DoD awards $50.8M to Boeing for B-52 aircraft hatches, a sole-source contract

Contract Overview

Contract Amount: $50,856,644 ($50.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2015-02-26

End Date: 2018-07-31

Contract Duration: 1,251 days

Daily Burn Rate: $40.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PURCHASE OF VARIOUS ACFT HATCHES FOR THE B-52..

Place of Performance

Location: WICHITA, SEDGWICK County, KANSAS, 67203

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $50.9 million to THE BOEING COMPANY for work described as: PURCHASE OF VARIOUS ACFT HATCHES FOR THE B-52.. Key points: 1. Contract awarded to a single supplier raises questions about price competitiveness. 2. Long contract duration suggests potential for cost overruns or scope creep. 3. Fixed-price contract type shifts risk to the contractor, but oversight is still crucial. 4. Sole-source nature limits opportunities for small businesses to participate. 5. Focus on sustainment of a legacy aircraft highlights ongoing defense spending needs. 6. Geographic concentration in Kansas for delivery may indicate specific operational hubs.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to assess if the $50.8 million awarded to Boeing represents good value for money. The sole-source nature means there was no direct comparison to market rates or other potential suppliers. Benchmarking against similar aircraft part procurements would be necessary to determine if the pricing is fair. The fixed-price contract type is generally favorable for the government in controlling costs, but the absence of competition is a significant concern for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was considered. This approach is typically used when only one responsible source is available or when there is a compelling justification for excluding competition. The lack of multiple bidders means there was no price discovery through a competitive process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competition. Without bids from other companies, it's impossible to know if a lower price could have been achieved.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the B-52 bomber fleet, ensuring continued operational readiness. The contract delivers essential aircraft hatches, critical components for flight safety and functionality. The geographic impact is concentrated in Kansas, where the delivery orders are likely fulfilled, potentially supporting local jobs. The contract supports the sustainment of the B-52's long service life, requiring specialized manufacturing and maintenance expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potential cost savings.
Lack of transparency in pricing due to no competitive bidding.
Long contract duration increases risk of cost escalation if not managed tightly.
Dependence on a single contractor for critical aircraft components.

Positive Signals

Fixed-price contract type helps control costs if scope is well-defined.
Award to incumbent contractor (Boeing) for B-52 parts leverages existing knowledge and infrastructure.
Focus on sustainment ensures readiness of a strategic asset.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and a concentration of large, established players like Boeing. This contract falls within the defense sub-sector, specifically focusing on aircraft component manufacturing and sustainment. Spending on legacy aircraft sustainment is a consistent part of defense budgets, ensuring the longevity of strategic assets. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition awards for similar critical aircraft components across different defense platforms.

Small Business Impact

As a sole-source award to a large prime contractor, this contract offers no direct set-aside opportunities for small businesses. There is also no explicit mention of subcontracting requirements for small businesses within the provided data. This limits the direct participation of the small business ecosystem in this specific procurement, although Boeing may engage small businesses indirectly through its broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically the Defense Logistics Agency. Accountability measures are inherent in the firm fixed-price contract type, which places cost risk on the contractor. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

B-52 Bomber Sustainment Programs
Defense Logistics Agency Aircraft Parts Procurement
Aerospace Component Manufacturing Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for price inflation
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.9 million to THE BOEING COMPANY. PURCHASE OF VARIOUS ACFT HATCHES FOR THE B-52..

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 $50.9 million.

What is the period of performance?

Start: 2015-02-26. End: 2018-07-31.

What is Boeing's track record with B-52 component manufacturing and sustainment?

The Boeing Company has a long-standing relationship with the B-52 program, having been the original manufacturer of the aircraft. This deep historical involvement suggests a strong understanding of the platform's intricacies and component requirements. Their track record typically includes extensive experience in aerospace manufacturing, defense contracting, and sustainment services for various military aircraft. For the B-52 specifically, Boeing has been involved in numerous sustainment, upgrade, and component replacement efforts over the decades. While specific performance metrics for this particular hatch contract are not detailed, Boeing's overall position as a primary defense contractor implies a capacity to meet stringent military specifications and delivery schedules, though like any large contractor, they may have faced past challenges related to cost, schedule, or quality on other programs.

How does the $50.8 million cost compare to similar aircraft hatch procurements?

Directly comparing the $50.8 million cost for these B-52 hatches to similar procurements is challenging without more specific data points. Firstly, the contract is sole-source, meaning there was no competitive bidding to establish a market price. Secondly, the nature of aircraft components can vary significantly in complexity, material, and required certification, making direct comparisons difficult. For instance, hatches for smaller aircraft or less critical systems might cost substantially less. Conversely, hatches for advanced, high-performance aircraft, or those requiring specialized materials for stealth or extreme environments, could be significantly more expensive. To benchmark this cost effectively, one would need to identify contracts for similar-sized, critical aircraft components (like access panels, landing gear doors, or engine nacelles) on comparable legacy platforms, ideally awarded through a competitive process, and adjust for inflation and specific technical requirements.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, the government has less leverage to negotiate the best possible price, potentially leading to paying more than necessary. Another significant risk is contractor performance; while Boeing is a reputable company, any sole-source award can reduce the urgency to perform optimally compared to a competitive environment. There's also a risk of complacency or reduced innovation from the contractor. Furthermore, a long-term sole-source dependency for critical parts can create vulnerabilities if the contractor faces financial difficulties, production issues, or decides to discontinue support for older platforms. Finally, the lack of transparency inherent in sole-source awards makes it harder for oversight bodies and the public to verify the fairness of the transaction.

How effective is the firm fixed-price contract type in managing costs for this specific procurement?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs because it places the primary cost risk on the contractor. Under an FFP agreement, the contractor agrees to a total price for a well-defined product or service, and is responsible for controlling their costs to achieve a profit. If the contractor's costs exceed the agreed-upon price, their profit margin shrinks or they incur a loss. Conversely, if they manage costs effectively, their profit increases. For this procurement of aircraft hatches, the FFP structure provides the government with cost certainty, as the total amount payable is fixed. This is particularly beneficial given the $50.8 million award ceiling. However, the effectiveness is contingent on the accuracy of the initial cost estimates and the clarity of the specifications. If the scope of work changes significantly or unforeseen technical issues arise, contract modifications (which could increase the total price) might become necessary, potentially eroding some of the cost certainty.

What are the historical spending patterns for B-52 component sustainment by the DoD?

The Department of Defense has consistently allocated significant funds towards the sustainment of the B-52 Stratofortress fleet throughout its long operational history. Spending patterns typically involve a mix of contracts for major overhauls, engine maintenance, avionics upgrades, and the procurement of individual components like hatches, structural parts, and repair kits. Historically, these sustainment contracts have often been awarded to the original equipment manufacturer (OEM), such as Boeing, due to specialized knowledge and existing infrastructure. The total annual spending can fluctuate based on the fleet's readiness requirements, the lifecycle stage of the aircraft, and the execution of specific modernization programs. While precise historical figures for hatch procurement alone are not readily available, the overall sustainment budget for the B-52 program represents a substantial and ongoing investment, reflecting the strategic importance and extended service life of this iconic bomber.

What are the implications of this contract being awarded in Kansas?

The indication that this contract's delivery orders are associated with Kansas (ST: KS, SN: KANSAS) suggests that either The Boeing Company's relevant manufacturing or distribution facility is located there, or a significant portion of the B-52 fleet's operational or maintenance activities occur in the state. This geographic concentration can have positive economic implications for the local area, potentially supporting jobs in manufacturing, logistics, and related support services. It may also indicate strategic basing or maintenance hubs for the B-52 fleet within Kansas. For the government, concentrating delivery or support in a specific region could streamline logistics and oversight, but it also introduces a degree of risk if that single location faces disruptions (e.g., natural disasters, labor issues).

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Other Measuring and Controlling Device 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: 2401 E WARDLOW ROAD, LONG BEACH, CA, 90807

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $50,856,644

Exercised Options: $50,856,644

Current Obligation: $50,856,644

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPM40003D9408

IDV Type: IDC

Timeline