DoD's $1.49B Advanced Procurement for Long Lead Items to Boeing Faces No Competition
Contract Overview
Contract Amount: $1,491,571,063 ($1.5B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2014-04-24
End Date: 2023-07-15
Contract Duration: 3,369 days
Daily Burn Rate: $442.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: ADVANCED PROCUREMENT FUNDING FOR LONG LEAD ITEMS
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $1.49 billion to THE BOEING COMPANY for work described as: ADVANCED PROCUREMENT FUNDING FOR LONG LEAD ITEMS Key points: 1. Significant funding allocated for long lead items, indicating critical component needs. 2. Sole-source award to Boeing suggests a lack of viable alternatives or specific expertise required. 3. Long contract duration (over 9 years) raises concerns about potential cost overruns and evolving needs. 4. Fixed Price Incentive (FPI) contract type aims to balance cost control with performance incentives.
Value Assessment
Rating: questionable
The $1.49 billion contract value is substantial. Without competitive bids, it's difficult to assess if this price reflects fair market value. Benchmarking against similar long-lead item procurements for aircraft components is necessary.
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 limits price discovery and may result in higher costs compared to a competitive environment.
Taxpayer Impact: The lack of competition for such a large contract raises concerns about taxpayer value. Without competitive pressure, there's a risk of overpaying for these critical long-lead items.
Public Impact
Impacts national defense capabilities by ensuring availability of critical aircraft components. Potential for job creation and economic activity within the aerospace sector and its supply chain. Long-term commitment could lock the government into specific technologies or platforms.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Long contract duration
- Potential for cost overruns with FPI contract type
Positive Signals
- Ensures availability of critical long-lead items
- Supports a key defense contractor
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a critical component of the defense industrial base. Spending benchmarks for long-lead item procurement can vary widely based on aircraft type and complexity.
Small Business Impact
The data does not indicate any subcontracting to small businesses. Further analysis would be needed to determine if small businesses are involved in the supply chain for these long-lead items.
Oversight & Accountability
The Defense Contract Management Agency (DCMA) is responsible for oversight. The long duration and sole-source nature warrant close monitoring to ensure cost control and adherence to contract terms.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competitive bidding
- Potential for inflated pricing due to sole-source award
- Extended contract duration increases risk of cost escalation and scope creep
- FPI contract type can lead to cost overruns if not managed tightly
- Limited transparency on specific long-lead items and their necessity
Tags
aircraft-manufacturing, department-of-defense, az, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.49 billion to THE BOEING COMPANY. ADVANCED PROCUREMENT FUNDING FOR LONG LEAD ITEMS
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 Contract Management Agency).
What is the total obligated amount?
The obligated amount is $1.49 billion.
What is the period of performance?
Start: 2014-04-24. End: 2023-07-15.
What is the justification for the sole-source award, and were any market research efforts conducted to identify potential competitors?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one source can meet the requirements. Comprehensive market research is crucial to validate these claims and ensure no viable alternatives exist. Without this information, it's difficult to ascertain if the government truly explored all options or if this award represents a missed opportunity for competitive pricing.
How are cost overruns managed under the Fixed Price Incentive (FPI) contract, and what are the target and ceiling prices?
An FPI contract establishes a target cost, target profit, and a price ceiling. If the final cost is below the target, the profit increases. If it exceeds the target, profit decreases, sharing the overrun with the contractor up to the ceiling. Understanding the specific target and ceiling prices, as well as the sharing ratio, is vital to assess the government's risk exposure and the contractor's incentive to control costs effectively.
What is the projected impact of these long-lead items on future aircraft production schedules and overall program costs?
The procurement of long-lead items is intended to de-risk and accelerate future production. Analyzing the specific items being procured and their integration into the overall aircraft manufacturing plan is key. This includes assessing whether the timing and quantity align with production forecasts and if any delays in these long-lead items could cascade into significant program cost increases or schedule slippages.
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: W58RGZ13R0153
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 5000 E MCDOWELL RD, MESA, AZ, 85215
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: $1,492,259,860
Exercised Options: $1,492,259,860
Current Obligation: $1,491,571,063
Subaward Activity
Number of Subawards: 54
Total Subaward Amount: $73,224,324
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2014-04-24
Current End Date: 2023-07-15
Potential End Date: 2023-07-15 00:00:00
Last Modified: 2024-07-15
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