Boeing awarded $140.7M for C-17 QEC Kits, a sole-source contract for aircraft manufacturing

Contract Overview

Contract Amount: $140,669,576 ($140.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2012-09-28

End Date: 2017-07-31

Contract Duration: 1,767 days

Daily Burn Rate: $79.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C-17 QEC KITS

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $140.7 million to THE BOEING COMPANY for work described as: C-17 QEC KITS Key points: 1. Contract awarded to a single supplier suggests potential for higher pricing due to lack of competition. 2. The contract duration of 1767 days indicates a long-term need for these critical aircraft components. 3. Sole-source procurement raises questions about whether the government explored all available options for cost savings. 4. The fixed-price contract type shifts some risk to the contractor, but the overall value needs further scrutiny. 5. This award falls under the Aircraft Manufacturing sector, highlighting specialized industrial capabilities. 6. The contract's value, while substantial, needs to be benchmarked against similar procurements for value-for-money assessment.

Value Assessment

Rating: fair

The contract value of $140.7 million for C-17 QEC Kits appears significant. Without comparable sole-source procurements for these specific kits, a direct value-for-money assessment is challenging. However, sole-source awards generally present a higher risk of overpayment compared to competitively bid contracts. Benchmarking against the cost of similar aircraft component kits or historical pricing for these kits, if available, would be crucial for a more definitive assessment of pricing and value.

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 used when only one responsible source is available or when there is a compelling justification for not seeking competitive proposals. The lack of competition means the government did not benefit from price discovery through multiple bids, potentially leading to a higher price than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium for these C-17 QEC Kits due to the absence of competitive bidding. The government's ability to negotiate the best possible price was limited in this sole-source scenario.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the C-17 Globemaster III aircraft, ensuring their continued operational readiness. The services delivered involve the manufacturing and supply of crucial "Quick Engine Change" (QEC) kits, essential for engine maintenance and replacement. The geographic impact is national, supporting the C-17 fleet which is deployed globally. This contract supports specialized manufacturing jobs within the aerospace industry, specifically at Boeing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the sole-source justification process could obscure potential cost efficiencies.
Long contract duration may not reflect current market conditions or technological advancements.
Dependence on a single supplier for critical components poses a supply chain risk.

Positive Signals

Contract awarded to a known, established manufacturer (Boeing) with a track record in C-17 production.
Fixed-price contract type provides some cost certainty for the government.
The contract addresses a clear and ongoing need for essential aircraft maintenance components.

Sector Analysis

The aerospace and defense industry is characterized by high barriers to entry, complex supply chains, and significant R&D investment. Boeing is a major player in this sector, particularly in large military aircraft manufacturing. The market for specialized aircraft components like QEC kits is often dominated by original equipment manufacturers due to proprietary designs and technical expertise. Comparable spending benchmarks for such specialized kits are difficult to ascertain publicly, but the overall defense aircraft manufacturing sector sees billions in annual federal spending.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded directly to The Boeing Company. There is no explicit information provided regarding subcontracting plans for small businesses. Without a competitive bidding process or specific subcontracting requirements, the direct impact on the small business ecosystem for these specific kits is likely minimal, though Boeing's overall supply chain may involve small businesses for other components.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contract compliance and performance. Accountability measures are embedded in the contract terms, including delivery schedules and quality standards. Transparency regarding the sole-source justification and pricing negotiations is limited due to the nature of the procurement. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

C-17 Globemaster III Sustainment Contracts
Aircraft Engine Component Procurement
Defense Logistics Agency (DLA) Aviation Support
Air Force Materiel Command (AFMC) Procurement

Risk Flags

Sole-source procurement
Potential for non-competitive pricing
Lack of transparency in award justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $140.7 million to THE BOEING COMPANY. C-17 QEC 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 $140.7 million.

What is the period of performance?

Start: 2012-09-28. End: 2017-07-31.

What is Boeing's track record with C-17 sustainment and component supply?

The Boeing Company has a long-standing relationship with the C-17 program, having been the prime contractor for its development and production. They have consistently been involved in the sustainment, maintenance, and supply of parts and kits for the C-17 fleet. Their track record includes delivering numerous aircraft and supporting ongoing operational needs. While generally considered reliable, like any large defense contractor, they have faced scrutiny over cost and performance on various programs. For the C-17 QEC kits specifically, their established role as the manufacturer suggests a deep understanding of the technical requirements and a proven ability to produce these components.

How does the $140.7 million value compare to similar sole-source procurements for aircraft engine kits?

Directly comparing the $140.7 million value for C-17 QEC kits to similar sole-source procurements is challenging without access to proprietary contract data for other aircraft types and their specific engine kits. Sole-source awards inherently lack the price transparency of competitive bids. However, the value represents a significant investment in a critical component for a major military airlifter. To assess value, one would ideally benchmark against historical pricing for these same kits, if available, or against the cost of engine overhaul or replacement, considering the QEC kit's role in facilitating such operations. The duration of the contract (1767 days) also suggests a substantial quantity or long-term supply agreement, influencing the total value.

What are the primary risks associated with this sole-source contract for C-17 QEC Kits?

The primary risk is financial: the government may be paying a higher price than necessary due to the lack of competition. Sole-source procurements limit the government's leverage in price negotiations. Another risk is potential supply chain disruption if Boeing faces production issues, as there are no immediate alternative suppliers for these specific, proprietary kits. Furthermore, a long-term sole-source contract might disincentivize Boeing from seeking cost-reduction innovations, as the competitive pressure is absent. Dependence on a single supplier also creates strategic vulnerability if geopolitical events or other factors impact Boeing's ability to deliver.

How effective is the C-17 Globemaster III program, and how do these QEC kits contribute to its effectiveness?

The C-17 Globemaster III program is widely considered highly effective, serving as a cornerstone of U.S. strategic airlift capabilities. It is known for its versatility, ability to operate from austere airfields, and large payload capacity. The Quick Engine Change (QEC) kits are crucial for maintaining the operational readiness and availability of the C-17 fleet. These kits facilitate rapid engine maintenance and replacement, minimizing aircraft downtime. By ensuring that engines can be efficiently swapped out, QEC kits directly contribute to the C-17's high mission capability rates, enabling the Air Force to meet its global deployment and logistical support requirements effectively.

What are the historical spending patterns for C-17 sustainment and related components?

Historical spending on C-17 sustainment, including components like QEC kits, has been substantial, reflecting the aircraft's critical role and long service life. The U.S. Air Force has consistently allocated significant funds towards maintaining the C-17 fleet's operational readiness. This includes contracts for spare parts, depot maintenance, upgrades, and logistical support. Spending patterns have often involved a mix of competitive and sole-source procurements, particularly for specialized components where only the original manufacturer can provide replacements. Over the years, total spending on C-17 sustainment has amounted to billions of dollars, underscoring the ongoing investment required to keep this vital airlifter operational.

What is the justification for awarding this contract as sole-source instead of through full and open competition?

The specific justification for this sole-source award is not detailed in the provided data snippet. However, common justifications for sole-source contracts in the defense sector include situations where only one responsible source possesses the unique capability, technical expertise, or proprietary knowledge required. For specialized aircraft components like QEC kits, the original equipment manufacturer (OEM), in this case, Boeing, often holds the necessary technical data, tooling, and certifications. Awarding as sole-source avoids the need for extensive technical data packages and lengthy qualification processes that would be required for competitors, potentially expediting delivery of critical parts, albeit at a higher cost.

Industry Classification

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

Product/Service Code: METALWORKING MACHINERY

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: 5301 BOLSA AVE, HUNTINGTON BEACH, CA, 92647

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $155,173,935

Exercised Options: $140,669,576

Current Obligation: $140,669,576

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852612D0001

IDV Type: IDC

Timeline