Boeing awarded $33.2M for F/A-18 H16 Block III SCS, with contract type indicating potential for cost overruns
Contract Overview
Contract Amount: $33,195,859 ($33.2M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2018-09-25
End Date: 2024-01-31
Contract Duration: 1,954 days
Daily Burn Rate: $17.0K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF F/A-18 H16 BLOCK III SCS
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $33.2 million to THE BOEING COMPANY for work described as: IGF::OT::IGF F/A-18 H16 BLOCK III SCS Key points: 1. Contract awarded as a sole-source delivery order, limiting competitive pricing benefits. 2. Cost-plus-fixed-fee structure may incentivize higher costs without strict oversight. 3. Long contract duration of 1954 days suggests a complex, multi-year project. 4. Focus on aircraft manufacturing places this within a high-value, specialized sector. 5. Delivery order under an existing contract suggests a continuation of established work. 6. No small business set-aside indicates prime focus on large prime contractor capabilities.
Value Assessment
Rating: questionable
Benchmarking the value of this specific delivery order is challenging without access to the base contract's pricing structure and the specific services rendered. However, the cost-plus-fixed-fee (CPFF) contract type, while common for complex R&D or production, carries inherent risks of cost escalation. Without detailed breakdowns of direct costs and fee calculations, it's difficult to definitively assess value for money. Comparisons to similar F/A-18 modifications or upgrades would be necessary for a more robust assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded as a sole-source delivery order, meaning it was not competed. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of fulfilling the requirement. While efficient for specific needs, it bypasses the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs for the government.
Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that can arise from competitive bidding, potentially resulting in a higher overall expenditure for this requirement.
Public Impact
The U.S. Navy benefits from the continued sustainment and modification of its F/A-18 Super Hornet fleet. Services delivered likely include specialized manufacturing, integration, or modification of aircraft systems. Geographic impact is primarily centered around the contractor's facilities in Missouri. Workforce implications include skilled labor in aerospace manufacturing and engineering at The Boeing Company.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee contract type can lead to cost overruns if not managed tightly.
- Sole-source award limits competitive pressure, potentially impacting price efficiency.
- Long contract duration increases exposure to market fluctuations and changing requirements.
- Lack of transparency in the base contract's pricing makes independent value assessment difficult.
Positive Signals
- Awarded to a prime contractor with extensive experience in F/A-18 production and sustainment.
- Delivery order structure suggests it aligns with existing program needs and infrastructure.
- Focus on specific aircraft systems (SCS) indicates targeted and potentially critical upgrades.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, a critical component of the U.S. industrial base. The F/A-18 Super Hornet is a key platform for naval aviation. Spending in this sector is characterized by high R&D costs, long production cycles, and significant government investment. Comparable spending benchmarks would involve other major aircraft modification or production contracts for military platforms.
Small Business Impact
The contract was awarded directly to The Boeing Company, a large prime contractor, and does not indicate any specific small business set-aside. This suggests that the primary focus is on the prime contractor's capabilities. While Boeing may utilize small businesses in its supply chain, there is no direct indication of subcontracting goals or impacts on the small business ecosystem from this specific award document.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The cost-plus-fixed-fee structure necessitates robust financial oversight to monitor costs and ensure the fee is earned appropriately. Inspector General investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is limited by the sole-source nature and the proprietary information typically associated with defense manufacturing.
Related Government Programs
- F/A-18 Super Hornet Program
- Naval Aviation Sustainment Contracts
- Aircraft Modification and Upgrade Programs
- Defense Production Contracts
Risk Flags
- Sole-source award
- Cost-plus-fixed-fee contract type
- Long contract duration
Tags
defense, department-of-defense, department-of-the-navy, aircraft-manufacturing, not-competed, sole-source, delivery-order, cost-plus-fixed-fee, missouri, f-18, large-contractor
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.2 million to THE BOEING COMPANY. IGF::OT::IGF F/A-18 H16 BLOCK III SCS
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 $33.2 million.
What is the period of performance?
Start: 2018-09-25. End: 2024-01-31.
What specific F/A-18 H16 Block III SCS modifications are being performed under this contract, and what is the justification for the sole-source award?
The specific details of the F/A-18 H16 Block III SCS (System Component Support) modifications are not publicly detailed in the provided data. However, sole-source awards are typically justified when the contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement within the necessary timeframe. For the F/A-18, this could relate to specific avionics upgrades, structural enhancements, or specialized system integration that only Boeing, as the original manufacturer, can provide efficiently and effectively. The justification would likely be documented within the Department of the Navy's procurement records, citing reasons such as industrial base considerations, critical program needs, or lack of viable alternatives.
How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar aircraft manufacturing work, and what are the associated risks?
The Cost-Plus-Fixed-Fee (CPFF) contract type is often used for research and development or complex manufacturing where the scope of work is not precisely defined at the outset, or where innovation is a key component. In CPFF contracts, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF offers less incentive for the contractor to control costs, as the government bears the risk of cost overruns. This can lead to higher final prices if not managed with stringent oversight. For aircraft manufacturing, fixed-price incentive (FPI) or firm-fixed-price (FFP) contracts are often preferred when requirements are well-defined, as they provide stronger cost control incentives for the contractor. The primary risk with CPFF is potential cost escalation and the government paying more than necessary if oversight is insufficient.
What is the historical spending trend for F/A-18 modifications and sustainment by the Department of the Navy, and how does this award fit within that trend?
Historical spending on F/A-18 modifications and sustainment by the Department of the Navy has been substantial, reflecting the platform's long service life and ongoing upgrade requirements. The Navy consistently invests billions annually in maintaining and modernizing its Super Hornet fleet to ensure operational readiness and incorporate new technologies. This $33.2 million award for specific SCS modifications represents a component of that larger, ongoing investment. Without access to detailed historical spending data for F/A-18 sustainment and upgrades, it's difficult to place this specific award precisely within the trend. However, it aligns with the expected pattern of continuous investment in major fleet platforms to address obsolescence, enhance capabilities, and extend service life.
What is The Boeing Company's track record with sole-source contracts and cost-plus-fixed-fee arrangements for defense programs?
The Boeing Company, as a major defense contractor, has a long history of working with the U.S. military across various platforms, including the F/A-18. This includes experience with both competitive and sole-source awards, as well as different contract types like cost-plus-fixed-fee (CPFF). Sole-source awards are not uncommon for large, complex defense systems where Boeing holds unique expertise or intellectual property. Similarly, CPFF contracts are utilized for programs involving significant development, integration, or uncertainty, where defining a fixed price upfront is challenging. Boeing's track record with these contract types is extensive, and oversight by the government is crucial to ensure cost control and value realization, regardless of the contractor's historical performance.
What are the potential risks associated with the long duration (1954 days) of this contract, and what mitigation strategies are typically employed?
A contract duration of 1954 days (approximately 5.3 years) for aircraft manufacturing modifications carries several potential risks. These include the possibility of scope creep, where requirements evolve significantly over the contract period, leading to cost increases and schedule delays. Market conditions, material costs, and technological advancements can also change, impacting the original cost estimates. Furthermore, a long duration can lead to a loss of institutional knowledge if key personnel depart. Mitigation strategies typically involve robust contract management, including regular reviews of progress, performance, and costs. Change control processes are essential to manage any scope adjustments. Performance metrics and incentives can be built into the contract to encourage timely and efficient completion. Regular communication and collaboration between the government and contractor are also vital to address issues proactively.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N6893615R0072
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: $33,975,235
Exercised Options: $33,975,235
Current Obligation: $33,195,859
Actual Outlays: $12,476,934
Subaward Activity
Number of Subawards: 25
Total Subaward Amount: $15,767,782
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N6893618D0026
IDV Type: IDC
Timeline
Start Date: 2018-09-25
Current End Date: 2024-01-31
Potential End Date: 2024-01-31 00:00:00
Last Modified: 2025-09-24
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