Boeing awarded $38M contract for aircraft manufacturing, raising questions about competition and value

Contract Overview

Contract Amount: $37,986,691 ($38.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2026-02-04

Contract Duration: 2,683 days

Daily Burn Rate: $14.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCURE&INSTALL P/N:74D140520-1003

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $38.0 million to THE BOEING COMPANY for work described as: PROCURE&INSTALL P/N:74D140520-1003 Key points: 1. Contract awarded via sole-source justification, limiting price discovery and potentially increasing costs. 2. Long contract duration of over two years suggests a need for ongoing support or production. 3. Firm Fixed Price contract type offers cost certainty but may limit flexibility for unforeseen issues. 4. Awarded by the Defense Contract Management Agency, indicating a focus on defense-related procurement. 5. The contract falls under Aircraft Manufacturing, a critical sector for national defense capabilities. 6. No small business set-aside was utilized, potentially impacting opportunities for smaller enterprises.

Value Assessment

Rating: questionable

The contract's value of approximately $38 million for aircraft manufacturing components requires careful benchmarking against similar sole-source awards. Without competitive bidding, it is difficult to definitively assess if this price represents fair market value. The firm fixed-price structure provides some cost control, but the lack of competition is a significant risk factor for achieving optimal value for taxpayer dollars. Further analysis of historical pricing for similar components and the specific justification for the sole-source award is needed to fully evaluate the value proposition.

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 bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances, such as when only one vendor possesses the necessary capabilities or proprietary technology, they inherently reduce the potential for price competition and may lead to higher costs for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible prices, potentially resulting in higher expenditures for taxpayers.

Public Impact

The primary beneficiaries are likely the Department of Defense, which will receive the manufactured aircraft components. The services delivered involve the procurement and installation of aircraft parts, crucial for maintaining and enhancing military aviation capabilities. The geographic impact is centered in Missouri, where the contract is being performed. Workforce implications may include employment opportunities within The Boeing Company and its supply chain in Missouri.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to inflated prices.
Lack of transparency in the sole-source justification could obscure potential alternatives.
Long contract duration may increase exposure to market fluctuations or technological obsolescence.
Firm fixed price contracts can be disadvantageous if unforeseen technical challenges arise.
No small business participation noted, missing opportunities to support smaller enterprises.

Positive Signals

Firm fixed price contract provides cost certainty for the government.
Award to a major defense contractor like Boeing suggests access to established expertise and production capacity.
Contract is for essential aircraft manufacturing, supporting critical defense needs.
Delivery order structure allows for phased procurement and potential flexibility in delivery schedules.

Sector Analysis

The Aircraft Manufacturing sector (NAICS 336411) is a vital component of the aerospace and defense industry, characterized by high barriers to entry, significant research and development investment, and stringent quality control requirements. This contract for aircraft components fits within this sector, likely supporting the production or sustainment of military aircraft. Spending in this sector is heavily influenced by defense budgets and geopolitical factors. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft components or systems within the Department of Defense.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This means that opportunities for small businesses to participate directly in this contract are limited. While Boeing may engage small businesses within its broader supply chain, the absence of a formal set-aside or subcontracting plan directly impacts the direct inclusion of small businesses in this specific award, potentially limiting their access to this federal spending.

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 firm fixed-price nature of the contract provides a degree of accountability for cost overruns, as the contractor is obligated to deliver at the agreed-upon price. Transparency regarding the sole-source justification and performance metrics would be key to assessing accountability. Further oversight could involve the Department of Defense's Inspector General if performance issues or potential fraud are suspected.

Related Government Programs

Aircraft Procurement
Aviation Support Services
Defense Manufacturing Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award lacks competitive transparency.
Potential for inflated pricing due to lack of competition.
Long contract duration may introduce performance and obsolescence risks.
No explicit small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.0 million to THE BOEING COMPANY. PROCURE&INSTALL P/N:74D140520-1003

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 $38.0 million.

What is the period of performance?

Start: 2018-10-01. End: 2026-02-04.

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

The provided data indicates the contract was awarded as 'NOT COMPETED,' which is synonymous with a sole-source award. The specific justification for this determination is not detailed in the data. Typically, sole-source awards are justified when only one responsible source is available to meet the government's needs. This could be due to proprietary technology, unique capabilities, urgent and compelling circumstances, or the existence of a long-term strategic partnership. Without the official justification document, it is impossible to ascertain the precise reasons. However, the lack of competition inherently raises concerns about whether alternative, potentially more cost-effective solutions were overlooked or unavailable.

How does the $38 million contract value compare to similar aircraft manufacturing procurements, especially sole-source ones?

Benchmarking the $38 million contract value requires access to a broader dataset of similar aircraft manufacturing procurements, particularly those awarded on a sole-source basis. Without this comparative data, it is challenging to definitively state whether this price is high, low, or fair. Sole-source contracts often command higher prices due to the absence of competitive pressure. To conduct a thorough comparison, one would need to analyze contracts for comparable aircraft components, considering factors like complexity, quantity, technological sophistication, and the specific defense platform they support. Analyzing historical pricing trends for The Boeing Company on similar sole-source awards would also provide valuable context.

What are the potential risks associated with a firm fixed-price contract of this duration (over two years)?

A firm fixed-price (FFP) contract, while offering cost certainty to the buyer, can present risks, especially over a long duration like the 26 months for this contract (October 2018 to February 2026). If the contractor, Boeing, encounters unforeseen cost increases in labor, materials, or manufacturing processes, they bear the full burden of those increases, potentially impacting their profitability and motivation to perform. Conversely, if costs decrease significantly, the government may have overpaid relative to the actual costs incurred. For long-duration FFP contracts, there's also a risk of the contractor becoming complacent or less incentivized to innovate if they perceive they are already priced adequately or are facing cost pressures. The government also loses the opportunity to benefit from potential cost savings if efficiencies are found during performance.

What is the significance of the contract being awarded by the Defense Contract Management Agency (DCMA)?

The Defense Contract Management Agency (DCMA) is the primary contract management organization for the Department of Defense (DoD). When DCMA awards or manages a contract, it signifies that the procurement is intended to support defense missions and operations. DCMA's role typically involves overseeing contract performance, ensuring compliance with terms and conditions, monitoring quality, and facilitating payments. An award from DCMA underscores the defense-critical nature of the aircraft manufacturing components being procured. It also means that DCMA's program managers and quality assurance representatives will be actively involved in overseeing Boeing's execution of this contract to ensure it meets stringent military specifications and delivery schedules.

How does the lack of small business participation impact the overall federal small business contracting goals?

The absence of a small business set-aside or specific subcontracting requirements for small businesses on this $38 million contract means that a direct opportunity for small businesses to compete for or benefit from this specific federal award is missed. Federal agencies have statutory goals for awarding a certain percentage of their contracting dollars to small businesses, including categories like small disadvantaged businesses, women-owned small businesses, and service-disabled veteran-owned small businesses. While this single contract's impact might be marginal on the overall goals of a large agency like the Department of Defense, numerous such awards without small business considerations can collectively hinder the achievement of these important national objectives. It also limits the growth and development of the small business industrial base that supports critical sectors like defense manufacturing.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $37,986,691

Exercised Options: $37,986,691

Current Obligation: $37,986,691

Subaward Activity

Number of Subawards: 46

Total Subaward Amount: $691,136,594

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