DoD awards $42.3M to Boeing for aircraft manufacturing, raising questions about competition and value

Contract Overview

Contract Amount: $42,318,295 ($42.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-07-31

End Date: 2023-05-31

Contract Duration: 1,765 days

Daily Burn Rate: $24.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ECP-5012B-A1-KITS

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $42.3 million to THE BOEING COMPANY for work described as: ECP-5012B-A1-KITS Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of 1765 days suggests a long-term need for these aircraft components. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Lack of competition raises concerns about whether the government secured the best possible price. 5. Boeing's established role in defense manufacturing suggests a strong incumbent advantage. 6. The contract's value, while substantial, needs benchmarking against similar sole-source awards.

Value Assessment

Rating: questionable

The contract's value of $42.3 million for aircraft manufacturing components requires careful scrutiny due to the sole-source award. Without competitive bidding, it is difficult to definitively assess if this price represents fair market value. Benchmarking against similar sole-source contracts for comparable aircraft parts would be necessary to determine if the government received good value. The Cost Plus Fixed Fee (CPFF) contract type, while sometimes necessary for complex or uncertain projects, can lead to higher costs if not managed diligently, as the contractor is reimbursed for costs plus a fixed fee.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or when a compelling justification exists for avoiding full and open competition. The lack of multiple bidders means there was no direct price competition, which can limit the government's ability to negotiate the lowest possible price and may result in higher overall costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding processes. This can lead to higher expenditure for the same goods or services compared to a competed contract.

Public Impact

The primary beneficiaries are likely the Department of Defense, ensuring the continued availability of critical aircraft manufacturing components. This contract supports the production and maintenance of specific aircraft, contributing to national defense capabilities. The geographic impact is centered around the contractor's facilities, primarily in Missouri, supporting local employment and economic activity. Workforce implications include the continued employment of skilled labor in aircraft manufacturing and related support roles at The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher prices.
Cost Plus Fixed Fee contract type may incentivize higher cost accumulation.
Lack of transparency in the justification for sole-source award.
Long contract duration could mask inefficiencies or scope creep.

Positive Signals

Boeing is a major defense contractor with a proven track record in aircraft manufacturing.
The contract ensures the supply of critical components for defense assets.
Delivery order structure allows for phased funding and management of requirements.

Sector Analysis

The aircraft manufacturing sector is a critical component of the aerospace and defense industry, characterized by high barriers to entry, complex supply chains, and significant government procurement. This contract falls within the broader defense industrial base, where major contractors like Boeing play a pivotal role. Spending in this sector is often driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft components or manufacturing services within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, there is no explicit mention of subcontracting goals for small businesses. This suggests that the primary awardee, The Boeing Company, will likely perform the majority of the work. The impact on the small business ecosystem is therefore indirect, potentially limited to opportunities within Boeing's supply chain rather than direct set-aside awards.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Department of Defense has internal audit and inspection mechanisms, and the Inspector General's office may conduct reviews of significant contracts. Transparency is moderate, as contract awards are publicly reported, but the justification for sole-source awards and detailed cost breakdowns may not always be fully accessible.

Related Government Programs

Aircraft Manufacturing
Defense Procurement
Sole-Source Contracts
Cost Plus Fixed Fee Contracts
Department of Defense Contracts

Risk Flags

Sole-source award
Cost-reimbursable contract type
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.3 million to THE BOEING COMPANY. ECP-5012B-A1-KITS

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $42.3 million.

What is the period of performance?

Start: 2018-07-31. End: 2023-05-31.

What is the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis to The Boeing Company?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as only one responsible source being available, or when a compelling urgency, industrial mobilization, or experimental development requires it. For a major defense contractor like Boeing, justifications often relate to unique capabilities, proprietary technology, or the need for commonality with existing platforms. A full review would require accessing the contract's justification and approval (J&A) document, which details the rationale and market research conducted to support the sole-source determination.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements in terms of risk and potential cost outcomes for the government?

The Cost Plus Fixed Fee (CPFF) contract type is designed to provide the contractor with reimbursement for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts a significant portion of the cost risk to the government, especially if the final costs are higher than initially estimated. While the fee is fixed, the total contract value can escalate if costs increase. Compared to fixed-price contracts, CPFF offers more flexibility for undefined scopes of work but can lead to higher overall costs for the government if not managed rigorously. It is often used when the scope of work is uncertain or involves research and development.

What is Boeing's historical performance record with the Department of Defense, particularly on similar aircraft manufacturing contracts?

The provided data does not contain specific performance metrics for The Boeing Company on this or similar contracts. However, Boeing is a major, long-standing defense contractor with extensive experience in aircraft manufacturing for the DoD. Historically, large defense contractors often have a mixed record, with successes in delivering complex systems and occasional challenges related to cost overruns, schedule delays, or technical issues. A comprehensive assessment of Boeing's track record would involve reviewing past performance evaluations, contract close-out data, and any documented disputes or corrective actions related to their previous DoD engagements.

Can the $42.3 million contract value be benchmarked against other aircraft manufacturing contracts awarded by the DoD, and what would such a comparison reveal?

Benchmarking this $42.3 million contract requires identifying comparable contracts based on the specific aircraft components, manufacturing processes, and contract type (sole-source CPFF). Without access to a comprehensive database of similar sole-source awards, a precise benchmark is difficult. However, if comparable competitively awarded contracts for similar services exist, they would likely show a lower price point, highlighting the potential cost premium associated with this sole-source award. Even comparing it to other sole-source awards for similar items could reveal variations in pricing that warrant further investigation into the specific circumstances of each contract.

What are the potential risks associated with the long contract duration (1765 days) for aircraft manufacturing components?

A long contract duration of 1765 days (approximately 4.8 years) for aircraft manufacturing components introduces several potential risks. Firstly, it increases the likelihood of scope creep or changes in requirements over time, which can lead to cost increases and schedule adjustments. Secondly, it extends the period during which the government is exposed to potential cost overruns, especially with a CPFF contract type. Thirdly, maintaining oversight and ensuring continued contractor performance and quality over such an extended period requires sustained effort and resources. Finally, technological advancements in aircraft manufacturing could render the components or processes obsolete before the contract concludes, potentially diminishing the value of the investment.

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

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $43,892,784

Exercised Options: $43,892,784

Current Obligation: $42,318,295

Actual Outlays: $9,889,271

Subaward Activity

Number of Subawards: 26

Total Subaward Amount: $4,192,648

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001916G0001

IDV Type: BOA

Timeline