Boeing awarded $135M contract for mechanical actuators, raising questions about competition and value

Contract Overview

Contract Amount: $135,002,240 ($135.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-06-24

End Date: 2032-12-31

Contract Duration: 3,112 days

Daily Burn Rate: $43.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACTUATOR,MECHANICAL

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS CITY County, MISSOURI, 63166

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $135.0 million to THE BOEING COMPANY for work described as: ACTUATOR,MECHANICAL Key points: 1. The contract's value, while substantial, requires further scrutiny against market benchmarks for mechanical actuators. 2. The sole-source nature of this award limits competitive pressure, potentially impacting price efficiency. 3. A long performance period (over 7 years) necessitates careful monitoring for cost overruns and performance degradation. 4. The absence of small business set-asides or subcontracting plans warrants examination of broader economic impacts. 5. This award falls within the 'Other Aircraft Parts' manufacturing sector, a critical but often specialized area. 6. The firm-fixed-price contract type shifts some risk to the contractor, but oversight remains crucial.

Value Assessment

Rating: fair

Benchmarking the $135 million contract for mechanical actuators against similar Department of Defense procurements is challenging without more specific component details. However, the duration of the contract (over 7 years) and the lack of competition suggest a potential for above-market pricing if not rigorously managed. The firm-fixed-price structure provides some cost certainty, but the overall value proposition depends heavily on the specific technical requirements and the uniqueness of the actuators provided by Boeing.

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 considered. This approach is typically justified when a specific item is required and only one source can provide it, or in cases of urgent need. However, the lack of competition means there was no opportunity for other qualified manufacturers to bid, potentially leading to higher prices than if a competitive process had been employed.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible prices for taxpayers. This means the negotiated price might be higher than what could have been achieved in an open market scenario.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive critical mechanical actuators for its aircraft. These actuators are essential components for the operational readiness and performance of naval aviation assets. The contract supports advanced manufacturing capabilities within the aerospace sector, specifically in Missouri. While not explicitly stated, the contract likely sustains or creates jobs within Boeing's aerospace manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Long contract duration increases risk of cost escalation or performance issues.
Lack of small business participation may limit broader economic benefits.
Specific component details are not publicly available, hindering detailed value analysis.

Positive Signals

Boeing is a major aerospace contractor with a proven track record.
Firm-fixed-price contract provides cost certainty.
Contract supports critical defense needs for naval aviation.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector (NAICS 336413), a segment of the broader aerospace industry. This sector is characterized by high technological demands, stringent quality control, and significant R&D investment. The market is often dominated by a few large, established players like Boeing, especially for specialized components. Comparable spending benchmarks are difficult to ascertain without knowing the exact specifications of the actuators, but defense contracts for aircraft components can range from millions to billions of dollars.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there information indicating specific subcontracting goals for small businesses. This suggests that the primary contract is with a large business, and opportunities for small businesses may be limited unless Boeing voluntarily includes them in its supply chain. The absence of explicit small business provisions warrants further investigation into potential subcontracting plans and 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. As a sole-source award, scrutiny may be heightened to ensure fair pricing and adherence to contract terms. Transparency is moderate, with basic contract award details available, but specific technical justifications for the sole-source nature and detailed pricing breakdowns are typically not public. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

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

Risk Flags

Sole-source award
Long contract duration
Lack of small business participation noted
Limited public detail on specific component value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $135.0 million to THE BOEING COMPANY. ACTUATOR,MECHANICAL

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 $135.0 million.

What is the period of performance?

Start: 2024-06-24. End: 2032-12-31.

What is Boeing's track record with similar mechanical actuator contracts for the Department of Defense?

The Boeing Company has an extensive history of supplying complex components, including actuators, for various military aircraft platforms. While specific data on past actuator contracts is not readily available in the public domain, Boeing's overall performance record with the Department of Defense is generally strong, marked by significant contributions to major defense programs. However, like any large contractor, they have faced scrutiny over specific contract performance and pricing in the past. A detailed review would require examining historical contract data for similar components, delivery performance, and any past disputes or contract modifications related to actuators.

How does the $135 million value compare to market rates for similar mechanical actuators?

Directly comparing the $135 million contract value to market rates for 'mechanical actuators' is challenging without precise specifications, quantity, and performance requirements. Mechanical actuators are highly specialized components, and their cost varies significantly based on factors like size, power, environmental resistance (e.g., for harsh aerospace conditions), precision, and lifespan. Given this is a sole-source award to a major defense contractor like Boeing, the price is likely negotiated based on Boeing's internal costs and profit margins, potentially influenced by historical pricing for similar internal developments. A true market comparison would necessitate understanding the unique technical specifications and identifying comparable commercial or military off-the-shelf (COTS) alternatives, which may not exist for highly customized defense applications.

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

The primary risks associated with this sole-source contract are related to price and performance. Without competitive bidding, there is an inherent risk that the negotiated price may not be the most economical, potentially leading to higher costs for the government. Furthermore, the long performance period (ending in 2032) increases the risk of unforeseen issues such as cost overruns due to inflation or material price fluctuations, potential performance degradation over time, or the need for contract modifications. The government's leverage to enforce strict performance standards or negotiate favorable changes is reduced compared to a competitively awarded contract.

What is the expected effectiveness of these mechanical actuators in supporting naval aviation?

The effectiveness of these mechanical actuators is expected to be high, given they are being procured by the Department of the Navy for use in naval aviation. These systems are critical for the operation of various aircraft functions, such as flight control surfaces, landing gear deployment, and other essential mechanical movements. The selection of The Boeing Company, a major aerospace manufacturer, suggests that the actuators are designed to meet stringent military specifications for reliability, durability, and performance under demanding operational conditions. Their successful integration and function are vital for maintaining the readiness and operational capability of naval aircraft fleets.

How does this contract fit into the historical spending patterns for aircraft parts by the Department of Defense?

This $135 million contract for mechanical actuators fits within the broader historical spending patterns of the Department of Defense (DoD) on aircraft parts and components. The DoD consistently allocates significant portions of its budget to maintaining and modernizing its vast fleet of aircraft, which includes the procurement of numerous parts, from simple fasteners to complex systems like actuators. While $135 million is a substantial sum for a single contract, it represents a fraction of the DoD's total annual spending on aviation sustainment and procurement. Historical data shows a continuous demand for such components, often awarded through both competitive and sole-source mechanisms, depending on the specificity and criticality of the part.

Are there any specific performance metrics or milestones tied to this contract?

While the provided data does not detail specific performance metrics or milestones, defense contracts of this nature typically include detailed specifications and requirements that the delivered actuators must meet. These often encompass technical performance standards (e.g., operational range, response time, load capacity), reliability targets (e.g., mean time between failures), durability requirements (e.g., lifespan under specific operational cycles), and quality control measures. Delivery schedules and phased milestones are also common to ensure timely production and integration. The firm-fixed-price nature implies that meeting these defined requirements is the contractor's responsibility to achieve the agreed-upon price.

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: N0038324RT256

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: $210,941,000

Exercised Options: $210,941,000

Current Obligation: $135,002,240

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $137,282,724

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0038322GYY01

IDV Type: BOA

Timeline