Boeing awarded $10.96M for KC-46 common strategic repair, a sole-source contract for aircraft parts

Contract Overview

Contract Amount: $10,962,306 ($11.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-04-07

End Date: 2023-04-06

Contract Duration: 364 days

Daily Burn Rate: $30.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KC46 COMMERCIAL COMMON STRATEGIC REPAIR LTC -YEAR 1 DO

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS CITY County, MISSOURI, 63166

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $11.0 million to THE BOEING COMPANY for work described as: KC46 COMMERCIAL COMMON STRATEGIC REPAIR LTC -YEAR 1 DO Key points: 1. Contract awarded to a single, incumbent provider, raising questions about price competitiveness. 2. The contract focuses on specialized repair services for the KC-46 aircraft fleet. 3. Performance is tied to a fixed-price structure, offering some cost certainty. 4. The duration of one year suggests a need for ongoing, specialized support. 5. This award falls under the Defense Logistics Agency's purview for aircraft sustainment.

Value Assessment

Rating: questionable

Given this is a sole-source award to The Boeing Company, a direct comparison to market rates for similar repair services is challenging. The firm fixed-price structure provides some predictability, but without competitive bidding, it's difficult to ascertain if the $10.96 million represents optimal value for money. Benchmarking against historical spending on similar sustainment contracts for other aircraft platforms would be necessary for a more robust assessment of pricing efficiency.

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 data indicates 'NOT AVAILABLE FOR COMPETITION,' suggesting that only one source, The Boeing Company, was deemed capable or available to fulfill the requirement. This lack of competition limits the government's ability to explore alternative pricing and service models.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also reduces the opportunity for other qualified businesses to secure government contracts.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the KC-46 Pegasus tanker aircraft. Services delivered include specialized repairs and maintenance for common strategic components of the KC-46. The geographic impact is primarily within the United States, supporting operational readiness of the fleet. Workforce implications include the need for highly skilled technicians familiar with Boeing's aircraft systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs.
Lack of competition may reduce incentives for innovation and efficiency improvements.
Dependence on a single contractor for critical repair services poses a supply chain risk.

Positive Signals

Fixed-price contract provides cost certainty for this specific award period.
Awarding to the original equipment manufacturer ensures specialized knowledge and access to proprietary parts.
Contract supports the sustainment of a critical national defense asset, the KC-46 tanker.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft sustainment and repair. The market for specialized aircraft parts and maintenance is often dominated by original equipment manufacturers (OEMs) like Boeing due to proprietary knowledge and intellectual property. Comparable spending benchmarks would involve analyzing other sustainment contracts for large military aircraft, which can run into millions or billions of dollars annually depending on fleet size and complexity.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large prime contractor, there are no direct subcontracting opportunities for small businesses specified in the provided data. The impact on the small business ecosystem is likely minimal unless Boeing engages in subcontracting beyond the scope of this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA) and potentially the Department of Defense's Inspector General. Accountability measures are inherent in the firm fixed-price structure, which obligates Boeing to deliver specified repairs at an agreed-upon cost. Transparency is limited due to the sole-source nature of the award, making public scrutiny of pricing and justification more challenging.

Related Government Programs

KC-46 Pegasus Program
Air Mobility Command Sustainment Contracts
Defense Logistics Agency Aviation Support
Aircraft Parts Manufacturing
Military Aircraft Repair Services

Risk Flags

Sole-source award
Potential for cost overruns
Contractor dependency risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.0 million to THE BOEING COMPANY. KC46 COMMERCIAL COMMON STRATEGIC REPAIR LTC -YEAR 1 DO

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 $11.0 million.

What is the period of performance?

Start: 2022-04-07. End: 2023-04-06.

What is the historical spending pattern for KC-46 common strategic repairs with The Boeing Company?

The provided data only details a single award for the period of April 7, 2022, to April 6, 2023, totaling $10.96 million. To understand historical spending patterns, one would need to access contract databases for previous years to identify any prior awards for similar KC-46 repair services, whether sole-source or competed. Analyzing trends in spending, contract duration, and the nature of services provided over several years would reveal patterns in how the DoD is supporting the KC-46 sustainment and whether costs have escalated or remained stable.

How does the pricing of this contract compare to similar aircraft repair services for other military platforms?

Direct comparison is difficult without specific data on comparable contracts. However, sole-source awards to OEMs like Boeing for specialized repairs often carry a premium compared to competitively bid services or repairs performed by third-party MRO (Maintenance, Repair, and Overhaul) providers. The firm fixed-price nature provides some cost control, but the absence of competition means the government cannot leverage market forces to secure the best possible price. A comprehensive analysis would require benchmarking against contracts for similar complexity and scale, considering factors like labor rates, parts costs, and overhead.

What are the specific risks associated with a sole-source award for critical aircraft repair?

The primary risks of a sole-source award for critical aircraft repair include inflated pricing due to lack of competition, potential for complacency from the contractor regarding efficiency and innovation, and a heightened dependence on a single supplier. If Boeing faces production issues, supply chain disruptions, or decides to prioritize other contracts, the availability of essential repair services for the KC-46 could be jeopardized, impacting operational readiness. Furthermore, the government has limited leverage to negotiate better terms or explore alternative solutions.

What is the track record of The Boeing Company in fulfilling defense sustainment contracts?

The Boeing Company has a long and extensive track record of fulfilling defense sustainment contracts across numerous platforms, including aircraft, rotorcraft, and missile systems. They are a major defense contractor with established processes for managing complex logistics, maintenance, and repair operations. While generally reliable, Boeing, like any large contractor, has faced scrutiny over program execution, cost overruns, and delivery schedules on certain high-profile programs. For KC-46 sustainment, their incumbency and role as the OEM provide deep technical expertise.

What is the estimated value of the entire KC-46 sustainment program over its lifecycle?

The provided data only covers a single year's delivery order valued at approximately $10.96 million for common strategic repairs. The total lifecycle sustainment cost for the KC-46 program is significantly higher and spans decades. Estimates for the total program cost, including procurement and sustainment, run into the tens of billions of dollars. Specific lifecycle sustainment cost projections are typically developed by the Air Force and are subject to change based on operational tempo, maintenance requirements, and evolving threat environments.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JAMES S 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: $10,962,306

Exercised Options: $10,962,306

Current Obligation: $10,962,306

Subaward Activity

Number of Subawards: 81

Total Subaward Amount: $15,254,450

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPRPA122D002U

IDV Type: IDC

Timeline