Boeing awarded $120M contract for PBL Material, raising questions about competition and value

Contract Overview

Contract Amount: $120,397,627 ($120.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-09-12

End Date: 2024-09-17

Contract Duration: 371 days

Daily Burn Rate: $324.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8510108370!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 $120.4 million to THE BOEING COMPANY for work described as: 8510108370!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 suggests a critical role in defense supply chains. 3. Lack of competition is a key risk indicator for potential overpayment and reduced innovation. 4. The contract duration of over a year indicates a sustained need for these materials. 5. Boeing's established position in defense manufacturing is a factor in this sole-source award.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of 'PBL Material'. Without competitive bids, it's difficult to assess if the $120.3 million price represents fair market value. Comparisons to similar sole-source awards for specialized aerospace components would be necessary for a more robust assessment. The firm-fixed-price structure offers some cost certainty, but the absence of competition remains a primary concern for value realization.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor, The Boeing Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no opportunity for multiple vendors to compete and drive down costs through their bids.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Defense Logistics Agency, ensuring the availability of critical aircraft parts. This contract supports the sustainment and operational readiness of military aircraft fleets. The geographic impact is primarily centered around Boeing's operations in Missouri, where the materials are likely sourced or processed. The contract sustains jobs within Boeing's manufacturing and supply chain operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced incentive for cost efficiency.
Sole-source awards can limit opportunities for emerging or smaller suppliers to enter the defense market.
Dependence on a single supplier for critical materials can create supply chain vulnerabilities.
The specific nature of 'PBL Material' is not detailed, making it difficult to assess its criticality and potential alternatives.

Positive Signals

Boeing is a long-standing and experienced defense contractor with a proven track record in aerospace manufacturing.
The firm-fixed-price contract type provides cost predictability for the government.
The contract supports the operational readiness of essential military assets.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized defense components is often characterized by high barriers to entry, significant R&D investment, and a limited number of qualified suppliers. Spending in this area is critical for maintaining national security and military readiness. Comparable spending benchmarks would likely involve other sole-source or limited-competition contracts for similar high-value, specialized aircraft components within the defense industrial base.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no explicit mention of subcontracting plans for small businesses. This suggests that the primary awardee is a large corporation, and opportunities for small businesses may be limited unless they are direct suppliers to Boeing. Further investigation into Boeing's subcontracting practices would be needed to understand the full impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency and potentially the Department of Defense's Inspector General. Transparency is limited due to the sole-source nature of the award. Accountability measures would be tied to Boeing's adherence to the firm-fixed-price terms and delivery schedules. The specific oversight mechanisms for 'PBL Material' would need further clarification.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Support
Aerospace Component Procurement
Sole-Source Defense 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 $120.4 million to THE BOEING COMPANY. 8510108370!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 $120.4 million.

What is the period of performance?

Start: 2023-09-12. End: 2024-09-17.

What is 'PBL Material' and why is it exclusively sourced from Boeing?

'PBL Material' likely refers to Performance-Based Logistics material, a strategy where the contractor is responsible for providing support and sustainment for a system or component over its lifecycle. In this context, it suggests that Boeing is the sole provider of specific materials critical to the performance and sustainment of certain aircraft or systems they manufacture. The exclusivity is often due to proprietary technology, unique manufacturing processes, or established long-term support agreements where Boeing holds the intellectual property or has unique expertise. Without more specific details on the 'PBL Material' designation, it's difficult to ascertain the exact technical reasons for the sole-source award beyond Boeing's established role as the original equipment manufacturer and sustainment provider.

What is the historical spending trend for this type of material with Boeing or the Defense Logistics Agency?

Analyzing historical spending trends for 'PBL Material' with Boeing or the Defense Logistics Agency (DLA) is crucial for understanding the context of this $120.3 million award. While the provided data is for a single delivery order, a comprehensive analysis would involve examining past contracts for similar materials or PBL support from Boeing to the DLA or other Department of Defense agencies. This would reveal whether spending has been consistently high, increasing, or decreasing. It would also help identify if this is a recurring need or a one-time procurement. Without access to historical contract databases and specific line-item details, it's challenging to provide precise figures, but a trend analysis would highlight patterns of reliance on Boeing and the overall investment in sustainment for relevant defense assets.

Are there any alternative suppliers or potential substitutes for this 'PBL Material' that were considered?

Given that this contract was awarded on a sole-source basis, it implies that alternative suppliers or substitutes for this specific 'PBL Material' were either not identified, not qualified, or deemed unsuitable by the contracting agency. In sole-source procurements, the justification often states that only one responsible source exists to meet the government's needs. This could be due to proprietary manufacturing processes, unique technical specifications, or the material being integral to a system for which Boeing is the sole provider. A thorough review of the sole-source justification documentation would be necessary to understand the specific reasons why alternatives were not pursued or considered viable for this particular procurement.

What are the performance metrics and key performance indicators (KPIs) associated with this contract?

Performance metrics and Key Performance Indicators (KPIs) for a Performance-Based Logistics (PBL) contract like this are typically defined to ensure the contractor meets specific sustainment and availability goals. For 'PBL Material,' these KPIs would likely focus on aspects such as material availability rates, on-time delivery, quality defect rates, and potentially response times for material requests. The success of the contract hinges on Boeing's ability to meet these predefined metrics, which are designed to ensure the readiness and operational capability of the supported aircraft or systems. The firm-fixed-price nature suggests that meeting these performance standards is tied to the overall value and successful execution of the contract, though the specific details of these KPIs are not publicly disclosed in the provided data.

What is the potential impact of this contract on Boeing's overall revenue and its position in the defense market?

A $120.3 million contract for critical 'PBL Material' represents a significant revenue stream for The Boeing Company and reinforces its established position within the defense market, particularly in aircraft sustainment. Such awards underscore Boeing's role as a key partner for the Department of Defense in maintaining the operational readiness of its fleet. This contract not only contributes directly to Boeing's top-line revenue but also strengthens its long-term relationships with defense agencies, potentially leading to future sustainment and upgrade contracts. It highlights Boeing's capabilities in providing integrated logistics support, which is a crucial aspect of the modern defense industrial base.

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: $120,397,627

Exercised Options: $120,397,627

Current Obligation: $120,397,627

Subaward Activity

Number of Subawards: 195

Total Subaward Amount: $44,647,168

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