DoD awards $226M Boeing contract for Egyptian Air Force spares, training, and logistics support

Contract Overview

Contract Amount: $22,597,131 ($22.6M)

Contractor: THE Boeing Company (0674)

Awarding Agency: Department of Defense

Start Date: 2007-12-27

End Date: 2012-09-30

Contract Duration: 1,739 days

Daily Burn Rate: $13.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: (1) LCT; A TWO (2) YEAR SPARES SUPPORT PACKAGE; OPERATOR AND MAINTAINER TRAINING; AN OPTION FOR ONE (1) YEAR OF CONTRACTOR LOGISTICS SUPPORT FOR THE EGYPTIAN AIR FORCE (EAF); PLUS AN OPTION FOR ONE (1) ADDITIONAL YEAR OF CONTRACTOR LOGISTICS SUPPORT TO BE EXERCISED AT A LATER DATE.

Plain-Language Summary

Department of Defense obligated $22.6 million to THE BOEING COMPANY (0674) for work described as: (1) LCT; A TWO (2) YEAR SPARES SUPPORT PACKAGE; OPERATOR AND MAINTAINER TRAINING; AN OPTION FOR ONE (1) YEAR OF CONTRACTOR LOGISTICS SUPPORT FOR THE EGYPTIAN AIR FORCE (EAF); PLUS AN OPTION FOR ONE (1) ADDITIONAL YEAR OF CONTRACTOR LOGISTICS SUPPORT TO BE EXERCISED AT A LATER DAT… Key points: 1. Contract provides critical spares, training, and logistics for the Egyptian Air Force, enhancing regional security. 2. Long-term support package indicates a strategic partnership and potential for follow-on work. 3. The contract's duration and scope suggest a significant investment in maintaining advanced military hardware. 4. Focus on operator and maintainer training aims to build local capacity and reduce reliance on external support. 5. The inclusion of contractor logistics support highlights the complexity of the systems being supported.

Value Assessment

Rating: fair

The total contract value of $225,971,310 over approximately five years (including options) for spares, training, and logistics support for a foreign military sale appears to be within a reasonable range for complex aircraft systems. However, without specific details on the number of aircraft, types of spares, or training hours, a precise value-for-money assessment is challenging. Benchmarking against similar Foreign Military Sales (FMS) packages for comparable aircraft types and support levels would be necessary for a more definitive evaluation. The firm-fixed-price nature of the contract shifts some cost risk to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that The Boeing Company was the only responsible source capable of providing the required spares, training, and logistics support. This is common for Foreign Military Sales (FMS) where the original equipment manufacturer (OEM) is often the sole provider of specialized parts and technical expertise. The lack of competition means that price discovery through a competitive bidding process was not utilized, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: For taxpayers, a sole-source award in an FMS context means that the government did not leverage competitive pricing to reduce costs. While the ultimate buyer is the Egyptian Air Force, U.S. taxpayer funds may be involved in the acquisition process or associated support, making competitive pricing a concern.

Public Impact

The Egyptian Air Force directly benefits from enhanced operational readiness and sustainment of its aircraft fleet. Services delivered include essential spare parts, operator training, and contractor logistics support. The geographic impact is primarily focused on Egypt, supporting a key U.S. security partner in the region. Workforce implications include training for Egyptian personnel and potential employment for Boeing's support staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Long-term support contracts can create vendor lock-in.
Reliance on contractor logistics support may reduce organic sustainment capabilities over time.

Positive Signals

Provides critical support for a key U.S. ally's air capabilities.
Enhances interoperability and regional security through sustained military readiness.
Includes training, fostering long-term self-sufficiency for the EAF.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically supporting military aircraft sustainment and readiness for a foreign partner. The market for defense logistics and support services is highly specialized, often dominated by original equipment manufacturers like Boeing due to proprietary knowledge and parts. Comparable spending benchmarks would involve analyzing other FMS contracts for similar aircraft platforms and support packages, which can range from tens to hundreds of millions of dollars depending on the scope and duration.

Small Business Impact

This contract does not appear to have a specific small business set-aside. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Boeing subcontracts portions of the work. The analysis of subcontracting opportunities for small businesses would require further insight into Boeing's procurement practices for this specific contract.

Oversight & Accountability

Oversight for this Foreign Military Sale (FMS) contract is managed by the Department of Defense, likely through the Defense Security Cooperation Agency (DSCA) and the relevant military service (Department of the Army in this case). Transparency is generally maintained through FMS case documentation and reporting requirements. Accountability measures are built into the contract terms, including performance standards and delivery schedules. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Foreign Military Sales (FMS)
Aircraft Sustainment Programs
Aerospace Logistics Support
Defense Training Services

Risk Flags

Sole-source award may limit cost savings.
Long-term reliance on contractor logistics.
Potential for vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.6 million to THE BOEING COMPANY (0674). (1) LCT; A TWO (2) YEAR SPARES SUPPORT PACKAGE; OPERATOR AND MAINTAINER TRAINING; AN OPTION FOR ONE (1) YEAR OF CONTRACTOR LOGISTICS SUPPORT FOR THE EGYPTIAN AIR FORCE (EAF); PLUS AN OPTION FOR ONE (1) ADDITIONAL YEAR OF CONTRACTOR LOGISTICS SUPPORT TO BE EXERCISED AT A LATER DATE.

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY (0674).

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $22.6 million.

What is the period of performance?

Start: 2007-12-27. End: 2012-09-30.

What specific aircraft platform is this contract supporting for the Egyptian Air Force?

The provided data does not explicitly state the specific aircraft platform for which the Egyptian Air Force (EAF) is receiving spares, training, and logistics support. However, given that The Boeing Company is the contractor and the context of military aircraft support, it is likely related to platforms manufactured by Boeing, such as fighter jets (e.g., F-15 variants, though less likely for EAF), trainer aircraft, or transport aircraft. Further investigation into active EAF fleets and Boeing's FMS history would be required to pinpoint the exact platform. This information is crucial for understanding the technical complexity and the specific nature of the spares and training required.

How does the $226 million contract value compare to typical sustainment costs for similar military aircraft fleets?

Benchmarking the $226 million contract value against typical sustainment costs for similar military aircraft fleets requires detailed information about the specific aircraft type, the number of aircraft in the EAF fleet being supported, the duration of the support (approximately 5 years including options), and the scope of services (spares, training, logistics). For advanced fighter or transport aircraft, annual sustainment costs can range from 5% to 15% of the acquisition cost per aircraft. If this contract covers a significant portion of a medium-sized fleet of advanced aircraft, the total value might be considered within a typical range. However, without knowing the platform, the comparison remains speculative. A more precise analysis would involve comparing this contract's cost-per-aircraft-per-year against publicly available data for similar FMS sustainment packages.

What are the potential risks associated with a sole-source award for this type of long-term support contract?

The primary risk associated with a sole-source award for this long-term support contract is the potential for inflated pricing due to the lack of competitive pressure. The Boeing Company, as the sole provider, may have less incentive to offer the most cost-effective solutions. Additionally, there's a risk of vendor lock-in, where the EAF becomes heavily reliant on Boeing for critical parts and expertise, making it difficult and costly to switch providers or bring support in-house in the future. Another risk is that the contractor might not prioritize performance or innovation as strongly as they would in a competitive environment. Ensuring robust contract oversight and performance metrics becomes paramount to mitigate these risks.

What is the expected impact on the Egyptian Air Force's operational readiness and self-sufficiency?

This contract is expected to significantly enhance the Egyptian Air Force's (EAF) operational readiness by ensuring the availability of critical spare parts and providing essential operator and maintainer training. The inclusion of contractor logistics support (CLS) offers immediate sustainment capabilities, allowing the EAF to maintain its fleet effectively. Over the long term, the training component aims to build the EAF's organic capability to maintain and operate its aircraft, thereby increasing self-sufficiency and reducing long-term reliance on external support. This strategic investment should lead to a more robust and capable air force.

How has the Department of Defense historically managed spares and logistics support contracts for Foreign Military Sales?

The Department of Defense (DoD) manages spares and logistics support contracts for Foreign Military Sales (FMS) primarily through the FMS program, administered by the Defense Security Cooperation Agency (DSCA). Contracts are typically awarded either directly by the U.S. government to the original equipment manufacturer (OEM) or through the partner nation directly purchasing from the OEM, with U.S. government oversight. Support often involves firm-fixed-price contracts for spares and services, including training and contractor logistics support. The DoD aims to ensure that FMS cases are priced fairly and that the supported equipment remains operational and interoperable with U.S. forces where necessary. Oversight focuses on delivery, quality, and adherence to agreed-upon performance metrics.

Industry Classification

NAICS: Manufacturing › Hardware Manufacturing › Hardware Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ07R0598

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 6200 J S MCDONNELL BLVD, SAINT LOUIS, MO, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,597,131

Exercised Options: $22,597,131

Current Obligation: $22,597,131

Contract Characteristics

Cost or Pricing Data: YES

Timeline