Boeing awarded $90.25M contract for PBL Material, raising questions about competition and value

Contract Overview

Contract Amount: $90,205,610 ($90.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-09-13

End Date: 2022-09-13

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8509376147!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 $90.2 million to THE BOEING COMPANY for work described as: 8509376147!PBL MATERIAL BOEING Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant portion of spending allocated to a single contractor, indicating limited market engagement. 3. Lack of competition raises concerns about the government securing the best possible value. 4. Performance-based logistics (PBL) approach aims for efficiency but requires careful monitoring. 5. Contract falls within the Defense Logistics Agency's broader support for aircraft parts. 6. Fixed-price contract type shifts some risk to the contractor, but sole-source nature mitigates this.

Value Assessment

Rating: questionable

The contract value of $90.25M for PBL Material for Boeing aircraft parts appears substantial. Without comparable sole-source contracts or detailed cost breakdowns, it is difficult to definitively benchmark the value. However, the absence of competition inherently limits the government's ability to negotiate the most favorable pricing. The fixed-price nature provides some cost certainty, but the lack of competitive pressure suggests potential for overpayment compared to a competed scenario. Further analysis of the specific materials and services is needed to assess true value-for-money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. The Defense Logistics Agency likely determined that only The Boeing Company could fulfill the requirement for these specific PBL materials. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. Consequently, the government did not benefit from the price reductions and innovation that often arise from a competitive environment.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition. Without competing the requirement, there is less assurance that the government is receiving the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense and its aviation units, ensuring the availability of critical materials for Boeing aircraft. Services delivered include the provision of Performance-Based Logistics (PBL) materials, essential for maintaining aircraft readiness. Geographic impact is national, supporting military operations across various locations where Boeing aircraft are deployed. Workforce implications are indirect, supporting jobs within The Boeing Company and its supply chain.

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 pricing due to non-competitive nature.
Dependence on a single contractor for critical materials could pose supply chain risks.
Limited opportunity for small businesses to participate in this specific contract.

Positive Signals

Fixed-price contract type provides some cost certainty for the government.
Performance-Based Logistics (PBL) approach can drive efficiency and contractor accountability.
Supports critical defense readiness by ensuring material availability for Boeing aircraft.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for such specialized components is often dominated by original equipment manufacturers like Boeing due to proprietary designs and technical expertise. Spending benchmarks for PBL materials can vary widely depending on the aircraft platform and the scope of the logistics support. However, significant sole-source awards in this category warrant scrutiny to ensure fair pricing and strategic sourcing.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the likely requirement for specialized, proprietary materials, it is improbable that small businesses would be direct recipients of this award. Subcontracting opportunities for small businesses may exist within Boeing's supply chain, but these are not explicitly detailed or mandated by this contract award notice. The impact on the small business ecosystem is therefore minimal for this specific procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA) and potentially the Department of Defense's Inspector General. Accountability measures are embedded within the Performance-Based Logistics (PBL) framework, which typically ties contractor payment to achieving specific performance metrics. Transparency is limited due to the sole-source award, making detailed public scrutiny of pricing and justification challenging. The DLA's internal audit and contracting oversight functions are the primary mechanisms for ensuring compliance and value.

Related Government Programs

Defense Logistics Agency Aircraft Parts Procurement
Boeing Aircraft Maintenance and Sustainment Contracts
Performance-Based Logistics (PBL) Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $90.2 million to THE BOEING COMPANY. 8509376147!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 $90.2 million.

What is the period of performance?

Start: 2022-09-13. End: 2022-09-13.

What is the specific justification for awarding this contract on a sole-source basis to The Boeing Company?

The provided data indicates the contract was 'NOT COMPETED' and awarded to 'THE BOEING COMPANY'. While the specific justification is not detailed in the provided snippet, sole-source awards are typically granted when only one responsible source can provide the required supplies or services. This could be due to proprietary technology, unique capabilities, urgent and compelling needs where competition is not feasible, or if the item is a follow-on to a competitively procured contract where only the original contractor can provide it. For PBL materials, it often relates to the manufacturer's exclusive rights to produce or supply specific parts essential for aircraft sustainment. A formal Justification for Other Than Full and Open Competition (JOFOC) would typically be required and should be publicly accessible for detailed review.

How does the $90.25M contract value compare to historical spending on similar PBL materials for Boeing aircraft?

Comparing the $90.25M contract value requires access to historical spending data for similar Performance-Based Logistics (PBL) materials specifically for Boeing aircraft platforms managed by the Defense Logistics Agency (DLA) or other relevant DoD entities. Without this comparative data, it's challenging to determine if this award represents an increase, decrease, or is consistent with past trends. Factors influencing such comparisons include the specific aircraft type, the scope of materials covered (e.g., engines, airframes, avionics), the duration of the contract, and the overall defense budget allocation for aviation sustainment. Analyzing trends over multiple fiscal years would provide better context on whether this award is an anomaly or part of a sustained spending pattern.

What are the key performance indicators (KPIs) associated with this Performance-Based Logistics (PBL) contract, and how is contractor performance measured?

Performance-Based Logistics (PBL) contracts are designed around measurable outcomes rather than specific tasks. While the exact KPIs for this $90.25M contract are not detailed in the provided data, typical PBL KPIs for aircraft parts include metrics such as item availability rates, order fulfillment timeliness, repair turnaround times, system reliability, and cost reduction targets. The Defense Logistics Agency (DLA) would establish these specific metrics in the contract's Performance Work Statement (PWS). Contractor performance is measured against these agreed-upon KPIs, and incentives or penalties may be tied to achieving or failing to meet these targets. Regular performance reviews and data analysis are crucial for ensuring the contractor, The Boeing Company, is meeting its obligations and delivering value.

What is The Boeing Company's track record with Defense Logistics Agency (DLA) contracts, particularly for PBL materials?

The Boeing Company has a long-standing and extensive relationship with the Department of Defense, including the Defense Logistics Agency (DLA), across various platforms and sustainment programs. They are a primary contractor for numerous military aircraft, and consequently, have been involved in numerous PBL and sustainment contracts for these platforms. Their track record generally involves delivering complex systems and support services. Specific to PBL materials, Boeing's experience would encompass managing supply chains, ensuring parts availability, and potentially offering repair and overhaul services. Performance can vary across contracts, but their position as a major defense contractor suggests a significant capacity to handle large-scale sustainment requirements like this one.

Are there any identified risks associated with this contract, such as supply chain disruptions or obsolescence of materials?

Yes, there are potential risks associated with this contract, particularly given its sole-source nature and the focus on PBL materials. Supply chain disruptions are a constant concern in defense contracting; if Boeing's supply chain for these specific materials is impacted by geopolitical events, natural disasters, or manufacturing issues, it could affect aircraft readiness. Material obsolescence is another risk, especially for older aircraft platforms, where sourcing original or equivalent parts may become increasingly difficult and expensive over time. The sole-source award itself carries a risk of complacency from the contractor, potentially leading to reduced focus on cost efficiency or innovation. Furthermore, dependence on a single supplier for critical components can create vulnerabilities if that supplier faces financial instability or strategic shifts.

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: $90,205,610

Exercised Options: $90,205,610

Current Obligation: $90,205,610

Subaward Activity

Number of Subawards: 214

Total Subaward Amount: $42,030,104

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