Boeing awarded $108.4M contract for PBL Material, raising questions about competition and value

Contract Overview

Contract Amount: $108,405,520 ($108.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-09-11

End Date: 2021-09-16

Contract Duration: 370 days

Daily Burn Rate: $293.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8507626168!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 $108.4 million to THE BOEING COMPANY for work described as: 8507626168!PBL MATERIAL BOEING Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value for aircraft parts, indicating a critical need for sustainment. 3. Lack of competition raises concerns about the government securing the best possible price. 4. Performance period of 370 days suggests a focus on immediate supply chain needs. 5. The contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code. 6. Boeing's role as a major defense contractor highlights the reliance on established suppliers.

Value Assessment

Rating: questionable

The $108.4 million award to Boeing for PBL Material appears to be a sole-source contract, which inherently limits the ability to benchmark against competitive bids. Without competing this requirement, it is difficult to assess if the pricing is optimal or represents fair market value. Comparisons to similar sole-source awards for aircraft parts would be necessary to provide a more definitive value assessment, but the lack of competition is a primary indicator of potential value concerns.

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. The Defense Logistics Agency (DLA) did not solicit bids from multiple vendors. This approach is typically used when only one responsible source can provide the required goods or services. The lack of competition means there were no other bidders, and therefore no direct price comparison or negotiation leverage was established through a bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding. This limits the government's ability to ensure it is receiving the most economical solution.

Public Impact

The primary beneficiaries are likely military aviation units relying on the supplied aircraft parts for operational readiness. The services delivered include the provision of critical 'PBL Material' essential for aircraft maintenance and sustainment. The geographic impact is primarily within the Department of Defense's logistics network, supporting global operations. Workforce implications may include continued employment for personnel involved in the manufacturing and distribution of these parts at Boeing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for money.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns due to absence of competitive pressure.
Reliance on a single supplier can create supply chain vulnerabilities.

Positive Signals

Ensures supply of critical materials for defense aviation sustainment.
Leverages established relationship with a key defense contractor.
Contract addresses a specific material need for operational readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such specialized 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 the operational readiness of military fleets, and contracts are often long-term and substantial in value, reflecting the complexity and criticality of the equipment.

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 provided regarding subcontracting opportunities for small businesses within this specific award. The nature of sole-source awards to large prime contractors often means that subcontracting plans, if any, are not detailed in the award notice, potentially limiting visibility for small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Logistics Agency (DLA) and the Department of Defense's contracting and financial management offices. Accountability measures would be tied to the delivery of specified materials according to the contract terms. Transparency is limited by the sole-source nature of the award; however, contract actions are generally recorded in federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Procurement
Defense Logistics Agency Contracts
Boeing Defense Contracts
Sole-Source Defense Acquisitions
Military Aircraft Sustainment

Risk Flags

Sole-source award lacks competitive justification.
Potential for non-competitive pricing.
Limited transparency on specific material requirements and performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $108.4 million to THE BOEING COMPANY. 8507626168!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 $108.4 million.

What is the period of performance?

Start: 2020-09-11. End: 2021-09-16.

What is the specific justification provided by the Defense Logistics Agency 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 procurements are justified under specific circumstances outlined in the Federal Acquisition Regulation (FAR), such as when only one responsible source is available or when a public exigency requires immediate delivery. For this contract, the DLA would have had to document why competitive bidding was not feasible or appropriate. Common reasons include proprietary data rights, unique capabilities of the sole provider, or urgent and compelling needs that preclude the time required for full and open competition. Without access to the DLA's justification documentation, the precise rationale remains unknown, but it is a critical piece of information for assessing the necessity and fairness of the procurement.

How does the $108.4 million contract value compare to historical spending on similar PBL Material from The Boeing Company by the DLA?

The provided data does not contain historical spending information for similar PBL Material contracts awarded to The Boeing Company by the DLA. To conduct a meaningful comparison, one would need to access historical contract databases (e.g., FPDS-NG) and filter for contracts with the same or similar Product Service Codes (PSCs) and the same contractor (Boeing) and awarding agency (DLA). Analyzing the total obligated amounts, contract durations, and the nature of the 'PBL Material' over several fiscal years would reveal trends in spending. Without this historical context, it is difficult to determine if the current $108.4 million award represents an increase, decrease, or stable level of expenditure for these materials.

What are the key performance indicators (KPIs) or deliverables expected under this 'PBL Material' contract, and how will their fulfillment be measured?

The provided data for this contract does not specify the key performance indicators (KPIs) or detailed deliverables. 'PBL Material' is a broad term, and the specific nature of the materials, their quantities, quality standards, and delivery schedules would be outlined in the contract's statement of work (SOW) or performance work statement (PWS). Measurement of fulfillment would typically involve tracking on-time delivery rates, adherence to quality specifications (e.g., through inspection and acceptance testing), and potentially inventory management metrics if the contract includes sustainment aspects. The contract type, 'FIRM FIXED PRICE,' suggests that the contractor is obligated to deliver the specified materials at the agreed-upon price, with penalties or remedies for non-performance detailed in the contract terms.

Given the sole-source nature, what mechanisms are in place to ensure Boeing is providing these materials at a fair and reasonable price?

Even in sole-source procurements, the government is required to ensure that prices are fair and reasonable. For a contract of this value ($108.4 million), the Defense Contract Audit Agency (DCAA) or the Defense Contract Management Agency (DCMA) would likely be involved in performing a cost and price analysis. This involves reviewing Boeing's cost proposals, verifying cost data, and assessing the reasonableness of the proposed profit. While competition is absent, the government relies on its own analytical capabilities and auditing functions to scrutinize the contractor's pricing structure. However, the absence of competitive bids inherently limits the government's leverage in price negotiations.

What is the potential impact of this contract on the broader supply chain for military aircraft parts, particularly concerning lead times and availability?

This contract, valued at over $100 million for 'PBL Material' from Boeing, suggests a significant demand for specific aircraft components. As a sole-source award, it directly channels substantial funding to Boeing, potentially prioritizing their production lines for these materials. The impact on the broader supply chain depends on whether these materials are unique to Boeing or if other manufacturers could potentially supply them. If these are critical, proprietary parts, this contract ensures their availability for the DLA's needs, potentially at the expense of wider market availability or diversification. Lead times are influenced by Boeing's internal production capacity and their own sub-tier suppliers. The 370-day duration indicates a medium-term supply commitment, aiming to stabilize availability for that period.

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: $108,405,520

Exercised Options: $108,405,520

Current Obligation: $108,405,520

Subaward Activity

Number of Subawards: 223

Total Subaward Amount: $31,335,938

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA114D002U

IDV Type: IDC

Timeline