Boeing awarded $72M contract for PBL Material, raising questions about competition and value

Contract Overview

Contract Amount: $72,074,504 ($72.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-09-14

End Date: 2022-09-16

Contract Duration: 367 days

Daily Burn Rate: $196.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8508515665!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 $72.1 million to THE BOEING COMPANY for work described as: 8508515665!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. Contract duration of approximately one year provides limited long-term performance context. 5. Boeing's established role as a major defense contractor positions them strongly in this sector. 6. The 'PBL MATERIAL' designation implies a focus on sustainment and readiness for existing platforms.

Value Assessment

Rating: questionable

The contract value of $72,045,040 for approximately one year of 'PBL MATERIAL' suggests a high per-unit cost, especially given the sole-source nature. Without competitive bids, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of transparency inherent in a non-competed award makes a definitive value-for-money assessment challenging. Further analysis would be needed to compare the specific materials and services provided against industry standards and alternative suppliers, if any exist.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. The Defense Logistics Agency (DLA) likely determined that only The Boeing Company could provide the required 'PBL MATERIAL' due to proprietary reasons, existing platform integration, or specific sustainment requirements. The absence of multiple bidders means there was no opportunity for price negotiation driven by market competition, potentially leading to a higher price than if multiple vendors had vied for the contract.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft parts due to the lack of competitive bidding. Without a competitive process, there is less assurance that the government is receiving the best possible price for the materials procured.

Public Impact

The primary beneficiaries are likely military aviation units relying on Boeing aircraft, ensuring operational readiness. Services delivered include the provision of critical 'PBL MATERIAL', essential for aircraft maintenance and sustainment. Geographic impact is likely national, supporting defense operations across various military branches. Workforce implications may include continued employment for specialized manufacturing and logistics personnel within Boeing and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value assessment.
Lack of transparency in pricing due to non-competitive nature.
Potential for higher costs without market-driven price discovery.
Contract duration is relatively short, offering limited insight into long-term sustainment costs.

Positive Signals

Award to a major, established defense contractor like Boeing suggests reliability and expertise.
Focus on 'PBL MATERIAL' indicates support for critical defense readiness.
Contract is firm fixed price, providing cost certainty once awarded.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government procurement. Contracts for aircraft parts and sustainment are crucial for maintaining military readiness. The market for such specialized materials is often dominated by original equipment manufacturers like Boeing, leading to a high degree of concentration. This contract fits within the broader category of defense sustainment and logistics, a substantial segment of federal spending.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Boeing voluntarily includes them in its supply chain. There is no explicit mechanism in this award to promote small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring compliance with contract terms and financial accountability. The Defense Logistics Agency (DLA) contracting officers are responsible for the award and administration. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight if specific concerns arise.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Logistics Agency Procurement
Boeing Defense Contracts
PBL (Performance-Based Logistics) Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.1 million to THE BOEING COMPANY. 8508515665!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 $72.1 million.

What is the period of performance?

Start: 2021-09-14. End: 2022-09-16.

What specific 'PBL MATERIAL' is being procured under this contract, and what is its criticality to defense operations?

The specific 'PBL MATERIAL' is not detailed in the provided data, but 'PBL MATERIAL' typically refers to components or parts essential for Performance-Based Logistics (PBL) sustainment contracts. PBL aims to improve weapon system readiness and reduce costs by focusing on outcomes rather than specific parts or services. Therefore, this material is likely critical for maintaining the operational readiness and availability of specific Boeing aircraft platforms used by the Department of Defense. Its criticality stems from ensuring that aircraft can be maintained and deployed as needed, directly impacting military mission effectiveness.

Can the $72 million contract value be benchmarked against similar sole-source awards for aircraft parts?

Benchmarking this $72 million sole-source contract is challenging without more specific details on the 'PBL MATERIAL' and the associated services. Sole-source awards inherently lack direct competitive benchmarks. However, one could attempt to compare it to other sole-source sustainment contracts for similar aircraft types or major components awarded by the Defense Logistics Agency or other military branches. Analysis of historical pricing trends for Boeing-supplied parts, even from competed contracts, might offer some indirect comparison points. The duration of approximately one year also needs to be factored in when comparing to multi-year contracts. Ultimately, a robust benchmark would require access to detailed cost breakdowns and proprietary pricing data, which is often not publicly available for sole-source procurements.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with awarding a $72 million contract on a sole-source basis are significant. Firstly, the lack of competition can lead to inflated prices, as the contractor faces no market pressure to offer the most cost-effective solution. This results in a potential loss of taxpayer value. Secondly, it limits the government's ability to explore innovative solutions or alternative suppliers that might offer better performance or lower costs. Thirdly, it can create a dependency on a single supplier, potentially weakening the government's negotiating position in future procurements. Finally, without competitive scrutiny, there's an increased risk of contractor inefficiencies going unnoticed, impacting overall program performance and cost.

What is the historical spending pattern for 'PBL MATERIAL' or similar aircraft parts procured from The Boeing Company by the Department of Defense?

Historical spending data for 'PBL MATERIAL' or similar aircraft parts from The Boeing Company by the Department of Defense would require a deep dive into federal procurement databases like FPDS-NG or USAspending. Generally, the Department of Defense spends billions annually on aircraft sustainment and spare parts, with Boeing being a major recipient due to its extensive portfolio of military aircraft (e.g., F-18, C-17, Apache). Spending on PBL contracts specifically has been a growing trend, aiming for better readiness and cost control. However, specific figures for 'PBL MATERIAL' are difficult to isolate without more precise contract descriptions. Past awards to Boeing for sustainment and parts have often been substantial, reflecting the high cost and complexity of maintaining advanced military aviation assets.

How does the 'firm fixed price' contract type mitigate or exacerbate the risks associated with this sole-source award?

The 'firm fixed price' (FFP) contract type offers a degree of cost certainty for the government, as the price is set and generally not subject to adjustment based on the contractor's cost experience. This mitigates the risk of cost overruns for the government if the contractor's actual costs are higher than anticipated. However, in the context of a sole-source award, FFP can exacerbate the risk of paying an excessively high price from the outset. Since there was no competition to establish a market-based price, the fixed price agreed upon might be significantly higher than what could have been achieved through a competitive process. While the government is protected from cost increases, it may not be protected from paying an inflated initial price.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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: $72,074,504

Exercised Options: $72,074,504

Current Obligation: $72,074,504

Subaward Activity

Number of Subawards: 169

Total Subaward Amount: $28,480,970

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA114D002U

IDV Type: IDC

Timeline