Boeing awarded $60.6M contract for aeronautical system instruments by the Department of Defense

Contract Overview

Contract Amount: $60,681,288 ($60.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-09-19

End Date: 2028-01-30

Contract Duration: 1,594 days

Daily Burn Rate: $38.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SPARES

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $60.7 million to THE BOEING COMPANY for work described as: SPARES Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. The firm fixed-price contract type suggests price certainty but may limit flexibility. 3. Long performance period of nearly 4 years indicates a sustained need for these instruments. 4. The contract is a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 5. Geographic location in Arizona for performance may indicate specific operational or manufacturing hubs. 6. Lack of small business involvement noted, suggesting focus on prime contractor capabilities.

Value Assessment

Rating: fair

The contract value of $60.6 million for aeronautical system instruments appears substantial. Without specific details on the instruments or comparable contracts, it's difficult to definitively benchmark value. However, given the sole-source nature and the prime contractor's established role in defense, the pricing warrants scrutiny. The firm fixed-price structure aims to control costs, but the absence of competition could lead to less favorable terms than a competed award.

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 approach is typically used when a specific capability is required that only one entity possesses, or in urgent situations. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards limit taxpayer value by removing the downward price pressure that competition provides. This means the government may be paying a premium for the goods or services.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical instruments for its aeronautical systems. This contract supports the maintenance and operational readiness of military aircraft. Performance is located in Arizona, potentially impacting the local economy and workforce in that region. The contract ensures the continued availability of specialized instruments essential for navigation, detection, and guidance systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for cost overruns if not closely managed, despite firm fixed-price structure.

Positive Signals

Award to a major defense contractor with a proven track record in aerospace systems.
Firm fixed-price contract provides cost certainty for the awarded amount.
Long-term nature of the contract suggests a stable and predictable supply chain for critical components.

Sector Analysis

The aerospace and defense industry is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is critical for national security and technological advancement. Comparable spending benchmarks are difficult to establish without knowing the specific instruments, but large sole-source awards to prime contractors are common for specialized defense systems.

Small Business Impact

This contract does not appear to have a small business set-aside. The award is made directly to The Boeing Company, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within this specific delivery order. This suggests that the primary focus is on the prime contractor's capabilities, and opportunities for small businesses may be limited unless Boeing proactively includes them in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Defense Contract Management Agency (DCMA) likely plays a role in monitoring performance and compliance. As a sole-source award, scrutiny would focus on ensuring the necessity of the sole-source justification and the reasonableness of the price. Transparency is limited due to the non-competitive nature, but contract modifications and performance reports would be subject to internal review.

Related Government Programs

Defense Logistics Agency (DLA) Indefinite-Delivery/Indefinite-Quantity (IDIQ) Contracts
Department of Defense Aircraft Systems Procurement
Aeronautical Instrument Manufacturing Contracts
Navigation and Guidance System Development

Risk Flags

Sole-source award
Lack of competition
Potential for non-competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.7 million to THE BOEING COMPANY. SPARES

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 $60.7 million.

What is the period of performance?

Start: 2023-09-19. End: 2028-01-30.

What specific aeronautical instruments are being procured under this contract, and what is their criticality to current defense operations?

The contract specifies "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing." While the exact list of instruments is not detailed in the provided data, these categories encompass a wide range of critical components for military aircraft. This includes, but is not limited to, radar systems for detection, GPS and inertial navigation systems for guidance, flight control instruments, and various sensors. Their criticality lies in ensuring the safe and effective operation of aircraft for reconnaissance, combat, transport, and training missions. Without specific instrument details, it's challenging to assess their precise impact, but the broad classification suggests a foundational role in aviation capabilities.

How does the $60.6 million contract value compare to historical spending on similar instruments or by similar agencies?

Benchmarking the $60.6 million value requires more granular data on the specific instruments and their quantities. However, as a sole-source award to a major prime contractor like Boeing for aeronautical systems, the amount is substantial but not necessarily out of line for complex defense procurements. Historical spending by the Department of Defense on navigation, guidance, and detection systems runs into billions of dollars annually. The Defense Logistics Agency (DLA) often manages large IDIQ contracts that encompass such items. Without access to specific contract line item details or a direct comparison to recently competed contracts for identical or highly similar instruments, a precise value comparison is difficult. The absence of competition inherently makes direct value-for-money assessment challenging.

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

The provided data indicates the contract was "NOT COMPETED," implying a sole-source justification was used. Common reasons for sole-source awards include: unique capabilities possessed by only one source, urgent and compelling needs where competition is impractical, or when the contract is a follow-on to a previously competed effort where only one contractor can provide the necessary integration or sustainment. For a major defense contractor like Boeing, it's plausible that they possess proprietary technology, unique manufacturing capabilities, or are the sole provider for specific integrated systems essential for the DoD's aeronautical platforms. A formal justification, such as a Justification and Approval (J&A) document, would typically be required and publicly available for such awards, detailing the specific rationale.

What are the potential risks associated with a sole-source award of this magnitude and duration?

The primary risk associated with a sole-source award of this magnitude ($60.6 million) and duration (ending Jan 2028) is the potential for inflated pricing due to the lack of competitive pressure. The government may not be achieving the best possible value. Another risk is contractor complacency; without the threat of losing future business to competitors, the contractor might be less incentivized to innovate or optimize costs. Furthermore, reliance on a single source can create supply chain vulnerabilities if that contractor faces production issues, financial instability, or geopolitical challenges. The long duration also means the government is locked into this provider, limiting flexibility to adapt to new technologies or market changes.

What is the track record of The Boeing Company in fulfilling similar defense contracts, particularly those involving aeronautical instruments?

The Boeing Company has an extensive and long-standing track record as a major prime contractor for the U.S. Department of Defense, involved in numerous large-scale aerospace and defense programs. They are a primary manufacturer of military aircraft, including fighters, bombers, and transport planes, which inherently require sophisticated navigation, guidance, and detection systems. Boeing has a history of delivering complex systems, though like any large defense contractor, they have also faced scrutiny regarding cost, schedule, and performance on certain programs. Their experience in designing, manufacturing, and integrating these types of instruments is well-established, making them a logical, albeit sole-source, provider for critical aeronautical components.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5000 E MCDOWELL RD, MESA, AZ, 85215

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: $60,681,288

Exercised Options: $60,681,288

Current Obligation: $60,681,288

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $13,018,475

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA118D002U

IDV Type: IDC

Timeline