DoD's $850M contract for Boeing aircraft parts awarded without competition, raising value concerns

Contract Overview

Contract Amount: $64,347,224 ($64.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-05-14

End Date: 2021-07-18

Contract Duration: 430 days

Daily Burn Rate: $149.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8507378148!PBL MATERIAL BOEING

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $64.3 million to THE BOEING COMPANY for work described as: 8507378148!PBL MATERIAL BOEING Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a critical need for these aircraft parts. 3. Lack of competition is a key risk indicator for potential overspending. 4. Performance period of over a year indicates a sustained requirement. 5. Contract falls within the 'Other Aircraft Parts' manufacturing sector. 6. No small business set-aside was applied, suggesting large prime contractor involvement.

Value Assessment

Rating: questionable

The contract's value of $850,737,814 is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The absence of competition inherently raises questions about whether the government secured the best possible value for these critical aircraft parts. Further analysis would be needed to compare unit costs to historical data or industry benchmarks, but the sole-source nature is a primary concern.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' method, indicating a sole-source procurement. This means only one vendor, The Boeing Company, was solicited. The lack of competition prevents a robust price discovery process and limits the government's ability to negotiate favorable terms based on multiple offers. It suggests that either only Boeing could provide these specific parts, or the justification for not competing was based on factors other than a lack of available sources.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing bids, there is a higher risk that the price reflects Boeing's proposed cost rather than a market-driven, cost-effective price.

Public Impact

The Department of Defense benefits from the continued availability of essential aircraft parts. This contract ensures the operational readiness of specific aircraft platforms. The geographic impact is primarily centered around the Defense Logistics Agency's operations and potentially Boeing's manufacturing facilities. The contract supports jobs within the aerospace manufacturing sector, specifically in the production of aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may lead to higher costs.
Lack of transparency in the procurement process due to non-competition.
Potential for cost overruns if pricing is not rigorously scrutinized.
Reliance on a single supplier for critical components can create supply chain risks.

Positive Signals

Ensures supply of critical aircraft parts for defense operations.
Award to a major defense contractor like Boeing suggests a known entity with established capabilities.
Contract duration provides stability for the supplier and ensures sustained availability.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often dominated by a few large original equipment manufacturers (OEMs) like Boeing, due to proprietary designs, technical expertise, and established supply chains. Spending in this area is critical for maintaining military readiness. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar high-value, specialized aircraft components.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the 'sb' (small business) flag is false and there is no indication of a small business set-aside. This suggests the contract was awarded directly to a large prime contractor, The Boeing Company. While large prime contractors often have subcontracting plans, the absence of a set-aside means opportunities for small businesses to directly compete for the prime contract were not pursued in this instance.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. Given the sole-source nature, scrutiny would focus on the justification for non-competition and the reasonableness of the price. Accountability measures would involve contract performance monitoring and financial audits. Transparency is limited due to the non-competitive award, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Manufacturing
Defense Logistics Support
Military Aircraft Procurement
Supply Chain Management for Defense

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for price inflation
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $64.3 million to THE BOEING COMPANY. 8507378148!PBL MATERIAL BOEING

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 $64.3 million.

What is the period of performance?

Start: 2020-05-14. End: 2021-07-18.

What is the historical spending pattern for this specific type of aircraft part with The Boeing Company?

Analyzing historical spending with The Boeing Company for similar aircraft parts is crucial for understanding value. Without specific part numbers or detailed descriptions, a precise historical comparison is challenging. However, the Defense Logistics Agency (DLA) manages a vast inventory of parts. If this contract represents a recurring need, past awards for similar components, whether competitively or sole-source, would provide a baseline. A significant increase in price or volume compared to previous periods, especially without clear justification like inflation or increased demand, could signal a value concern. Reviewing DLA's historical contract databases for Boeing's performance on related items would be the next step.

What was the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis?

The justification for a sole-source award typically falls under specific exceptions to full and open competition, such as the "only one responsible source" rule (FAR 6.302-1) or "brand name" specifications. For aircraft parts, this often relates to proprietary designs, unique technical requirements, or the need for parts manufactured by the original equipment manufacturer (OEM) to maintain airworthiness and warranty. The Department of Defense would have documented this justification, likely citing Boeing's exclusive rights to manufacture or supply these specific parts, or the critical nature of maintaining fleet commonality and safety standards that only Boeing could meet. This documentation is essential for validating the necessity of a sole-source award.

How does the awarded amount compare to the initial estimated cost or budget for this procurement?

Comparing the awarded amount ($850,737,814) to the initial estimated cost or budget is vital for assessing fiscal responsibility. If the awarded amount significantly exceeds the initial estimate, it warrants further investigation into the reasons. This could be due to unforeseen cost increases, changes in scope, or an inaccurate initial estimate. Conversely, if the award is well within the estimated budget, it might suggest a more favorable negotiation outcome, though the lack of competition still limits definitive value assessment. Accessing the contract file or related budget documents would be necessary to perform this comparison.

What are the key performance indicators (KPIs) and delivery schedules associated with this contract?

Key Performance Indicators (KPIs) and delivery schedules are critical for monitoring contract performance and ensuring the government receives the intended value. For aircraft parts, KPIs might include on-time delivery rates, defect rates, compliance with technical specifications, and responsiveness to urgent requirements. The contract duration (430 days) provides a framework for these deliveries. The Defense Logistics Agency (DLA) would track Boeing's adherence to these metrics. Failure to meet KPIs could trigger contractual remedies or impact future sole-source awards. Understanding these performance expectations helps contextualize the overall value and risk of the contract.

Are there any known issues or past performance concerns with The Boeing Company regarding similar sole-source contracts for defense parts?

Investigating past performance issues with The Boeing Company on similar sole-source contracts is essential for risk assessment. While Boeing is a major defense contractor with extensive experience, any history of cost overruns, delivery delays, quality problems, or disputes on previous sole-source awards for aircraft parts could be indicative of potential future risks. Reviewing contract performance reports, CPARS (Contractor Performance Assessment Reporting System) data, and any public records of disputes or investigations related to Boeing's sole-source procurements would provide valuable insights into their track record and the potential risks associated with this current contract.

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: $64,347,224

Exercised Options: $64,347,224

Current Obligation: $64,347,224

Actual Outlays: $62,097,224

Subaward Activity

Number of Subawards: 85

Total Subaward Amount: $14,857,857

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA114D002U

IDV Type: IDC

Timeline