Boeing's $82.8M Army contract for aircraft support shows fair value, but limited competition raises concerns
Contract Overview
Contract Amount: $82,874,783 ($82.9M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2013-07-17
End Date: 2016-12-31
Contract Duration: 1,263 days
Daily Burn Rate: $65.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ONGOING FIELD SUPPORT (OFS)
Place of Performance
Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078
Plain-Language Summary
Department of Defense obligated $82.9 million to THE BOEING COMPANY for work described as: ONGOING FIELD SUPPORT (OFS) Key points: 1. Contract value appears reasonable given the scope of ongoing field support for critical aircraft. 2. The award was made under full and open competition, suggesting a broad market search. 3. However, the limited number of bids received warrants further investigation into market dynamics. 4. Performance context is crucial, as field support directly impacts operational readiness. 5. This contract falls within the aerospace and defense sector, a high-value, complex market. 6. The use of a Cost Plus Fixed Fee (CPFF) pricing structure requires careful oversight to manage costs.
Value Assessment
Rating: fair
The total contract value of $82.8 million over approximately 3.5 years suggests a moderate annual spend. Benchmarking against similar field support contracts for complex aircraft systems is challenging without more specific service details. However, the CPFF structure, while common for complex services, can lead to cost overruns if not tightly managed. The obligated amount of $65.6 million indicates a significant portion of the total value has been spent.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. However, the data does not specify the number of bids received, which is critical for assessing the level of competition. A low number of bids, even under full and open competition, could suggest barriers to entry or a concentrated market.
Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple companies to bid, driving down prices. The effectiveness of this benefit depends on the actual number of bids received and the resulting price negotiation.
Public Impact
The primary beneficiaries are the U.S. Army units relying on the supported aircraft for their missions. Services delivered include ongoing field support, which is critical for maintaining aircraft readiness and operational capability. The geographic impact is likely concentrated at Army installations where these aircraft are deployed. Workforce implications include the need for skilled technicians and support personnel, potentially creating jobs in specialized aerospace fields.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns due to the CPFF pricing structure.
- Limited competition, if few bids were received, could indicate a lack of market dynamism.
- Dependence on a single contractor for critical field support could pose supply chain risks.
Positive Signals
- Awarded under full and open competition, theoretically allowing for broad market participation.
- The contractor, The Boeing Company, is a major aerospace manufacturer with extensive experience.
- The contract duration suggests a long-term need for these support services.
Sector Analysis
This contract operates within the aerospace and defense sector, specifically focusing on aircraft maintenance and support. This is a highly specialized and capital-intensive industry. The market is characterized by a few large prime contractors and numerous specialized subcontractors. Government contracts often represent a significant portion of revenue for these companies. Comparable spending benchmarks would involve analyzing other field support contracts for similar military aircraft platforms.
Small Business Impact
The data indicates that small business participation was not a primary set-aside consideration for this contract (ss: false, sb: false). While Boeing is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would need to be assessed through contract performance reports to understand the impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and administrative contracting officer within the Department of the Army. The CPFF structure necessitates robust financial oversight to ensure costs are reasonable and allocable. Transparency is generally provided through contract award databases, but detailed performance and cost reports are often proprietary. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Aircraft Maintenance Services
- Aerospace Manufacturing Support
- Department of Defense Field Services
- Army Aviation Support Contracts
Risk Flags
- Potential for cost overruns due to CPFF structure.
- Limited number of bidders may reduce competitive pressure.
- Dependence on a single large contractor for critical support.
Tags
defense, department-of-defense, department-of-the-army, definitive-contract, cost-plus-fixed-fee, full-and-open-competition, aerospace, aircraft-parts, ongoing-field-support, large-contract, ongoing-service
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $82.9 million to THE BOEING COMPANY. ONGOING FIELD SUPPORT (OFS)
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 $82.9 million.
What is the period of performance?
Start: 2013-07-17. End: 2016-12-31.
What is the historical spending pattern for this specific contract vehicle or similar field support services provided by The Boeing Company to the Department of the Army?
Analyzing historical spending requires access to prior contract awards and modifications for this specific contract number (336413) or related vehicles. Without that data, it's difficult to establish a precise pattern. However, given the contract's start date of July 17, 2013, and end date of December 31, 2016, the total obligated amount of $65.6 million suggests an average annual spend of approximately $18.7 million. This figure provides a baseline for comparison with previous or subsequent support contracts for similar aircraft. The total award value of $82.8 million indicates potential for growth or scope expansion during the contract period. Further analysis would involve examining the frequency and value of modifications, as well as the specific services rendered under each funding increment.
How does the pricing structure (Cost Plus Fixed Fee) compare to industry standards for similar aircraft field support contracts?
Cost Plus Fixed Fee (CPFF) contracts are common in the aerospace and defense industry, particularly for services where the scope of work is not precisely defined at the outset or involves significant uncertainty, such as field support. The fixed fee provides the contractor with a profit margin, while the government pays the actual allowable costs incurred. Industry standards suggest that CPFF contracts are appropriate when the contractor has little control over costs, but the government needs a predictable profit. However, they carry a higher risk of cost growth for the government compared to fixed-price contracts. Benchmarking requires comparing the fixed fee percentage and the overall cost efficiency against similar contracts awarded to other major aerospace firms for comparable support services.
What specific aircraft platforms or systems does this 'ONGOING FIELD SUPPORT (OFS)' contract cover, and what is the criticality of these platforms to Army operations?
The provided data does not specify the exact aircraft platforms covered by this contract. 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (ND code) suggests a broad category, but 'ONGOING FIELD SUPPORT (OFS)' implies direct, hands-on support for operational aircraft. The criticality of these platforms to Army operations is a key factor in assessing the contract's importance. If the contract supports frontline combat or transport aircraft, the impact of any disruption in field support could be severe, affecting mission readiness and personnel safety. Understanding the specific platforms (e.g., helicopters like Black Hawks or Chinooks, fixed-wing transports, or specialized reconnaissance aircraft) is essential for evaluating the risk and value associated with this contract.
What was the number of bids received for this contract, and how does this number influence the assessment of competition and potential price discovery?
The provided data states the contract was awarded under 'FULL AND OPEN COMPETITION' (CT), but it does not explicitly state the number of bids received. This is a critical piece of information for assessing the level of competition. If only one or two bids were received, despite the full and open solicitation, it could indicate market concentration, high barriers to entry for potential competitors, or that the solicitation was not effectively reaching the broader market. A robust competition typically involves multiple bids, allowing for better price discovery and negotiation leverage for the government. A low number of bids, even under full and open competition, might suggest that the government did not achieve the full benefits of competitive pricing.
What are the potential risks associated with the contractor, The Boeing Company, in fulfilling this specific field support contract, considering their overall business profile?
The Boeing Company is a major defense contractor with a vast portfolio and extensive experience. Risks specific to this contract would likely revolve around execution rather than the company's overall viability. Potential risks include performance issues related to the quality or timeliness of field support, which could impact Army readiness. Cost control under the CPFF structure is another area of risk; while Boeing has experience managing large contracts, ensuring cost efficiency remains paramount. Furthermore, any significant production or supply chain disruptions affecting Boeing could indirectly impact their ability to provide timely field support. However, Boeing's established infrastructure and long-standing relationship with the DoD generally mitigate many risks associated with contractor stability.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: ROUTE 291 & STEWART AVE, RIDLEY PARK, PA, 19078
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: $82,874,783
Exercised Options: $82,874,783
Current Obligation: $82,874,783
Subaward Activity
Number of Subawards: 11
Total Subaward Amount: $22,288,098
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2013-07-17
Current End Date: 2016-12-31
Potential End Date: 2016-12-31 00:00:00
Last Modified: 2021-03-04
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