Boeing awarded $28.8M for F/A-18E/F aircraft, a sole-source contract with a cost-plus incentive fee structure

Contract Overview

Contract Amount: $28,861,061 ($28.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-11-15

End Date: 2026-11-30

Contract Duration: 745 days

Daily Burn Rate: $38.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: F/A-18E/F OP24 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 $28.9 million to THE BOEING COMPANY for work described as: F/A-18E/F OP24 PPP SLM AIRCRAFT Key points: 1. Contract awarded to a single, established supplier, raising questions about price competitiveness. 2. The cost-plus incentive fee structure aims to balance contractor profit with performance objectives. 3. Delivery order for a critical defense platform, indicating ongoing fleet sustainment needs. 4. Contract duration extends over two years, suggesting a significant period of work. 5. The contract is not competed, limiting opportunities for alternative suppliers and potentially higher prices. 6. Awarded to The Boeing Company, a major defense contractor with extensive experience in this platform.

Value Assessment

Rating: questionable

Benchmarking the value of this specific delivery order is challenging without comparable sole-source awards for the F/A-18E/F program. The cost-plus incentive fee (CPIF) structure introduces complexity in assessing true value, as final costs are subject to performance outcomes. However, the lack of competition inherently limits the government's ability to secure the lowest possible price. The total award amount of $28.8 million for this order suggests a significant investment in maintaining and potentially upgrading the F/A-18E/F fleet.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one responsible source can provide the required goods or services, or in cases of urgent need. The absence of a competitive bidding process means that price discovery through market forces was not utilized, potentially leading to higher costs for the government compared to a fully competed scenario. The specific justification for the sole-source award would need further review to understand the rationale.

Taxpayer Impact: Taxpayers may face higher costs due to the lack of competitive pressure. Without multiple bids, the government cannot be assured it is receiving the best possible price for these aircraft components or services.

Public Impact

The U.S. Navy benefits from the continued sustainment and potential upgrades of its F/A-18E/F Super Hornet fleet. This contract supports the operational readiness of a key naval aviation platform. The geographic impact is primarily centered in Missouri, where The Boeing Company's relevant facilities are located. The contract supports jobs within the aerospace manufacturing sector, particularly at Boeing's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus incentive fee contracts can be complex to manage and may not always yield the most cost-effective outcome if not closely monitored.
Reliance on a single contractor for critical defense platforms can create supply chain vulnerabilities.
Lack of transparency in the sole-source justification could obscure potential inefficiencies.
The extended contract duration requires sustained oversight to ensure performance and cost control.

Positive Signals

Award to a highly experienced contractor (Boeing) with a proven track record on the F/A-18E/F program.
The CPIF structure incentivizes the contractor to meet performance targets, potentially improving program outcomes.
Ensures continued operational readiness of a vital naval aviation asset.
The contract supports critical defense industrial base capabilities and associated employment.

Sector Analysis

The F/A-18E/F Super Hornet is a key component of the U.S. Navy's carrier-based strike fighter capability. This contract falls within the broader aerospace and defense manufacturing sector, a significant segment of the U.S. economy. Spending on military aircraft sustainment and upgrades is a consistent and substantial part of the defense budget. Comparable spending benchmarks would involve analyzing other major aircraft sustainment contracts within the Department of Defense, particularly those for aging but critical platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, The Boeing Company, is a large aerospace firm. While Boeing may engage in subcontracting with small businesses, this specific award does not directly benefit small businesses through a set-aside. The impact on the small business ecosystem would depend on Boeing's subcontracting practices for this particular order.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The cost-plus incentive fee structure necessitates close monitoring of costs and performance against established metrics. Transparency is generally maintained through contract reporting mechanisms, though specific details of sole-source justifications may be less public. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

F/A-18 Hornet Program
Naval Aviation Sustainment Contracts
Defense Aircraft Manufacturing
Cost-Plus Incentive Fee Contracts
Department of Defense Aircraft Procurement

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.9 million to THE BOEING COMPANY. F/A-18E/F OP24 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 $28.9 million.

What is the period of performance?

Start: 2024-11-15. End: 2026-11-30.

What is Boeing's historical performance and track record with the F/A-18E/F program?

The Boeing Company has been the prime contractor for the F/A-18E/F Super Hornet program since its inception. Historically, Boeing has a deep understanding of the platform's design, manufacturing, and sustainment requirements. While specific performance metrics for individual delivery orders are not publicly detailed, the continued reliance on Boeing for this critical aircraft suggests a generally satisfactory performance record. However, like many large defense programs, the F/A-18E/F has faced scrutiny regarding cost overruns and schedule delays in its broader lifecycle. Boeing's ability to meet cost and schedule targets on this specific $28.8 million delivery order, under a CPIF structure, will be a key indicator of its ongoing performance.

How does the $28.8 million award compare to previous F/A-18E/F sustainment or upgrade contracts?

Direct comparison of this $28.8 million delivery order to previous F/A-18E/F contracts requires access to detailed historical award data, which is not fully public. However, the F/A-18E/F program involves significant sustainment and modernization efforts, with annual spending often in the hundreds of millions or even billions of dollars for the entire fleet. This $28.8 million order likely represents a specific component of that larger sustainment effort, such as procurement of specific parts, depot-level maintenance, or a particular upgrade package. Without knowing the precise scope of work for this order, a precise value comparison is difficult. However, it appears to be a moderate-sized award within the context of the overall F/A-18E/F program's lifecycle costs.

What are the primary risks associated with this sole-source, cost-plus incentive fee contract?

The primary risks associated with this sole-source, cost-plus incentive fee (CPIF) contract are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, increasing the risk of the government paying a higher price than might be achievable through a competitive bidding process. Secondly, CPIF contracts, while designed to incentivize performance, carry inherent risks. If not meticulously managed and monitored, they can lead to cost growth if the contractor's incurred costs exceed initial estimates, even with performance incentives. There's also a risk of scope creep or inefficient resource allocation if the government's oversight is insufficient. Finally, over-reliance on a single contractor for a critical platform like the F/A-18E/F poses a supply chain risk; any disruption at Boeing could impact naval aviation readiness.

How effective is the cost-plus incentive fee (CPIF) structure in ensuring value for money on defense contracts?

The effectiveness of the CPIF structure in ensuring value for money is contingent on several factors, including the clarity of performance metrics, the accuracy of cost estimations, and the rigor of government oversight. When well-defined, CPIF can align contractor incentives with government objectives, encouraging efficiency and quality to achieve target costs and performance levels. However, if performance metrics are poorly defined or cost targets are unrealistic, the incentive may be weak or lead to unintended consequences. For complex defense procurements like aircraft sustainment, where costs can be difficult to predict precisely, CPIF can be a useful tool to share risk and reward performance. Nonetheless, it requires diligent government management to prevent cost overruns and ensure that the 'incentive' truly drives value rather than simply justifying higher costs.

What is the historical spending trend for F/A-18E/F sustainment and upgrades by the Department of the Navy?

Historical spending on F/A-18E/F sustainment and upgrades by the Department of the Navy has been substantial and consistent, reflecting the platform's critical role. Annual obligations for the Super Hornet program typically range from several hundred million dollars to over a billion dollars, depending on the specific fiscal year and the mix of procurement, research, development, test, and evaluation (RDT&E), and operation and maintenance (O&M) funds allocated. This spending covers a wide array of activities, including spare parts, depot maintenance, modifications, and system upgrades. The trend generally shows a sustained investment to maintain the operational readiness and extend the service life of the aging fleet, with significant portions dedicated to sustainment activities like the one this delivery order likely supports.

What are the implications of this contract being a 'Delivery Order' under a larger contract vehicle?

This contract being a 'Delivery Order' (awarded as 'DELIVERY ORDER') signifies that it is a task order issued under a previously established indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar basic ordering agreement. This approach allows the government to procure specific quantities of goods or services over a period without needing to re-compete the entire requirement each time. For the F/A-18E/F program, this likely means there is an overarching contract vehicle in place with The Boeing Company that allows for the issuance of multiple delivery orders for various sustainment, repair, or upgrade needs. The $28.8 million represents the value of this specific order, not the total potential value of the underlying contract vehicle. This method provides flexibility for the Navy but also means the competition dynamics are tied to the initial award of the IDIQ contract.

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

Solicitation ID: N0001925R0001

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: $28,861,061

Exercised Options: $28,861,061

Current Obligation: $28,861,061

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $275,679

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