Boeing awarded $53.6M for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $53,620,972 ($53.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-08-13

End Date: 2024-05-08

Contract Duration: 999 days

Daily Burn Rate: $53.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FLAP SHROUD,AIRCRAF

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $53.6 million to THE BOEING COMPANY for work described as: FLAP SHROUD,AIRCRAF Key points: 1. The contract's value, while substantial, warrants scrutiny due to the lack of competitive bidding. 2. Analysis of pricing against similar contracts is crucial to determine fair market value. 3. The sole-source nature of this award presents a potential risk for price inflation. 4. Performance context is limited without visibility into delivery timelines and quality metrics. 5. This contract falls within the broader Defense Logistics Agency's aircraft parts procurement sector. 6. The absence of small business subcontracting requirements needs further investigation.

Value Assessment

Rating: questionable

The total award of $53.6 million for aircraft parts requires careful benchmarking. Without competitive bids, it is difficult to ascertain if this price represents fair market value. Comparing the unit costs of the 'FLAP SHROUD,AIRCRAF' to similar procurements by the DoD or other agencies would be essential. The contract's duration of 999 days also suggests a long-term commitment, making value assessment over the full period critical.

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 significantly limits price discovery and competition. While sole-source awards can be justified in specific circumstances, such as unique technical requirements or urgent needs, the lack of competition here raises concerns about potential overpayment and reduced innovation.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft parts due to the absence of competitive pressure to drive down costs. The government has fewer options to negotiate better terms or explore alternative suppliers.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units relying on the aircraft for which these parts are intended. The services delivered involve the manufacturing and supply of critical aircraft components, ensuring operational readiness. The geographic impact is primarily centered around the contractor's facility in Missouri, though the ultimate use is defense-wide. Workforce implications include employment at Boeing's manufacturing facilities, supporting skilled labor in the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source award limits opportunities for other suppliers.
Potential for reduced urgency in delivery without competitive pressure.
Long contract duration could mask inefficiencies.
Limited transparency on specific part pricing.

Positive Signals

Award to a major, established aerospace manufacturer with a known track record.
Contract supports critical defense logistics and aircraft maintenance.
Firm Fixed Price contract provides some cost certainty for the government.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such components is characterized by high technical barriers to entry, stringent quality requirements, and significant consolidation among major players like Boeing. Comparable spending benchmarks would involve analyzing other sole-source or competitively awarded contracts for similar aircraft components within the DoD's extensive supply chain.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the award was sole-source and the 'sb' (small business) flag is false. There is no explicit mention of small business set-asides or subcontracting plans. This suggests that opportunities for small businesses to participate in this specific procurement are likely limited, potentially excluding them from a significant defense contract.

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 monitoring performance, costs, and compliance. Transparency is moderate, as contract awards are publicly reported, but detailed pricing and performance metrics may be less accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Logistics Agency Aircraft Parts Procurement
Department of Defense Aircraft Maintenance Contracts
Sole-Source Aerospace Component Awards
Major Defense Contractor Supply Chain Management

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns due to lack of competition.
Limited transparency on specific cost breakdowns.
Long contract duration increases risk exposure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.6 million to THE BOEING COMPANY. FLAP SHROUD,AIRCRAF

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 $53.6 million.

What is the period of performance?

Start: 2021-08-13. End: 2024-05-08.

What is Boeing's track record with the Defense Logistics Agency on similar sole-source contracts?

Boeing has a long-standing relationship with the Defense Logistics Agency (DLA) and has received numerous contracts, both competitive and sole-source, for various aircraft parts and support services. Analyzing historical DLA awards to Boeing for similar components, especially those awarded sole-source, would provide context. This includes examining the frequency of sole-source awards, the average contract values, and any documented performance issues or cost overruns on past agreements. A review of past performance evaluations and any contract disputes or modifications could also shed light on Boeing's reliability and pricing practices within the DLA's procurement ecosystem.

How does the $53.6 million award compare to market rates for aircraft parts?

Benchmarking the $53.6 million award against market rates for aircraft parts is challenging without specific details on the 'FLAP SHROUD,AIRCRAF' components. However, the sole-source nature of the award inherently prevents direct market comparison through competitive bidding. To assess value, one would need to identify comparable parts procured competitively by the DoD or other government agencies, or consult industry pricing databases and expert analyses. Factors such as material costs, manufacturing complexity, required certifications, and volume discounts play a significant role. The absence of competition suggests the government may not be achieving the lowest possible price.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, The Boeing Company faces less pressure to offer its most competitive price. Another risk is reduced urgency in delivery or quality control, as the government has limited leverage to switch suppliers if issues arise. Furthermore, the long contract duration (999 days) increases the exposure to price fluctuations or potential changes in market conditions that might not be fully mitigated by the firm fixed-price structure. There's also a risk of vendor lock-in, making future procurements more difficult and potentially more expensive.

How effective is the Defense Logistics Agency in ensuring value for money on sole-source awards?

The DLA employs various mechanisms to ensure value for money, even on sole-source awards, though effectiveness can vary. These include conducting market research to justify the sole-source justification, negotiating prices based on cost analysis (if applicable), and leveraging historical pricing data. However, the inherent limitation of sole-source procurement is the reduced competitive pressure, which is a primary driver of value. The DLA's success depends heavily on the diligence of its contracting officers in performing thorough price and cost analyses, obtaining necessary certifications from the contractor, and ensuring the justification for sole-source is robust and regularly reviewed. Oversight from agencies like DCAA is also critical.

What is the historical spending pattern for aircraft parts by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) is a massive entity responsible for procuring a vast array of aviation parts and equipment for all branches of the U.S. military. Historical spending patterns show billions of dollars allocated annually towards aviation sustainment, encompassing everything from raw materials and individual components like flap shrouds to complex systems and engines. This spending is often characterized by a mix of competitive bids for standardized parts and sole-source or limited-competition awards for proprietary or highly specialized items. The DLA continuously manages a complex supply chain, aiming to balance cost-effectiveness with the critical need for operational readiness and timely delivery of essential aviation materiel.

What are the implications of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code for this contract?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates that this contract falls under a broad category of specialized manufacturing within the aerospace industry. This code encompasses establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment, not elsewhere classified. For this contract, it signifies that the 'FLAP SHROUD,AIRCRAF' is a specific component within this diverse manufacturing landscape. It suggests a need for specialized tooling, materials, and quality control processes, typical of aerospace manufacturing, and implies that the supplier likely possesses specific certifications and expertise relevant to aircraft safety and performance standards.

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: $53,620,972

Exercised Options: $53,620,972

Current Obligation: $53,620,972

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $57,603,339

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