Boeing awarded $29.9M for aircraft instrument repair, a sole-source contract with a high unit cost

Contract Overview

Contract Amount: $29,919,641 ($29.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2006-11-03

End Date: 2009-12-31

Contract Duration: 1,154 days

Daily Burn Rate: $25.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: REPAIR OF AIRCRAFT FLIGHT INSTRUMENTS

Place of Performance

Location: HEATH, LICKING County, OHIO, 43056, UNITED STATES OF AMERICA

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to THE BOEING COMPANY for work described as: REPAIR OF AIRCRAFT FLIGHT INSTRUMENTS Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing pressures. 2. Significant portion of contract value allocated to repair services, indicating potential for high maintenance costs. 3. The contract's duration of over three years suggests a long-term need for these specialized repair services. 4. The 'OH' location for the contractor may indicate a concentration of specialized repair facilities in that region. 5. The Cost Plus Award Fee (CPAF) structure can incentivize performance but may also lead to cost overruns if not managed tightly. 6. The absence of small business set-asides suggests the primary contractor is a large entity.

Value Assessment

Rating: questionable

The contract's total value of $29.9 million for aircraft flight instrument repair appears substantial. Without specific benchmarks for the types and volume of repairs performed, it is difficult to definitively assess value for money. However, the sole-source nature of the award raises concerns about whether the government secured the most competitive pricing. The Cost Plus Award Fee (CPAF) structure, while offering performance incentives, can sometimes lead to higher overall costs compared to fixed-price contracts if cost controls are not rigorously enforced.

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. This typically occurs when only one responsible source is available or when a compelling justification for other than full and open competition exists. The lack of competition means that pricing was likely negotiated directly with The Boeing Company without the benefit of multiple bids to drive down costs. This can limit the government's ability to ensure it is receiving the best possible price.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government's negotiating position is weakened when only one provider can be considered.

Public Impact

The primary beneficiaries are the U.S. Air Force, ensuring the continued operational readiness of its aircraft fleet. Services delivered include the repair of critical flight instruments essential for navigation, detection, and guidance systems. The geographic impact is primarily within the operational theaters of the U.S. Air Force, wherever these aircraft are deployed. Workforce implications include the employment of skilled technicians and engineers at The Boeing Company's facilities, likely in Ohio.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Award Fee (CPAF) contract type can lead to cost escalation if not closely monitored.
Lack of transparency in the justification for sole-source award.
The specific nature of 'flight instrument repair' could be subject to proprietary technology or specialized knowledge, but this should be rigorously verified.
Contract duration of over three years without re-competition raises questions about ongoing market analysis.

Positive Signals

Contract ensures critical flight instruments are repaired, maintaining aircraft operational readiness.
The Boeing Company is a well-established aerospace manufacturer with significant expertise in aircraft systems.
The CPAF structure incentivizes contractor performance, potentially leading to higher quality repairs.
The contract addresses a specific and necessary maintenance requirement for the Air Force.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on the maintenance and repair of aeronautical systems. The North American Industry Classification System (NAICS) code 334511 covers Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. This is a highly specialized segment of the defense industrial base, often characterized by long product lifecycles and significant R&D investment. Spending in this area is critical for maintaining the operational capabilities of military aviation assets.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and the prime contractor is The Boeing Company, a large aerospace corporation. There is no explicit information regarding subcontracting plans for small businesses within this award. Given the specialized nature of aircraft instrument repair and the sole-source award to a major prime, the direct impact on the small business ecosystem is likely minimal unless Boeing actively engages small businesses for specific components or services not covered by the prime contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. As a Cost Plus Award Fee (CPAF) contract, rigorous oversight of costs incurred and performance metrics achieved is crucial. The Department of Defense's Inspector General may also conduct audits or investigations into contract performance and financial management. Transparency is dependent on the level of detail made public regarding performance reviews and cost justifications.

Related Government Programs

Aircraft Maintenance and Repair Services
Aeronautical and Nautical System and Instrument Manufacturing
Department of Defense Procurement
Air Force Logistics and Sustainment

Risk Flags

Sole-source award
Cost Plus Award Fee (CPAF) contract type
Lack of competitive bidding
Potential for cost overruns
Long contract duration without re-competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 million to THE BOEING COMPANY. REPAIR OF AIRCRAFT FLIGHT INSTRUMENTS

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 $29.9 million.

What is the period of performance?

Start: 2006-11-03. End: 2009-12-31.

What is the specific justification for awarding this contract on a sole-source basis to The Boeing Company?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is capable of providing the required service or supply, or when there is a critical need that cannot be met through competitive means. For specialized aerospace components and repair services, this could be due to proprietary technology, unique manufacturing capabilities, or extensive existing knowledge of the specific aircraft systems. A thorough review of the contract file would be necessary to ascertain the official justification, which might involve factors like unique technical expertise, existing tooling, or specific integration requirements with existing Air Force platforms.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types for this type of service?

Cost Plus Award Fee (CPAF) contracts are used when the government needs flexibility to adapt to changing requirements or when performance outcomes are difficult to define precisely upfront. Unlike fixed-price contracts, CPAF reimburses the contractor for allowable costs plus a fee that is composed of a base amount and an award amount tied to performance metrics. For aircraft instrument repair, this structure allows for variations in the complexity and number of repairs needed. However, it places a significant burden on the government to establish clear performance standards and diligently monitor costs to prevent overruns. Fixed-price contracts, conversely, offer greater cost certainty but may be less suitable if the scope of work is highly variable or unpredictable.

What is the historical spending trend for aircraft flight instrument repair within the Department of the Air Force?

Analyzing historical spending trends for aircraft flight instrument repair within the Department of the Air Force requires access to comprehensive procurement data beyond this single contract. However, it is generally understood that sustainment and repair services constitute a significant portion of the defense budget. Spending in this category can fluctuate based on aircraft fleet age, operational tempo, technological upgrades, and the availability of depot-level maintenance capabilities. Contracts for such services are often long-term due to the specialized nature of the work and the need for consistent support. Without broader data, it's difficult to benchmark this $29.9 million award against historical norms, but it represents a substantial investment in maintaining critical avionics.

What are the potential risks associated with a sole-source contract for specialized repair services?

The primary risk associated with a sole-source contract for specialized repair services is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may not achieve the most cost-effective solution. Additionally, there's a risk of vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future flexibility and innovation. Oversight becomes even more critical to ensure fair pricing and adequate performance. If the sole-source provider experiences financial difficulties or operational issues, it could severely disrupt the availability of essential repair services, impacting mission readiness.

How does the contractor's location in Ohio (ST: OH) impact the logistics and cost of these repair services?

The contractor's location in Ohio (ST: OH) could have several implications for the logistics and cost of aircraft flight instrument repair. If Ohio is strategically located relative to major Air Force bases or operational hubs that utilize these instruments, it could streamline transportation and reduce lead times for repairs. However, if the primary operational bases are geographically distant, shipping costs and transit times could increase. The cost of labor and overhead in Ohio would also factor into the overall pricing. Without knowing the distribution of Air Force assets requiring these repairs, it's difficult to definitively state whether the Ohio location is optimal for cost-efficiency and logistical speed, but it suggests a concentration of Boeing's repair capabilities in that state.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument 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: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 801 IRVING WICK DR W, HEATH, OH, 43056

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $29,919,641

Exercised Options: $29,919,641

Current Obligation: $29,919,641

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F4261099D0006

IDV Type: IDC

Timeline