Air Force awards $105.6M contract to Boeing for full-scale fatigue testing of aircraft

Contract Overview

Contract Amount: $105,619,723 ($105.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2010-09-29

End Date: 2016-05-31

Contract Duration: 2,071 days

Daily Burn Rate: $51.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: B-1 FULL SCALE FATIGUE TEST

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $105.6 million to THE BOEING COMPANY for work described as: B-1 FULL SCALE FATIGUE TEST Key points: 1. Contract awarded to a single, established large business prime contractor. 2. Significant duration of over 2000 days suggests a complex, long-term testing requirement. 3. Cost-plus incentive fee contract type indicates potential for cost overruns if not managed closely. 4. The contract was not competed, raising questions about potential price efficiencies. 5. The value of the contract is substantial, reflecting the critical nature of fatigue testing for aircraft safety and longevity. 6. The specific nature of fatigue testing suggests a highly specialized service with limited market alternatives.

Value Assessment

Rating: fair

Benchmarking the value of this specific fatigue testing contract is challenging due to its specialized nature and lack of competitive bidding. The cost-plus incentive fee structure allows for flexibility but also introduces risk. Without comparable contracts or a competitive process, it's difficult to definitively assess if the $105.6 million represents excellent value for money. The duration of the contract (over 2000 days) suggests a comprehensive testing regimen, which could justify the overall cost if it leads to enhanced aircraft safety and extended operational life.

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 approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a direct award. The lack of competition means there was no direct price comparison or negotiation against other potential providers, which could limit the government's ability to secure the most favorable pricing.

Taxpayer Impact: The absence of competition for this significant contract means taxpayers may not have benefited from the cost savings that typically arise from a competitive bidding process. The government relied on negotiation with a single entity, potentially leading to a higher overall expenditure than if multiple firms had vied for the contract.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the Department of Defense, who will receive critical data on aircraft structural integrity. The services delivered include extensive fatigue testing, simulating years of operational stress to identify potential failure points. The geographic impact is primarily within California, where the contractor is located, but the ultimate benefit extends to airbases and operational units nationwide. Workforce implications include specialized engineering and technical roles at the contractor's facility, contributing to the aerospace industry's skilled labor base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to higher costs for taxpayers.
Cost-plus incentive fee contracts can incentivize cost overruns if not closely monitored.
Sole-source award limits transparency in pricing and vendor selection.
Long contract duration increases exposure to potential scope creep or unforeseen cost increases.

Positive Signals

Contract awarded to a prime contractor with established expertise in aircraft manufacturing and testing.
Fatigue testing is critical for ensuring aircraft safety and extending service life, representing a vital investment.
Cost-plus incentive fee structure can align contractor and government interests towards achieving specific performance goals.
The contract supports the sustainment and readiness of critical Air Force assets.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and stringent regulatory requirements. Fatigue testing is a crucial component of aircraft development and sustainment, ensuring compliance with safety standards and maximizing operational lifespan. Spending in this area is often concentrated among a few large, specialized contractors like Boeing, given the complexity and capital-intensive nature of the testing required. Comparable spending benchmarks are difficult to establish due to the unique, long-term nature of full-scale fatigue testing.

Small Business Impact

This contract was awarded to a large business prime contractor and does not appear to have a small business set-aside component. There is no explicit information provided regarding subcontracting plans for small businesses. Given the specialized nature of full-scale fatigue testing, it is possible that the prime contractor utilizes its own internal capabilities or relies on other large, specialized subcontractors. The impact on the small business ecosystem is likely minimal for this specific contract, as it does not appear to be structured to promote small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The cost-plus incentive fee structure necessitates close monitoring of costs and performance against established milestones. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse. Regular reporting and audits would be expected to ensure accountability.

Related Government Programs

Aircraft Manufacturing
Aircraft Maintenance and Repair
Aerospace Research and Development
Defense Logistics
Air Force Procurement

Risk Flags

Sole-source award limits price competition.
Cost-plus contract types can lead to cost overruns.
Long contract duration increases risk exposure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $105.6 million to THE BOEING COMPANY. B-1 FULL SCALE FATIGUE TEST

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 $105.6 million.

What is the period of performance?

Start: 2010-09-29. End: 2016-05-31.

What is the specific type of aircraft undergoing fatigue testing under this contract?

The provided data does not specify the exact aircraft model undergoing the full-scale fatigue test. However, the contract is awarded to The Boeing Company by the Department of the Air Force, suggesting it pertains to a military aircraft within the Air Force's inventory or under development. Fatigue testing is a critical process for validating the structural integrity and predicting the service life of aircraft under repeated stress cycles, essential for ensuring flight safety and operational readiness. Further details on the specific aircraft would likely be found in the contract's statement of work or associated technical documentation, which are not included in the provided summary data.

How does the $105.6 million cost compare to similar fatigue testing contracts for aircraft?

Direct comparison of the $105.6 million cost to similar fatigue testing contracts is challenging due to the specialized nature of full-scale testing and the sole-source award mechanism. Fatigue testing requirements vary significantly based on aircraft size, complexity, intended mission profile, and the specific testing protocols mandated by regulatory bodies like the FAA or military equivalents. Contracts for such extensive testing are often long-term and involve substantial infrastructure and expertise. Without access to a database of comparable sole-source or competed fatigue testing contracts, including their scope, duration, and specific testing methodologies, it is difficult to benchmark this $105.6 million award effectively. The cost-plus incentive fee structure also introduces variability.

What are the key performance indicators (KPIs) and incentive structures within this Cost Plus Incentive Fee (CPIF) contract?

The provided data indicates the contract type is Cost Plus Incentive Fee (CPIF), but it does not detail the specific Key Performance Indicators (KPIs) or the incentive structure. In a CPIF contract, the final profit is adjusted based on the contractor's performance against mutually agreed-upon targets, typically related to cost, schedule, or performance objectives. For fatigue testing, KPIs might include the timely completion of specific test cycles, achieving a certain number of stress repetitions, adherence to testing protocols, or the accuracy and completeness of data reporting. The incentive mechanism would define how deviations from target costs or performance milestones impact the contractor's fee, aiming to motivate efficiency and effectiveness while sharing potential cost savings or overruns.

What is the historical spending pattern for full-scale fatigue testing by the Department of the Air Force?

The provided data focuses on a single contract awarded in 2010. To understand historical spending patterns for full-scale fatigue testing by the Department of the Air Force, a broader analysis of past contracts would be necessary. This would involve examining contract databases for similar services, identifying trends in contract values, durations, award types (competed vs. sole-source), and the primary contractors involved over several fiscal years. Factors influencing historical spending could include the introduction of new aircraft platforms, upgrades to existing fleets requiring re-testing, changes in safety regulations, and overall defense budget allocations for aircraft sustainment and modernization. Without this broader dataset, specific historical spending patterns cannot be determined from the given information.

What are the potential risks associated with a sole-source award for critical aircraft testing?

A primary risk of a sole-source award for critical aircraft testing is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government may pay a premium compared to what could have been achieved in a competitive environment. Another risk is reduced transparency in the pricing and negotiation process. Furthermore, relying on a single source might limit the government's leverage if performance issues arise, as switching contractors for such specialized, long-term testing could be impractical and costly. There's also a risk that the sole-source provider may not be incentivized to innovate or improve efficiency as strongly as they would under competitive conditions.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 2600 WESTMINSTER AVE, SEAL BEACH, CA, 90740

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $105,619,723

Exercised Options: $105,619,723

Current Obligation: $105,619,723

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365701D2050

IDV Type: IDC

Timeline