DoD Awards Boeing $322.7M for 10 New Build Aircraft, Lacking Competition
Contract Overview
Contract Amount: $322,658,718 ($322.7M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2010-05-05
End Date: 2016-06-30
Contract Duration: 2,248 days
Daily Burn Rate: $143.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: EGYPT 10 NEW BUILD LONG LEAD FOR MATERIAL AND LABOR
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $322.7 million to THE BOEING COMPANY for work described as: EGYPT 10 NEW BUILD LONG LEAD FOR MATERIAL AND LABOR Key points: 1. Significant investment in aircraft manufacturing with a substantial price tag. 2. Sole-source award to Boeing raises questions about competitive pricing and value. 3. Long lead times for materials and labor suggest potential for cost overruns. 4. Contract duration spans over 6 years, indicating a long-term commitment.
Value Assessment
Rating: questionable
The contract value of $322.7 million for 10 aircraft is difficult to assess without specific unit cost data. However, the lack of competition for a significant procurement like this raises concerns about whether the government achieved the best possible price.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to The Boeing Company. This method limits price discovery and may result in higher costs compared to a competitive process.
Taxpayer Impact: The absence of competition for this substantial contract means taxpayers may not have received the most cost-effective solution, potentially leading to overpayment.
Public Impact
Procurement of new aircraft impacts national defense capabilities. Long-term contract may influence future defense spending priorities. Award to a single large contractor could affect market dynamics for aircraft manufacturing. Potential for job creation and economic activity in Arizona where the contractor is located.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Long contract duration
- Potential for cost overruns due to long lead times
Positive Signals
- Award to established prime contractor
- Firm fixed price contract type
Sector Analysis
This contract falls within the aerospace and defense sector, specifically aircraft manufacturing. Spending benchmarks in this sector can vary widely based on aircraft type, complexity, and quantity. The $32.3 million average per aircraft in this award is substantial.
Small Business Impact
The contract was awarded to The Boeing Company, a large prime contractor. There is no indication in the data that small businesses were involved as subcontractors or partners in this specific award, suggesting limited direct impact on the small business sector for this procurement.
Oversight & Accountability
The contract was awarded by the Department of the Army. Oversight would typically involve contract management, performance monitoring, and financial accountability to ensure delivery and adherence to terms. The lack of competition warrants closer scrutiny of the justification and pricing.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award limits competitive pricing.
- Long lead times increase risk of delays and cost volatility.
- Lack of transparency in justification for non-competition.
- Potential for contractor lock-in due to specialized nature of aircraft.
Tags
aircraft-manufacturing, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $322.7 million to THE BOEING COMPANY. EGYPT 10 NEW BUILD LONG LEAD FOR MATERIAL AND LABOR
Who is the contractor on this award?
The obligated recipient is THE BOEING COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $322.7 million.
What is the period of performance?
Start: 2010-05-05. End: 2016-06-30.
What was the justification for awarding this contract on a sole-source basis to The Boeing Company, and were alternative sources considered?
The provided data indicates the contract was 'NOT COMPETED.' A sole-source award typically requires a strong justification, such as unique capabilities, urgent need, or lack of viable alternatives. Without this justification, it's difficult to assess if the government adequately explored competitive options or if this was the only feasible path.
How does the per-unit cost of these aircraft compare to similar procurements or market rates, given the lack of competitive bidding?
The average per-unit cost is approximately $32.3 million ($322.7M / 10 units). Without competitive bids or publicly available benchmarks for these specific aircraft, it's challenging to definitively assess value. However, sole-source contracts often carry a risk of higher pricing due to the absence of market pressure.
What measures are in place to mitigate risks associated with long lead times for materials and labor, and potential cost escalations over the contract's duration?
While the contract is firm fixed price, the long lead times (2248 days) present inherent risks. The government's mitigation would likely involve close monitoring of Boeing's supply chain management, adherence to production schedules, and potentially contractual clauses addressing delays or unforeseen cost increases, though the fixed price nature aims to cap government exposure.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W58RGZ10R0156
Offers Received: 1
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, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $322,658,718
Exercised Options: $322,658,718
Current Obligation: $322,658,718
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2010-05-05
Current End Date: 2016-06-30
Potential End Date: 2016-06-30 00:00:00
Last Modified: 2025-04-21
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