Air Force awards $31.4M for airframe structural components, with Boeing as the sole contractor

Contract Overview

Contract Amount: $31,438,949 ($31.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2005-06-10

End Date: 2012-09-05

Contract Duration: 2,644 days

Daily Burn Rate: $11.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: 200510!001584!5700!FA8103!OC-ALC/LID !F3365701D2050 !A!N! !N!SD15 ! !20050610!20100731!076200344!076200344!009256819!N!MCDONNELL DOUGLAS CORPORATION !2401 E WARDLOW ROAD !LONG BEACH !CA!90807!21796!253!48!DYESS AFB !JONES !TEXAS !+000000211000!N!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1A!AIRFRAMES AND SPARES !000 !* !336413!E! !5!A!S! ! ! !20200930!B! ! !A! !D!N!Y!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90807

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $31.4 million to THE BOEING COMPANY for work described as: 200510!001584!5700!FA8103!OC-ALC/LID !F3365701D2050 !A!N! !N!SD15 ! !20050610!20100731!076200344!076200344!009256819!N!MCDONNELL DOUGLAS CORPORATION !2401 E WARDLOW ROAD !LONG BEACH !CA!90807!21796!253!48!DYESS AFB !JONE… Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns. 2. Significant duration of over 6 years suggests a long-term need for these components. 3. The contract type (Time and Materials) can lead to cost escalation if not closely managed. 4. Boeing's established role as a major defense contractor likely influenced the sole-source decision. 5. Geographic location of the contractor in California may have implications for regional economic impact. 6. The contract falls under aircraft manufacturing, a critical sector for national defense capabilities.

Value Assessment

Rating: questionable

The contract value of $31.4 million over approximately 6.5 years averages to about $4.8 million annually. Without specific benchmarks for airframe structural components, it's difficult to definitively assess value. However, the Time and Materials pricing structure, coupled with a sole-source award, presents a risk of the government not achieving the best possible price compared to a competitive, fixed-price contract. Further analysis would require detailed cost breakdowns and comparisons to similar sole-source awards for comparable components.

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 competitive bidding process, which typically drives down prices and encourages innovation. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and may result in higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that competitive bidding typically generates. This can lead to a less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the continued airworthiness of its aircraft fleet. Services delivered include the provision of airframe structural components, essential for aircraft maintenance and repair. The geographic impact is primarily centered around the contractor's location in Long Beach, California, and the Air Force bases receiving the components. Workforce implications include employment opportunities at Boeing and potentially its subcontractors, supporting skilled labor in the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs.
Time and Materials contract type carries inherent risk of cost overruns.
Lack of transparency in the sole-source justification requires scrutiny.
Long contract duration could lead to price increases if not managed proactively.

Positive Signals

Ensures availability of critical airframe components for Air Force operations.
Leverages the established expertise of a major aerospace manufacturer (Boeing).
Provides long-term supply chain stability for essential aircraft parts.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft components. The market for such components is dominated by a few large, established players like Boeing and its competitors. Spending in this area is critical for maintaining military readiness. Benchmarks for comparable spending would typically involve analyzing other Air Force contracts for similar structural parts, as well as broader defense spending on aircraft sustainment and modernization.

Small Business Impact

This contract does not appear to have a small business set-aside. As a sole-source award to a large prime contractor, there is a potential risk that subcontracting opportunities for small businesses may be limited or not fully realized. The government should ensure that subcontracting plans are robust and actively monitored to promote small business participation where feasible.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would include performance reviews, delivery tracking, and financial audits. Transparency is limited due to the sole-source nature of the award; however, contract modifications and payment data are typically available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Parts and Components
Air Force Sustainment Programs
Defense Manufacturing Contracts
Aerospace Component Procurement

Risk Flags

Sole-source award
Time and Materials contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.4 million to THE BOEING COMPANY. 200510!001584!5700!FA8103!OC-ALC/LID !F3365701D2050 !A!N! !N!SD15 ! !20050610!20100731!076200344!076200344!009256819!N!MCDONNELL DOUGLAS CORPORATION !2401 E WARDLOW ROAD !LONG BEACH !CA!90807!21796!253!48!DYESS AFB !JONES !TEXAS !+000000211000!N!N!000000000000!1560!AIRFRAME STRUCTURAL COMPONENTS !A1A!AIRFRAMES AND SPARES !000 !* !336413!E! !5!A!S! ! ! !202

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 Air Force).

What is the total obligated amount?

The obligated amount is $31.4 million.

What is the period of performance?

Start: 2005-06-10. End: 2012-09-05.

What is Boeing's track record with similar sole-source Time and Materials contracts for airframe components?

Analyzing Boeing's historical performance on sole-source Time and Materials (T&M) contracts for airframe components is crucial for assessing risk. T&M contracts, by their nature, allow the contractor to bill for actual labor hours and material costs, plus a fee. This structure can lead to cost overruns if not meticulously managed and overseen by the government. Boeing, as a major defense contractor, has extensive experience with various contract types. However, a review of past performance would need to examine specific instances where similar sole-source T&M awards resulted in cost variances, schedule delays, or quality issues. Without this specific data, it's difficult to quantify the risk associated with this particular contract beyond the general concerns associated with the contract type and award method.

How does the $31.4 million contract value compare to the average annual spending on airframe structural components by the Air Force?

The $31.4 million contract value, spread over approximately 6.5 years (from June 10, 2005, to September 5, 2012), equates to an average annual expenditure of roughly $4.8 million. To benchmark this effectively, one would need to compare it against the Air Force's total annual spending on airframe structural components across all its fleets and contract types. This would involve analyzing historical obligated amounts for relevant Product Service Codes (PSCs) and contract vehicles. If the Air Force typically spends hundreds of millions annually on such components, this $4.8 million annual figure might represent a specific program or component type. Conversely, if total spending is lower, this contract could represent a significant portion. Without broader Air Force spending data on this category, the $4.8 million annual figure serves as a standalone metric, but its relative significance remains unclear.

What are the primary risks associated with a sole-source Time and Materials contract for critical aircraft parts?

The primary risks associated with a sole-source Time and Materials (T&M) contract for critical aircraft parts are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing as the contractor faces no direct market comparison. The government relies heavily on the contractor's cost proposals and internal controls. Secondly, the T&M structure shifts much of the cost risk to the government. If the contractor's labor efficiency is low, or if material costs escalate unexpectedly, the government bears the brunt of these increases, capped only by the contract's ceiling. For critical parts, this combination can result in significantly higher expenditures than anticipated and potentially impact budget predictability for aircraft sustainment.

What evidence exists to justify the sole-source award to McDonnell Douglas Corporation (now Boeing)?

Justification for a sole-source award typically requires demonstrating that only one responsible source can provide the required supplies or services. For McDonnell Douglas Corporation (now Boeing), this justification might stem from factors such as proprietary data rights, unique manufacturing capabilities, specialized tooling, or existing integration with the specific aircraft platforms requiring these structural components. Without access to the official Justification and Approval (J&A) document, it's impossible to state the precise reasons. However, in the aerospace industry, established manufacturers often hold unique positions due to the complexity and proprietary nature of their designs and production processes, making competitive sourcing challenging or impossible for certain components.

How has spending on airframe structural components evolved for the Air Force since this contract was awarded?

To assess the evolution of Air Force spending on airframe structural components since this contract (awarded 2005, ended 2012), one would need to examine aggregate spending data for relevant Product Service Codes (PSCs) like 'A1A' (Airframes and Spares) or '5340' (Hardware, Industrial, and Supplies) over the subsequent years. This analysis would reveal trends in overall investment in aircraft sustainment and modernization. Factors influencing this evolution include fleet size, aircraft age, operational tempo, new platform introductions, and shifts in maintenance philosophies (e.g., from depot maintenance to contractor logistics support). Comparing spending patterns before, during, and after this contract period can highlight whether investments in structural components have increased, decreased, or remained stable relative to the overall defense budget.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 2600 WESTMINSTER AVE, SEAL BEACH, CA, 47

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $31,438,949

Exercised Options: $31,438,949

Current Obligation: $31,438,949

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365701D2050

IDV Type: IDC

Timeline