Boeing awarded $332.7M for F/A-18 E/F modifications, a sole-source contract with significant duration

Contract Overview

Contract Amount: $33,266,240 ($33.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-02-28

End Date: 2024-10-31

Contract Duration: 2,072 days

Daily Burn Rate: $16.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F/A-18 E/F MODIFICATIONS

Place of Performance

Location: JACKSONVILLE, DUVAL County, FLORIDA, 32221

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $33.3 million to THE BOEING COMPANY for work described as: F/A-18 E/F MODIFICATIONS Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, potentially leading to higher final costs than fixed-price agreements. 2. The contract spans over 2000 days, indicating a long-term need for sustainment and upgrades. 3. Sole-source award suggests limited market alternatives or specific contractor capabilities required. 4. Modifications to a key fighter aircraft platform highlight ongoing investment in defense readiness. 5. Geographic concentration in Florida for contract performance. 6. No small business set-aside noted, potentially limiting opportunities for smaller enterprises.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific technical modifications involved. Cost-plus-fixed-fee contracts inherently carry more cost risk for the government compared to fixed-price contracts, as the final price is not fully determined at the outset. Without comparable sole-source modification contracts for similar aircraft, assessing whether the pricing is competitive is difficult. The duration of the contract suggests a sustained need, but the overall value-for-money depends heavily on the effective management of costs and the successful execution of the modifications.

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 among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole provider of necessary parts or services. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government relies on negotiation and oversight to ensure fair pricing in sole-source situations.

Public Impact

The U.S. Navy benefits from the continued sustainment and modernization of its F/A-18 E/F Super Hornet fleet. Services delivered include modifications and upgrades to enhance aircraft performance, survivability, and mission capabilities. Contract performance is concentrated in Florida, impacting the local aerospace workforce and economy. The F/A-18 E/F is a critical component of naval aviation, ensuring air superiority and strike capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure introduces potential for cost overruns.
Sole-source award limits competitive pressure on pricing.
Long contract duration increases exposure to changing economic conditions and technological obsolescence.
Lack of small business participation may limit broader economic benefits.

Positive Signals

Contract addresses critical sustainment needs for a key defense asset.
Boeing is a recognized leader in fighter aircraft manufacturing, suggesting technical expertise.
Modifications aim to improve aircraft capabilities, enhancing warfighter effectiveness.
Contract performance is geographically concentrated, potentially supporting a skilled regional workforce.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. The F/A-18 E/F Super Hornet is a mature platform, and contracts for its modification and sustainment are crucial for maintaining fleet readiness. Spending in this area reflects ongoing efforts to upgrade existing platforms rather than procure entirely new ones. Comparable spending benchmarks would involve other major defense aircraft sustainment programs, which often involve substantial, multi-year contracts due to the complexity and scale of the work.

Small Business Impact

This contract does not appear to include a small business set-aside. The prime contractor, The Boeing Company, is a large aerospace firm. While Boeing may engage subcontractors, the absence of a specific set-aside for small businesses in the prime contract suggests that opportunities for direct subcontracting to small businesses might be limited or not explicitly mandated at this level. This could impact the broader small business ecosystem that supports major defense platforms.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee nature of the contract necessitates rigorous oversight of incurred costs and the contractor's adherence to the fixed fee. Transparency is typically maintained through contract reporting requirements and audits. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

F/A-18 Hornet Program
Naval Aviation Sustainment
Defense Aircraft Modifications
Aerospace Manufacturing Contracts
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Cost-plus-fixed-fee contract type
Sole-source award
Long contract duration
No small business set-aside

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.3 million to THE BOEING COMPANY. F/A-18 E/F MODIFICATIONS

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 $33.3 million.

What is the period of performance?

Start: 2019-02-28. End: 2024-10-31.

What is the historical spending trend for F/A-18 E/F modifications with The Boeing Company?

Analyzing historical spending trends for F/A-18 E/F modifications with The Boeing Company requires access to detailed contract databases. However, it is generally understood that sustainment and modification of major defense platforms like the Super Hornet represent a significant and ongoing investment for the Department of Defense. Spending typically fluctuates based on specific upgrade requirements, fleet readiness needs, and the availability of funding. Contracts for modifications can range from smaller, targeted enhancements to larger, more comprehensive overhauls. The current $332.7 million contract for a duration of over 2000 days suggests a substantial, long-term commitment to maintaining and improving the F/A-18 E/F fleet's capabilities, aligning with typical patterns of sustained investment in aging but critical military assets.

How does the cost-plus-fixed-fee (CPFF) contract type impact the government's financial risk compared to other contract types for aircraft modifications?

The Cost-Plus-Fixed-Fee (CPFF) contract type shifts a significant portion of the financial risk to the government. Under CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. This means the final contract price is not fixed and can exceed initial estimates if costs escalate. Compared to Firm-Fixed-Price (FFP) contracts, where the contractor bears the risk of cost overruns to achieve the agreed-upon price, CPFF offers less cost certainty for the government. However, CPFF can be advantageous for complex projects with uncertain cost elements, such as extensive modifications where the scope of work might evolve, allowing for flexibility while still providing the contractor with an incentive to control costs to protect their fee.

What are the potential risks associated with a sole-source award for defense aircraft modifications?

Sole-source awards for defense aircraft modifications carry several potential risks. Primarily, the absence of competition can lead to higher prices than might be achieved in a competitive bidding process, as the government lacks the leverage of multiple offers. This can result in reduced value for taxpayer money. Furthermore, sole-source contracts can sometimes foster complacency in contractors, potentially impacting innovation or efficiency over time, as the immediate pressure of competition is removed. There's also a risk that the government becomes overly reliant on a single supplier, creating vulnerabilities in the supply chain or future procurement options. Robust negotiation and stringent oversight are critical to mitigate these risks.

What is the significance of the F/A-18 E/F Super Hornet platform to U.S. naval aviation, and why are modifications crucial?

The F/A-18 E/F Super Hornet is a cornerstone of U.S. naval aviation, serving as a multi-role strike fighter capable of performing a wide array of missions, including air superiority, fighter escort, reconnaissance, and close air support. It operates from aircraft carriers, making it vital for projecting power globally. Modifications are crucial for several reasons: extending the platform's service life beyond its original design, incorporating new technologies and weapon systems to counter evolving threats, enhancing survivability through upgrades to electronic warfare and defensive systems, and improving overall performance and mission effectiveness. Continuous modification ensures the Super Hornet remains a relevant and capable asset in a dynamic threat environment.

What oversight mechanisms are typically in place for a contract of this magnitude and duration awarded to a major defense contractor like Boeing?

For a contract of this magnitude ($332.7 million) and duration (over 2000 days) awarded to a major defense contractor like Boeing, robust oversight mechanisms are essential. The Defense Contract Management Agency (DCMA) typically plays a key role, providing contract administration services, including monitoring contractor performance, ensuring compliance with contract terms, and overseeing cost reporting for CPFF contracts. Financial audits by the Defense Contract Audit Agency (DCAA) are common to verify incurred costs. Furthermore, the contracting activity within the Department of Defense (e.g., Naval Air Systems Command) will maintain program oversight, tracking technical progress and ensuring the modifications meet operational requirements. Transparency is often facilitated through regular progress reports and program reviews.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6211 AVIATION AVE, JACKSONVILLE, FL, 32221

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: $33,266,240

Exercised Options: $33,266,240

Current Obligation: $33,266,240

Actual Outlays: $3,057,863

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001919D0003

IDV Type: IDC

Timeline