Boeing awarded $36.5M for F/A-18E/F aircraft manufacturing, a sole-source contract with a cost-plus incentive fee structure

Contract Overview

Contract Amount: $36,518,858 ($36.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-03-20

End Date: 2026-05-23

Contract Duration: 794 days

Daily Burn Rate: $46.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

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

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $36.5 million to THE BOEING COMPANY for work described as: F/A-18E/F PPP SLM AIRCRAFT Key points: 1. Contract awarded to The Boeing Company for F/A-18E/F aircraft manufacturing. 2. The contract is structured as a Cost Plus Incentive Fee (CPIF), which can incentivize performance but also carries cost overrun risks. 3. This is a sole-source award, indicating limited competition and potentially higher prices than a fully competed contract. 4. The contract duration is 794 days, ending in May 2026. 5. The contract is for a Delivery Order under an existing agreement. 6. The base value is $45,994, but the total award value is significantly higher at $36.5M, suggesting substantial scope beyond the base.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without knowing the exact scope of work and the specific incentives tied to the CPIF structure. However, sole-source awards generally present a higher risk of suboptimal pricing compared to competitive procurements. The significant difference between the base value and the total award value warrants scrutiny to ensure the incentive fee is effectively driving desired outcomes without excessive cost.

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 is typically used when only one source is capable of meeting the agency's needs, often due to proprietary technology or unique capabilities. The lack of competition means the Department of the Navy did not benefit from price discovery through a bidding process, which could lead to less favorable pricing.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price reflects the best possible value for the government.

Public Impact

The primary beneficiaries are the U.S. Navy, which receives advanced fighter aircraft critical for national defense. The contract supports the continued production and delivery of F/A-18E/F Super Hornet aircraft. The geographic impact is primarily centered in Missouri, where The Boeing Company's facility is located, supporting local employment and the aerospace industry. This contract sustains jobs within the aerospace manufacturing sector, particularly for skilled labor involved in aircraft production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Cost-plus incentive fee structure requires careful monitoring to ensure cost control and effective incentive alignment.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if performance incentives are not structured optimally or if unforeseen issues arise.

Positive Signals

Contract awarded to a known, experienced manufacturer of the specified aircraft.
CPIF structure aims to align contractor and government interests for better performance.
Supports critical defense capabilities for the U.S. Navy.
Delivery order under an existing contract may indicate established processes and a degree of familiarity.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and a concentrated market. The F/A-18E/F Super Hornet is a key component of naval aviation, and its production falls within a specialized segment of defense manufacturing. Comparable spending benchmarks would involve other large-scale military aircraft procurement contracts, which often run into billions of dollars over their lifecycle. This specific contract represents a portion of the overall sustainment and production costs for this critical platform.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the nature of large-scale military aircraft manufacturing, it is unlikely that small businesses would be the primary contractors. However, The Boeing Company, as the prime contractor, would be expected to engage small businesses for subcontracting opportunities, contributing to the broader small business ecosystem within the defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Cost Plus Incentive Fee structure necessitates close monitoring of costs and performance against established metrics. Transparency may be limited due to the sole-source nature and defense classification, but internal DoD oversight mechanisms and potentially the Government Accountability Office (GAO) would review contract performance and expenditures.

Related Government Programs

F/A-18 Program
Naval Aviation Procurement
Defense Aircraft Manufacturing
Sole-Source Defense Contracts
Cost-Plus Incentive Fee Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Potential for cost overruns
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.5 million to THE BOEING COMPANY. F/A-18E/F PPP SLM AIRCRAFT

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 $36.5 million.

What is the period of performance?

Start: 2024-03-20. End: 2026-05-23.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract is 'NOT COMPETED' and is 'sole-source'. While the specific justification is not detailed in the provided data, common reasons for sole-source awards in defense contracting include unique capabilities, proprietary technology, or the existence of only one responsible source capable of meeting the requirement. For the F/A-18E/F aircraft, Boeing is the original equipment manufacturer and primary producer, suggesting that specialized knowledge, tooling, and production lines may be exclusive to them. A formal Justification for Other Than Full and Open Competition (JOFOC) would typically be required and documented by the Department of the Navy to support this sole-source decision, outlining the specific circumstances that preclude competitive bidding.

How does the Cost Plus Incentive Fee (CPIF) structure compare to other contract types for aircraft manufacturing?

Cost Plus Incentive Fee (CPIF) contracts are used when the final costs are uncertain but the government wants to incentivize the contractor to control costs and meet performance targets. In a CPIF contract, the final profit is adjusted based on whether the actual costs are below or above a target cost, and performance objectives are met. This differs from Fixed-Price contracts, where the price is set regardless of cost, and Cost-Plus-Fixed-Fee (CPFF) contracts, where the fee is fixed. For aircraft manufacturing, CPIF can be beneficial for complex, developmental, or sustainment programs where innovation and efficiency are key, but it requires robust government oversight to ensure the incentives are effective and costs are managed appropriately. It offers more flexibility than fixed-price but less cost certainty than fixed-price contracts.

What is the historical spending trend for F/A-18E/F aircraft manufacturing by the Department of the Navy?

Historical spending on the F/A-18E/F Super Hornet program by the Department of the Navy has been substantial, reflecting its role as a frontline strike fighter. Over the program's lifecycle, billions of dollars have been allocated for procurement, upgrades, and sustainment. Annual spending fluctuates based on production rates, modernization efforts, and budget priorities. While this specific $36.5 million delivery order represents a snapshot, the overall trend indicates consistent, significant investment in maintaining and expanding the Super Hornet fleet. Analyzing past appropriations and contract awards for this platform would reveal multi-year spending patterns and the evolution of program costs.

What are the potential risks associated with a sole-source award for a major defense platform like the F/A-18E/F?

The primary risk of a sole-source award for a major defense platform like the F/A-18E/F is the potential for inflated costs due to a lack of competitive pressure. Without competing bids, the government may not achieve the best possible price. Additionally, sole-source contracts can reduce the incentive for the contractor to innovate or become more efficient if they are assured of the business regardless of market alternatives. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future options or leverage. Effective negotiation and stringent oversight become even more critical in sole-source situations to mitigate these risks.

How does the base value of $45,994 relate to the total award value of $36,518,858.15?

The base value of $45,994 likely represents an initial estimate or a minimum guaranteed amount for a specific portion of the work under this delivery order. The total award value of $36,518,858.15 encompasses the base amount plus anticipated costs and the incentive fee, reflecting the full scope and estimated cost of the entire delivery order. The significant difference suggests that the majority of the contract value is tied to performance incentives, variable costs, and potentially options or contract line items not fully detailed in the base figure. This structure is common in CPIF contracts where the final cost is determined by actual performance against targets.

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: $36,518,858

Exercised Options: $36,518,858

Current Obligation: $36,518,858

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $3,445,794

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