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 $94.5 million.

What is the period of performance?

Start: 2024-03-01. End: 2027-12-31.

What is the specific aircraft platform these trailing edge flap kits are intended for, and why is Boeing the sole source provider?

The provided data does not specify the exact aircraft platform. However, trailing edge flap kits are critical aerodynamic control surfaces on aircraft wings. Boeing is often the sole source provider for such components due to proprietary design rights, specialized manufacturing processes, and the extensive engineering and testing required for certification. For military aircraft, the original equipment manufacturer (OEM) like Boeing typically holds the intellectual property and the necessary tooling and expertise to produce or overhaul these parts, making it difficult for other companies to enter the market without extensive licensing or reverse engineering efforts, which can be costly and time-consuming.

How does the firm fixed price (FFP) contract type mitigate risks in a sole-source environment?

A Firm Fixed Price (FFP) contract establishes a price that is not subject to adjustment based on the contractor's cost experience. In a sole-source environment, FFP is crucial because it shifts the risk of cost overruns entirely to the contractor. While the government agrees to pay a set amount, the contractor is incentivized to manage its costs efficiently to maximize profit. This provides cost certainty for the government, preventing unexpected increases in the contract value. However, the effectiveness of FFP in ensuring value is diminished without competitive bidding, as the initial price negotiation is critical and may not reflect the lowest achievable market price.

What is the historical spending trend for similar trailing edge flap kits or related aircraft components procured by the Department of the Navy?

The provided data does not include historical spending trends for this specific item or category. To assess historical spending, one would need to query procurement databases (like FPDS) for similar contracts awarded by the Department of the Navy or other DoD branches for trailing edge flap kits or related structural aircraft components over several fiscal years. Analyzing these trends would reveal patterns in pricing, volume, and contractor performance, helping to contextualize the current $94.5 million award and identify any significant deviations or escalations in cost over time.

What are the potential implications of relying on a single supplier for critical aircraft components like these flap kits?

Relying on a single supplier, especially for critical components, introduces several risks. Firstly, it creates a potential bottleneck in the supply chain; any disruption at the supplier's facility (e.g., production issues, labor strikes, natural disasters) can directly impact aircraft availability and readiness. Secondly, it reduces the government's leverage in price negotiations and can lead to higher costs over the long term, as the supplier faces little competitive pressure. Thirdly, it can stifle innovation and the development of alternative solutions or more cost-effective designs. Finally, it raises concerns about long-term sustainment if the supplier decides to exit the market or discontinue the product line.

Are there any provisions within the contract or existing policies that encourage or require Boeing to explore competitive subcontracting for these flap kits?

The provided data does not detail specific subcontracting provisions within this delivery order. However, federal acquisition regulations generally encourage prime contractors to seek competitive subcontracting where feasible. For sole-source prime contracts, the emphasis is often on the prime contractor's internal processes and their existing supply chain management. While this specific award is sole-source, the Department of Defense often has overarching policies promoting small business participation and competitive sourcing. It would be necessary to review the full contract document or related DoD policies to determine if specific mandates for competitive subcontracting exploration exist for this particular award.

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: $94,521,598

Exercised Options: $94,521,598

Current Obligation: $94,521,598

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $46,729,746

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