DoD awards Boeing $250M contract for PBL Material, raising questions about competition and value

Contract Overview

Contract Amount: $24,969,200 ($25.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-11-19

End Date: 2024-11-18

Contract Duration: 365 days

Daily Burn Rate: $68.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8510245925!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 $25.0 million to THE BOEING COMPANY for work described as: 8510245925!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 role in supporting defense logistics. 3. Lack of competition raises concerns about contractor performance incentives and innovation. 4. Fixed-price contract type offers some cost certainty but may not fully capture efficiencies. 5. Contract duration of one year with options indicates a need for ongoing support. 6. Geographic focus on Missouri for delivery highlights regional economic impact.

Value Assessment

Rating: questionable

The contract value of $249.7 million for aircraft manufacturing materials is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The sole-source nature raises concerns about whether the government is receiving the best possible value for its investment. Further analysis would be needed to determine if the pricing is fair and reasonable given the lack of competition.

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 Defense Logistics Agency (DLA) did not solicit bids from multiple offerors. This lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive procurement, potentially leading to higher costs.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down prices. The government's ability to negotiate favorable terms is also diminished without alternative sources.

Public Impact

The Department of Defense benefits from the supply of critical aircraft manufacturing materials. This contract supports the operational readiness and maintenance of military aircraft. The contract has a geographic impact on Missouri, where the materials will be delivered. The contract supports jobs within the aerospace manufacturing sector, particularly at Boeing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of transparency in pricing due to non-competitive nature.
Dependence on a single contractor for critical materials could pose supply chain risks.

Positive Signals

Boeing is a long-standing, experienced contractor with a proven track record in aerospace.
Fixed-price contract type provides some cost predictability for the government.
The contract supports essential defense logistics and readiness.

Sector Analysis

The aerospace and defense manufacturing sector is characterized by high barriers to entry, complex supply chains, and significant government investment. This contract falls within the aircraft manufacturing sub-sector, which is crucial for national security. The total addressable market for such materials is substantial, driven by military aircraft production and sustainment. Benchmarking this contract's value against other sole-source awards for similar materials would be informative.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the prime contractor being Boeing, there is a potential for limited subcontracting opportunities for small businesses within this specific award. The overall impact on the small business ecosystem would depend on Boeing's established subcontracting relationships and DLA's broader small business utilization goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring contractor performance and financial accountability. Transparency is limited due to the sole-source award, but contract modifications and performance reports would be subject to internal DoD review. The Inspector General of the Department of Defense may also investigate if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Logistics Support Services
Military Aircraft Maintenance and Repair

Risk Flags

Sole-source award
Potential for uncompetitive pricing
Lack of transparency in cost justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.0 million to THE BOEING COMPANY. 8510245925!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 $25.0 million.

What is the period of performance?

Start: 2023-11-19. End: 2024-11-18.

What is Boeing's historical performance record with the Department of Defense, particularly on sole-source contracts?

Boeing has a long and extensive history of contracting with the Department of Defense, supplying a wide range of aircraft, systems, and support services. While generally considered a reliable contractor, like any large defense prime, Boeing has faced scrutiny over program costs, delivery schedules, and quality control on specific projects. For sole-source contracts, performance can be influenced by the specific nature of the requirement and the lack of competitive pressure. Historical data from contract databases and performance reviews (e.g., CPARS) would be necessary to provide a detailed assessment of their performance on similar sole-source awards for critical materials, looking for trends in on-time delivery, quality compliance, and cost overruns.

How does the $249.7 million contract value compare to similar sole-source awards for aircraft manufacturing materials?

Directly comparing this $249.7 million contract value to similar sole-source awards for aircraft manufacturing materials is challenging without access to proprietary pricing data and specific material classifications. However, the magnitude of the award suggests it covers a significant volume or highly specialized components. Sole-source awards, by definition, lack a competitive benchmark. To assess value, one would typically look at historical pricing trends for the same or similar materials from Boeing or other potential suppliers, analyze the cost breakdown provided by the contractor, and consider the criticality and uniqueness of the materials. If this represents a substantial increase over previous years or similar procurements, it would warrant deeper investigation into the justification for the price.

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

The primary risks associated with awarding a contract of this magnitude on a sole-source basis include: 1. **Cost Overruns:** Without competitive pressure, the contractor may not be incentivized to offer the lowest possible price, potentially leading to higher costs for the government. 2. **Reduced Innovation:** A lack of competition can stifle innovation as the contractor may not feel the need to develop more efficient processes or materials. 3. **Supply Chain Vulnerability:** Over-reliance on a single source for critical materials can create vulnerabilities in the supply chain, especially if the contractor experiences production issues or financial instability. 4. **Limited Oversight Effectiveness:** While oversight mechanisms exist, the absence of competitive proposals makes it harder to validate the reasonableness of the contractor's proposed costs and technical approach.

What specific aircraft manufacturing materials are covered under this contract, and why are they critical?

The provided data indicates 'PBL MATERIAL BOEING' and a North American Industry Classification System (NAICS) code of 336411 (Aircraft Manufacturing). This suggests the contract covers materials essential for the production or sustainment of Boeing aircraft. These could range from raw materials like specialized alloys, composites, and advanced polymers to manufactured components such as structural parts, engine components, or avionics sub-assemblies. The criticality stems from their direct impact on the airworthiness, performance, and operational readiness of military aircraft. Without these specific materials, the ability to maintain and produce key defense assets would be severely hampered, directly affecting national security capabilities.

What are the historical spending patterns for aircraft manufacturing materials by the Defense Logistics Agency?

Historical spending patterns for aircraft manufacturing materials by the Defense Logistics Agency (DLA) are likely substantial and consistent, reflecting the ongoing need to support the U.S. military's vast aircraft inventory. DLA's role is to provide logistics support, including the procurement and distribution of spare parts, raw materials, and components. Spending in this category would fluctuate based on modernization programs, depot maintenance cycles, operational tempo, and the introduction of new aircraft platforms. Analyzing DLA's historical budgets and contract awards related to NAICS code 336411 and similar classifications would reveal trends in annual expenditures, major contract vehicles, and key suppliers. This specific $249.7 million award represents a significant single-year expenditure within this broader category.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft 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: $24,969,200

Exercised Options: $24,969,200

Current Obligation: $24,969,200

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $2,295,813

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA120D005U

IDV Type: IDC

Timeline