Boeing awarded $122.7M for KC-135 horizontal stabilizers, a sole-source contract for critical aircraft parts

Contract Overview

Contract Amount: $122,695,145 ($122.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-03-28

End Date: 2028-06-30

Contract Duration: 2,286 days

Daily Burn Rate: $53.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MANUFACTURE OR LEFT, RIGHT AND CENTER HORIZONTAL STABLIZERS FOR THE KC-135 AIRCRAFT.

Place of Performance

Location: TULSA, TULSA County, OKLAHOMA, 74116

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $122.7 million to THE BOEING COMPANY for work described as: MANUFACTURE OR LEFT, RIGHT AND CENTER HORIZONTAL STABLIZERS FOR THE KC-135 AIRCRAFT. Key points: 1. Contract awarded to a single supplier, raising questions about price competitiveness. 2. Long-term contract duration suggests a need for sustained supply of these components. 3. Focus on a specific aircraft part indicates specialized manufacturing requirements. 4. The contract is managed by the Defense Logistics Agency, a key procurement arm for military sustainment. 5. No small business set-aside, indicating the primary contractor is likely a large entity. 6. The contract's value is significant, reflecting the importance of KC-135 sustainment.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific component focus. Without competitive bids, it's difficult to ascertain if the $122.7 million price represents optimal value for money. However, the long duration (over 6 years) and the critical nature of the KC-135 aircraft suggest that ensuring a stable supply chain for these stabilizers is a priority, potentially justifying the investment. Further analysis would require understanding the cost drivers for manufacturing these specialized parts and comparing them to historical pricing for similar components.

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 only one responsible source is available or when urgent, compelling reasons exist. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competed contract. The rationale for this sole-source award would need to be thoroughly documented by the agency.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible pricing, potentially resulting in higher expenditures for taxpayers. This contract's value could be inflated without the pressure of multiple bidders vying for the work.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the KC-135 Stratotanker fleet, ensuring the continued airworthiness of these vital refueling and transport aircraft. The contract delivers essential horizontal stabilizers, critical flight control surfaces necessary for the safe operation of the KC-135. The geographic impact is national, supporting the operational readiness of a key strategic asset for global reach. Workforce implications are likely concentrated at The Boeing Company's manufacturing facilities, supporting skilled labor in aerospace production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of competition may reduce incentives for the contractor to innovate or improve efficiency.
Long contract duration could lead to price increases if market conditions change significantly.

Positive Signals

Ensures continued availability of critical components for a vital military aircraft.
Award to a single, established manufacturer likely guarantees high-quality production standards.
Long-term contract provides supply chain stability for essential aircraft sustainment.

Sector Analysis

This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components like horizontal stabilizers is often dominated by original equipment manufacturers (OEMs) due to proprietary designs, tooling, and expertise. The total addressable market for KC-135 sustainment parts is substantial, given the aircraft's long service life and strategic importance. Comparable spending benchmarks are difficult to establish without more data on the specific components and their manufacturing complexity, but large sole-source contracts for critical parts are not uncommon in defense.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by the 'sb' field being false. The primary awardee, The Boeing Company, is a large aerospace corporation. While the prime contract is not set aside for small businesses, there may be opportunities for small businesses to participate as subcontractors to Boeing, particularly in supplying raw materials or specialized services. However, the direct impact on the small business ecosystem from this specific prime contract award is likely minimal.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Defense and the Defense Logistics Agency (DLA). The DLA has established procurement regulations and contract management processes to ensure compliance and performance. Contract performance reviews, payment audits, and adherence to delivery schedules would be key oversight mechanisms. Transparency is facilitated through contract databases like FPDS, though detailed cost breakdowns may be proprietary. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

KC-135 Stratotanker Sustainment Programs
Defense Logistics Agency Aircraft Parts Procurement
Air Mobility Command Aircraft Maintenance
Boeing Defense, Space & Security Contracts

Risk Flags

Sole-source award
Lack of competition
Critical aircraft component dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $122.7 million to THE BOEING COMPANY. MANUFACTURE OR LEFT, RIGHT AND CENTER HORIZONTAL STABLIZERS FOR THE KC-135 AIRCRAFT.

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 $122.7 million.

What is the period of performance?

Start: 2022-03-28. End: 2028-06-30.

What is the historical spending pattern for horizontal stabilizers for the KC-135 aircraft with The Boeing Company?

Analyzing historical spending for KC-135 horizontal stabilizers with The Boeing Company requires accessing detailed procurement data over multiple years. While the current award is for $122.7 million, understanding past expenditures for these specific parts is crucial for context. This would involve querying contract databases for previous awards to Boeing for the same or similar components for the KC-135. Factors such as the number of units procured, the unit price trends, and any modifications or upgrades impacting cost would need to be examined. Without this historical data, it's difficult to determine if the current contract represents an increase, decrease, or stable pricing compared to previous periods. Such analysis would inform whether the current sole-source award is consistent with past procurement practices or represents a significant shift in cost.

What specific technical specifications or unique capabilities necessitate a sole-source award for these horizontal stabilizers?

The necessity for a sole-source award for KC-135 horizontal stabilizers typically stems from The Boeing Company's unique position as the original equipment manufacturer (OEM). This often involves proprietary designs, specialized tooling, unique manufacturing processes, and extensive testing data that only Boeing possesses. For critical flight control surfaces like stabilizers, maintaining design integrity and ensuring airworthiness requires adherence to exact specifications. Replicating these components might be technically infeasible or prohibitively expensive for other manufacturers without access to Boeing's intellectual property and manufacturing know-how. The Defense Logistics Agency would need to justify this sole-source determination based on these technical dependencies and the critical safety implications of the components.

How does the unit cost of these horizontal stabilizers compare to similar components on other military aircraft programs?

Directly comparing the unit cost of these KC-135 horizontal stabilizers to similar components on other military aircraft is challenging without specific cost data and detailed specifications for each part. However, horizontal stabilizers are critical flight control surfaces, and their manufacturing complexity, materials used, and required certifications can vary significantly across different aircraft platforms. For large, long-serving aircraft like the KC-135, components may be produced in smaller batches over extended periods, potentially increasing unit costs compared to components for newer, mass-produced aircraft. If this contract were competed, a comparison of bids would provide a market-driven benchmark. In the absence of competition, comparing to publicly available data on similar components for other DoD aircraft, adjusted for size, complexity, and production volume, would be the next best approach, though such data is often limited.

What are the potential risks associated with relying on a single supplier for such a critical aircraft component?

Relying on a single supplier, like Boeing, for critical KC-135 horizontal stabilizers presents several risks. Foremost is the potential for supply chain disruption; any issue at Boeing's manufacturing facility, such as labor strikes, natural disasters, or production quality problems, could halt the supply of these essential parts, grounding aircraft. Secondly, the lack of competition can lead to price escalation over time, as the government has limited leverage to negotiate lower costs. There's also a risk of technological obsolescence if Boeing does not invest in modernizing the production process or materials. Finally, dependence on a sole source can reduce the government's flexibility in adapting to changing requirements or seeking alternative solutions if performance issues arise.

What is the expected lifespan and maintenance schedule for the delivered horizontal stabilizers?

The expected lifespan and maintenance schedule for the delivered horizontal stabilizers are critical aspects of this contract, though not explicitly detailed in the provided summary data. Typically, such components are designed for the expected service life of the aircraft, which for the KC-135 Stratotanker, extends well into the future. The contract likely specifies performance standards and durability requirements. Maintenance would involve regular inspections as part of the aircraft's overall maintenance program, with potential for repair or replacement based on condition monitoring and fatigue analysis. The contract's duration (ending June 2028) suggests it covers a significant period of the aircraft's ongoing operational life, implying the stabilizers are expected to remain serviceable throughout this timeframe, barring unforeseen damage or wear.

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

Solicitation ID: SPRTA120R0108

Offers Received: 1

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: $122,695,145

Exercised Options: $122,695,145

Current Obligation: $122,695,145

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPE4A119G0013

IDV Type: BOA

Timeline