Boeing awarded $103.6M contract for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $103,652,392 ($103.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2017-10-13

End Date: 2018-09-16

Contract Duration: 338 days

Daily Burn Rate: $306.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8504840368!PERFORMANCE BASED SUPPORT

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $103.7 million to THE BOEING COMPANY for work described as: 8504840368!PERFORMANCE BASED SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Performance period is relatively short, suggesting a need for ongoing procurement. 3. The contract type is firm-fixed-price, which can shift risk to the contractor but may also lead to higher initial bids. 4. The specific product code indicates a focus on aircraft parts, a critical but potentially specialized market. 5. The awardee, Boeing, is a major defense contractor with a significant existing relationship with the DoD. 6. Lack of competition is a key indicator of potential value-for-money concerns.

Value Assessment

Rating: questionable

The contract value of $103.6 million for aircraft parts is substantial. Without a competitive bidding process, it is difficult to benchmark this price against market rates or similar contracts. The firm-fixed-price structure means the government is committed to this price regardless of actual costs incurred by Boeing. Further analysis would require access to cost breakdowns or comparable sole-source awards for similar parts to assess if the price represents good value for money.

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 solicited. This approach bypasses the standard competitive procurement process, which typically involves multiple companies bidding on the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price competition and can result in higher costs for the government compared to fully competed contracts.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as the absence of competition removes a key incentive for contractors to offer lower bids. This can lead to a less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Defense Logistics Agency, which receives essential aircraft parts. The services delivered involve the manufacturing and supply of 'Other Aircraft Parts and Auxiliary Equipment'. The geographic impact is primarily linked to the contractor's operations in Missouri, where the contract was awarded. This contract supports jobs within the aerospace manufacturing sector, particularly at Boeing and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer money.
Sole-source awards can indicate a lack of market availability or a reliance on a single supplier, which poses a risk.
The firm-fixed-price contract, while shifting risk, might have been inflated due to the absence of competitive pressure.

Positive Signals

The awardee, Boeing, is a well-established and experienced manufacturer of aircraft and related components.
The contract is for essential aircraft parts, indicating a critical need being met.
The firm-fixed-price nature provides cost certainty for the government once the contract is awarded.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for aircraft parts fall within the manufacturing segment of this sector. The market for specialized aircraft components can be concentrated, with a few large players like Boeing dominating. Spending in this area is driven by military readiness requirements and the need to maintain aging fleets. Comparable spending benchmarks would typically involve analyzing historical awards for similar parts or services, ideally from competitive procurements.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, there is no explicit mention of subcontracting goals for small businesses. This suggests that the primary awardee is a large corporation, and opportunities for small businesses to participate in this specific contract may be limited unless they are part of Boeing's established supply chain. The absence of set-aside provisions means that the direct economic benefit to the small business ecosystem from this particular award is likely minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management systems. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring performance and compliance. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. Accountability relies heavily on the contractual terms and Boeing's adherence to them.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Component Manufacturing
Defense Logistics Support
Military Aircraft Procurement
Airframe Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supplier dependency risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $103.7 million to THE BOEING COMPANY. 8504840368!PERFORMANCE BASED SUPPORT

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 Logistics Agency).

What is the total obligated amount?

The obligated amount is $103.7 million.

What is the period of performance?

Start: 2017-10-13. End: 2018-09-16.

What is Boeing's track record with the Department of Defense for similar aircraft parts contracts?

The provided data indicates The Boeing Company is a major defense contractor. While specific details on past performance for identical parts are not available in this snippet, Boeing has a long history of supplying aircraft, components, and services to the DoD. Their track record generally includes large-scale production and complex systems integration. However, like any large contractor, they have faced scrutiny over cost overruns and delivery schedules on various programs. A deeper dive into historical contract awards, performance reviews, and any past disputes or investigations related to Boeing's parts manufacturing for the DoD would be necessary for a comprehensive assessment.

How does the $103.6 million award compare to the market value for these specific aircraft parts?

Directly comparing the $103.6 million award to the 'market value' is challenging without more specific information about the parts themselves and the competitive landscape. Since this was a sole-source award, there was no open market competition to establish a price benchmark. To assess value, one would need to identify comparable parts, analyze their pricing from other manufacturers (if available), review historical pricing trends for these specific parts, or examine cost data if it were publicly disclosed. The absence of competition inherently limits the ability to confirm if this price represents the best value achievable.

What are the primary risks associated with a sole-source award for critical aircraft parts?

The primary risks associated with a sole-source award for critical aircraft parts include: 1. **Higher Costs:** Without competition, the contractor has less incentive to offer the lowest possible price, potentially leading to inflated costs for the government. 2. **Reduced Innovation:** The lack of competitive pressure may stifle innovation and the development of more cost-effective solutions. 3. **Supplier Dependency:** The government becomes reliant on a single supplier, creating vulnerability if that supplier faces production issues, financial instability, or decides to discontinue the product. 4. **Limited Oversight Effectiveness:** While oversight mechanisms exist, the absence of competing proposals makes it harder to validate the necessity and pricing of the components. 5. **Potential for Complacency:** The sole-source provider might become complacent regarding quality or delivery timelines due to the guaranteed business.

What is the expected impact of this contract on the operational readiness of military aircraft?

This contract is intended to directly support the operational readiness of military aircraft by ensuring the availability of necessary parts and auxiliary equipment. The Defense Logistics Agency (DLA) plays a crucial role in maintaining the supply chain for military equipment, and awards like this are fundamental to their mission. By procuring these parts, the DLA aims to prevent aircraft downtime due to component failures or shortages, thereby enabling the Air Force, Navy, or other branches to maintain their fleets in a state of readiness for training, deployment, and operational missions. The timely delivery and quality of these parts are critical factors.

How does this contract's duration and value fit into historical spending patterns for aircraft parts by the DoD?

The contract has a duration of 338 days (approximately 11 months) and a value of $103.6 million. This represents a significant, albeit relatively short-term, expenditure for aircraft parts. Historical spending patterns by the DoD on aircraft parts are substantial, often running into billions of dollars annually across various platforms and components. Single awards can range widely in value and duration depending on the criticality and volume of parts needed. This specific award appears to be for a substantial quantity or high-value set of parts, likely addressing a specific need within a defined timeframe rather than a long-term sustainment contract. Analyzing broader DoD spending trends would reveal if this award is typical for sole-source procurements of this nature or if it deviates significantly.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134

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: $103,652,392

Exercised Options: $103,652,392

Current Obligation: $103,652,392

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $3,338,569

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA114D002U

IDV Type: IDC

Timeline