DoD's $75.7M Boeing contract for aircraft parts saw no competition, raising value concerns
Contract Overview
Contract Amount: $75,696,550 ($75.7M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2009-05-27
End Date: 2020-11-30
Contract Duration: 4,205 days
Daily Burn Rate: $18.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: AVIATON SPARES.
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $75.7 million to THE BOEING COMPANY for work described as: AVIATON SPARES. Key points: 1. The contract's value, while substantial, lacks competitive benchmarking due to its sole-source nature. 2. Limited competition suggests potential for higher-than-market pricing and reduced innovation. 3. The long duration (over 11 years) and firm-fixed-price structure may shift risk to the government. 4. Performance context is limited without details on delivery timeliness or quality metrics. 5. This contract falls within the broader Defense Logistics Agency's procurement of aircraft components.
Value Assessment
Rating: questionable
Without competitive bids, assessing the value for money is challenging. The $75.7 million awarded over more than 11 years for aircraft parts necessitates a comparison to similar sole-source procurements or industry benchmarks. The firm-fixed-price structure, while offering cost certainty, could lead to overpayment if market prices decreased or if the initial estimate was inflated. Further analysis of the specific parts and their market availability is needed to determine if the price paid was reasonable.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. The absence of a competitive process means there were no multiple bidders vying for the contract. This lack of competition limits price discovery and may result in the government paying a premium compared to a fully competed scenario. Reasons for sole-sourcing, such as unique capabilities or urgent needs, would need to be documented to justify the approach.
Taxpayer Impact: Taxpayers may have paid more than necessary due to the lack of competitive pressure to drive down prices.
Public Impact
The Department of Defense is the primary beneficiary, receiving essential aircraft parts. This contract supports the operational readiness of military aircraft. The geographic impact is primarily within Missouri, where the contractor is located. Workforce implications are likely within the aerospace manufacturing sector, supporting skilled labor.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated prices.
- Long contract duration could expose the government to price changes if not managed carefully.
- Firm-fixed-price contracts can be disadvantageous if costs decrease significantly post-award.
Positive Signals
- Ensures a consistent supply of critical aircraft parts.
- Firm-fixed-price provides budget certainty for the agency.
- Long-term relationship with a known supplier can streamline procurement.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components can be niche, with a limited number of qualified manufacturers. The Defense Logistics Agency (DLA) is a major procurer of such goods, aiming to ensure the readiness of military aviation assets. Benchmarking would involve comparing pricing for similar components across different military branches or allied nations.
Small Business Impact
The contract was awarded to The Boeing Company and does not indicate any small business set-aside provisions. There is no information provided on subcontracting plans for small businesses. This suggests that the primary awardee is a large corporation, and the impact on the small business ecosystem is likely indirect, potentially through supply chain opportunities if Boeing utilizes smaller suppliers.
Oversight & Accountability
Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA) for performance and financial oversight, respectively. The Defense Logistics Agency's internal procurement regulations and the Federal Acquisition Regulation (FAR) provide the framework for accountability. Transparency is dependent on the public availability of contract details and performance reports.
Related Government Programs
- Defense Logistics Agency Procurement
- Military Aircraft Maintenance and Repair
- Aerospace Component Manufacturing
- Sole-Source Defense Contracts
Risk Flags
- Sole-source award lacks competitive justification.
- Long contract duration increases potential for price escalation or obsolescence.
- Firm-fixed-price shifts cost overrun risk to the government.
- Lack of transparency on specific parts procured.
Tags
defense, department-of-defense, defense-logistics-agency, missouri, sole-source, firm-fixed-price, aircraft-parts, aerospace, manufacturing, long-term-contract, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $75.7 million to THE BOEING COMPANY. AVIATON 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 $75.7 million.
What is the period of performance?
Start: 2009-05-27. End: 2020-11-30.
What is the track record of The Boeing Company in fulfilling similar sole-source contracts with the DoD?
The Boeing Company has a long history of contracting with the Department of Defense, often for large, complex systems and components. While specific data on their sole-source contract fulfillment for aircraft parts is not detailed here, Boeing has faced scrutiny in the past regarding contract costs and delivery schedules on various programs. Their extensive experience suggests a capacity to deliver, but the absence of competition in this specific instance warrants careful monitoring of performance metrics and adherence to the contract terms to ensure value.
How does the awarded price compare to market rates for similar aircraft parts, considering it was not competed?
Direct comparison to market rates is difficult without competitive bidding. However, the $75.7 million awarded over 11 years for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' suggests a significant investment. To assess value, one would need to benchmark against prices for identical or comparable parts procured competitively by other government agencies or commercial airlines, or consult industry pricing guides. The sole-source nature inherently removes the downward price pressure that competition provides, making a thorough post-award analysis crucial.
What are the primary risks associated with a sole-source, firm-fixed-price contract of this duration?
The primary risks include potential overpayment due to lack of competitive pricing, and the contractor potentially bearing less risk than anticipated if market conditions change favorably for them. For a firm-fixed-price contract, the government assumes the risk of cost overruns if the contractor's estimates were too low, though this is mitigated by the fixed price. The long duration (over 11 years) increases the risk of the government being locked into a potentially suboptimal price if market conditions or technological needs evolve significantly. Contractor performance risk also remains, despite the fixed price.
What specific types of aircraft parts are covered under this contract, and are they critical for operational readiness?
The contract falls under the North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This broad category encompasses a wide range of components, potentially including structural parts, engine components, avionics, or other essential equipment. Without specific line-item details, it's presumed these parts are critical for maintaining the operational readiness of various military aircraft platforms managed by the Defense Logistics Agency. The sole-source nature might imply these are specialized or proprietary parts.
What is the historical spending pattern for this specific type of aircraft part procurement by the Defense Logistics Agency?
Historical spending data for this specific contract (awarded May 27, 2009, ending November 30, 2020) indicates a consistent, long-term procurement strategy for these aircraft parts. The total award of $75.7 million over its duration suggests significant and ongoing demand. Analyzing prior DLA procurements under NAICS 336413, especially those with similar sole-source justifications or long durations, would reveal trends in pricing, volume, and supplier relationships, providing context for this contract's scale and necessity.
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
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: J.S. MCDONNELL BLVD., SAINT LOUIS, MO, 63166
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $75,696,550
Exercised Options: $75,696,550
Current Obligation: $75,696,550
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038306D004H
IDV Type: IDC
Timeline
Start Date: 2009-05-27
Current End Date: 2020-11-30
Potential End Date: 2020-11-30 00:00:00
Last Modified: 2022-03-08
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