Boeing awarded $73.8M contract for performance-based support, raising questions about competition and value

Contract Overview

Contract Amount: $73,856,708 ($73.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-05-15

End Date: 2020-07-18

Contract Duration: 430 days

Daily Burn Rate: $171.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8506524388!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 $73.9 million to THE BOEING COMPANY for work described as: 8506524388!PERFORMANCE BASED SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Performance-based contract structure aims for improved outcomes but requires robust oversight. 3. Limited competition raises concerns about whether the government secured the best possible value. 4. Contract duration of 430 days suggests a focused, short-term support requirement. 5. Awarded by the Defense Logistics Agency, indicating a need for critical aircraft parts or support. 6. The firm fixed-price structure shifts risk to the contractor, but initial pricing needs scrutiny.

Value Assessment

Rating: fair

The contract's value of $73.8 million for performance-based support requires careful benchmarking against similar sole-source awards for aircraft parts. Without competitive bids, it is difficult to definitively assess if the pricing represents fair market value. The 'performance-based' nature suggests a focus on outcomes, which can be valuable if achieved, but the lack of competition inherently introduces a risk of overpayment compared to a fully competed scenario. Further analysis of the specific services rendered and their necessity would be required for a more precise value assessment.

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 standard competitive bidding process, which typically involves multiple interested parties submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and reduce the government's leverage to negotiate the lowest possible price. The absence of competition means taxpayers do not benefit from the cost savings that often arise from a robust bidding environment.

Taxpayer Impact: The lack of competition means taxpayers may have paid a premium for these services, as there was no market pressure to drive down costs. This award highlights the importance of ensuring sole-source justifications are rigorous and that alternative solutions are not overlooked.

Public Impact

The primary beneficiaries are likely military aviation units requiring specialized performance-based support for their aircraft. Services delivered are critical for maintaining the operational readiness and effectiveness of defense assets. The geographic impact is primarily tied to the locations where Boeing provides these support services, potentially within the US or at deployed locations. Workforce implications include the employment of skilled technicians and support personnel by Boeing to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Lack of transparency in the bidding process makes it difficult to assess true value for money.
Performance-based metrics need rigorous monitoring to ensure contract objectives are met effectively.
Reliance on a single contractor for critical support could pose risks if performance falters.

Positive Signals

Performance-based contract structure incentivizes contractor efficiency and outcome achievement.
Award to a major defense contractor like Boeing suggests access to specialized expertise and capabilities.
The contract addresses a specific need within the Department of Defense, contributing to national security objectives.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft parts and support services. The market for such specialized support is often dominated by original equipment manufacturers like Boeing due to proprietary knowledge and technical requirements. While the total market size for defense logistics and support is substantial, individual contracts for specific aircraft platforms can be highly concentrated. Benchmarking this contract's value is challenging without comparable sole-source awards or detailed cost breakdowns, but it represents a significant investment in maintaining critical defense capabilities.

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 regarding subcontracting plans for small businesses within the provided data. Consequently, the direct impact on the small business ecosystem from this specific award is likely minimal, although Boeing's overall subcontracting practices could involve small businesses in other capacities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA) and the Department of Defense's contracting and financial management offices. Given it's a sole-source award, scrutiny on the justification and pricing is crucial. Accountability measures would be tied to the performance metrics defined in the contract. Transparency is limited due to the non-competitive nature, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Logistics Agency Procurement
Aircraft Maintenance and Repair Services
Performance-Based Logistics Contracts
Sole-Source Defense Contracts
Boeing Defense Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns if performance metrics are not rigorously managed.
Limited transparency due to non-competitive nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.9 million to THE BOEING COMPANY. 8506524388!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 $73.9 million.

What is the period of performance?

Start: 2019-05-15. End: 2020-07-18.

What specific performance metrics are included in this contract, and how are they measured to ensure accountability?

The provided data does not detail the specific performance metrics (Key Performance Indicators - KPIs) for this contract. However, typical performance-based contracts include metrics related to delivery timeliness, quality of service, equipment availability, and response times for support requests. The Defense Logistics Agency (DLA) would have established these KPIs and a system for monitoring Boeing's adherence to them. Regular performance reviews and audits would be conducted to assess compliance. Failure to meet these metrics could result in financial penalties, reduced payments, or other contractual remedies, ensuring a degree of accountability. The effectiveness of these metrics is crucial for validating the 'performance-based' aspect of the contract and ensuring taxpayer value.

Can the $73.8 million award be benchmarked against similar sole-source contracts for aircraft support?

Benchmarking this $73.8 million sole-source award is challenging without access to a comprehensive database of similar contracts, especially those awarded non-competitively. Sole-source awards inherently lack the price discovery mechanism of competition, making direct value comparisons difficult. To perform a robust benchmark, one would need to identify contracts with similar scope, duration, aircraft type, and service complexity, ideally also awarded sole-source by agencies like DLA. Analyzing the cost-plus-fee structure (if applicable) or firm-fixed-price components against industry standards for labor, parts, and overhead would be necessary. However, the absence of competitive bids means any benchmark serves as an indicative comparison rather than a definitive measure of overpayment.

What is The Boeing Company's track record with performance-based contracts, particularly with the Defense Logistics Agency?

The Boeing Company has a long history of contracting with the Department of Defense, including the Defense Logistics Agency (DLA), across various platforms and support services. They have experience with performance-based contracts, which are increasingly common in defense procurement to drive efficiency and ensure mission readiness. Boeing's track record generally involves delivering complex systems and support for military aircraft. However, like any large contractor, they may have faced scrutiny or challenges on specific contracts regarding cost, schedule, or performance. A detailed review of Boeing's specific performance on prior DLA contracts, especially those designated as performance-based and sole-source, would be needed to fully assess their reliability and effectiveness in this context.

What specific aircraft or systems does this 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' contract support?

The National Item Identification Number (NIIN) '336413' and the Product Service Code (PSC) are not explicitly provided, nor is the specific aircraft type. However, the description 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' and the awarding agency (Defense Logistics Agency) suggest this contract likely supports a range of aircraft components or specialized support equipment necessary for military aviation operations. The DLA's mission is to provide logistics support for the U.S. Armed Forces, encompassing supply, procurement, transportation, and facility management. Therefore, this contract could pertain to parts for various fixed-wing or rotary-wing aircraft, or auxiliary equipment essential for their maintenance, repair, or operation, rather than a single, specific platform.

How does the firm-fixed-price (FFP) structure interact with the 'performance-based' nature of this contract?

A Firm-Fixed-Price (FFP) contract structure, combined with a performance-based approach, aims to provide cost certainty while incentivizing desired outcomes. In this scenario, Boeing is obligated to deliver the specified aircraft parts and support services for a set price. The 'performance-based' aspect means that payment or contract continuation is likely tied to achieving specific, measurable performance standards (e.g., on-time delivery, quality, availability). If Boeing meets these performance targets, they receive the agreed-upon fixed price. If they fail, they may face penalties or reduced payment, despite the FFP structure. This combination shifts significant risk to the contractor, requiring them to manage costs effectively to maintain profitability while ensuring the performance objectives are met.

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: $73,856,708

Exercised Options: $73,856,708

Current Obligation: $73,856,708

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $2,089,814

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA114D002U

IDV Type: IDC

Timeline