Boeing awarded $93.9M for Aileron Assembly, AI, with no competition

Contract Overview

Contract Amount: $93,968,280 ($94.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-09-27

End Date: 2027-06-30

Contract Duration: 1,737 days

Daily Burn Rate: $54.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AILERON ASSEMBLY,AI

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $94.0 million to THE BOEING COMPANY for work described as: AILERON ASSEMBLY,AI Key points: 1. Contract awarded to a single, established supplier, raising questions about price competitiveness. 2. The fixed-price contract structure aims to control costs, but the lack of competition limits potential savings. 3. Long contract duration (over 4 years) suggests a critical, ongoing need for these aircraft parts. 4. The award is a delivery order under an existing contract, indicating a pre-established relationship. 5. Focus on a specific component (Aileron Assembly) highlights the specialized nature of defense supply chains. 6. The contract value is substantial, reflecting the importance and complexity of the supplied parts.

Value Assessment

Rating: fair

The contract value of $93.9 million for Aileron Assembly, AI, is significant. Without competitive bidding, it is difficult to benchmark the value for money effectively. However, the firm fixed-price structure provides some cost certainty for the government. Comparisons to similar sole-source contracts for specialized aircraft components would be necessary for a more precise assessment of pricing fairness.

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 unique product or service is required, or when only one responsible source is available. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The government did not benefit from the potential cost reductions that typically arise from a competitive bidding environment.

Public Impact

The primary beneficiaries are the Department of Defense (Navy), ensuring the continued availability of critical aircraft components. The services delivered involve the manufacturing and supply of Aileron Assemblies for aircraft. The geographic impact is primarily within Missouri, where the contractor is located, and wherever the aircraft utilizing these parts are deployed. Workforce implications include skilled manufacturing jobs at The Boeing Company's facility in Missouri.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Lack of transparency in the procurement process due to no-bid award.
Potential for cost overruns if pricing is not rigorously managed without competitive benchmarks.

Positive Signals

Award to a known, established contractor (Boeing) suggests reliability and existing expertise.
Firm fixed-price contract provides cost predictability for the government.
Long-term contract indicates a sustained need and potential for stable supply.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry, significant R&D investment, and a limited number of qualified suppliers, particularly for defense applications. Spending in this sub-sector is driven by military readiness requirements and the lifecycle support of existing aircraft fleets. Comparable spending benchmarks would involve other sole-source or limited-competition awards for similar high-value, specialized aircraft components.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to The Boeing Company, a large aerospace manufacturer. There is no explicit information provided regarding subcontracting plans for small businesses. The lack of a set-aside means that opportunities for small businesses to participate in this specific contract are limited unless they are part of Boeing's supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver the specified goods at the agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Parts Manufacturing
Defense Procurement
Aerospace Supply Chain
Naval Aviation Support
Sole-Source Contracts

Risk Flags

Sole-source procurement
Lack of competition
Potential for non-competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.0 million to THE BOEING COMPANY. AILERON ASSEMBLY,AI

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 $94.0 million.

What is the period of performance?

Start: 2022-09-27. End: 2027-06-30.

What is the historical spending pattern for Aileron Assemblies by the Department of Defense?

Historical spending data for 'Aileron Assembly, AI' specifically is not readily available in public databases without more granular contract identifiers. However, the Department of Defense, particularly the Navy, consistently spends billions annually on aircraft parts and maintenance to ensure fleet readiness. This includes a significant portion for specialized components like wing assemblies, control surfaces, and engine parts. Spending patterns are influenced by aircraft modernization programs, operational tempo, and the aging of existing fleets. Sole-source awards for critical components are not uncommon in defense procurement due to the specialized nature of the products and the limited number of qualified manufacturers, often leading to consistent, high-value contracts with incumbent suppliers over extended periods.

What is Boeing's track record with sole-source defense contracts?

The Boeing Company has a long and extensive history of receiving sole-source and limited-competition contracts from the Department of Defense across various platforms, including aircraft, helicopters, and space systems. As one of the largest defense contractors globally, Boeing often holds unique positions as the original equipment manufacturer (OEM) or sole provider of highly specialized components and integrated systems. While these awards are often justified by technical expertise, proprietary technology, or existing platform integration, they also draw scrutiny regarding pricing and competition. Regulatory bodies and oversight agencies frequently review these sole-source awards to ensure they represent fair value and are appropriately justified, especially for high-value contracts.

How does the firm fixed-price (FFP) contract type mitigate risk in this sole-source scenario?

The Firm Fixed-Price (FFP) contract type is designed to provide the government with cost certainty, which is particularly valuable in a sole-source situation where competitive pricing cannot be leveraged. Under an FFP contract, the price is not subject to adjustment based on the contractor's cost experience. This places the risk of cost overruns squarely on the contractor, incentivizing Boeing to manage its production costs efficiently to maintain profitability. While it doesn't address the initial price level determination (which is a concern with sole-source), it does protect the government from unexpected cost increases during the contract performance period, ensuring the total expenditure remains within the agreed-upon $93.9 million ceiling.

What are the potential risks associated with a sole-source award for critical aircraft components?

The primary risk associated with a sole-source award for critical aircraft components like Aileron Assemblies is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government has less leverage to negotiate the lowest possible price. Additionally, sole-source awards can reduce incentives for the contractor to innovate or improve efficiency beyond what is necessary to meet contract specifications, as there is no direct competitive threat. There's also a risk of vendor lock-in, making it difficult and costly to switch suppliers in the future, even if better alternatives emerge. This dependence can be particularly concerning for long-term sustainment of military assets.

Are there alternative suppliers for Aileron Assemblies, and why might they not have been considered?

Determining the existence of alternative suppliers for highly specialized aircraft components like Aileron Assemblies requires in-depth market research and technical analysis, which is typically conducted by the procuring agency. Potential reasons why alternatives might not have been considered for this sole-source award include: 1) Boeing may be the Original Equipment Manufacturer (OEM) with unique design rights, tooling, or proprietary manufacturing processes. 2) The specific Aileron Assembly might be deeply integrated into a particular aircraft system, requiring extensive and costly re-qualification or redesign for a new supplier. 3) There may be a limited number of manufacturers possessing the necessary certifications, security clearances, and technical expertise to produce such critical defense components to stringent military specifications. 4) The urgency of the requirement might have favored an existing, trusted supplier.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0038322RT103

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: $191,772,000

Exercised Options: $191,772,000

Current Obligation: $93,968,280

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $4,772,519

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0038322GYY01

IDV Type: BOA

Timeline