Department of Defense awards $65.2M contract to The Boeing Company for aircraft manufacturing services

Contract Overview

Contract Amount: $65,216,024 ($65.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2014-07-22

End Date: 2020-02-28

Contract Duration: 2,047 days

Daily Burn Rate: $31.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: COOLS KITS

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $65.2 million to THE BOEING COMPANY for work described as: COOLS KITS Key points: 1. The contract value of $65.2M represents a significant investment in aircraft manufacturing capabilities. 2. Competition dynamics for this contract were complex, involving exclusion of sources before full and open competition. 3. Risk indicators are moderate, given the long duration and fixed-price nature of the contract. 4. Performance context suggests a need for specialized aircraft manufacturing, aligning with Boeing's expertise. 5. Sector positioning places this contract within the broader Defense industrial base, supporting critical national security needs.

Value Assessment

Rating: good

Benchmarking the value of this $65.2M contract requires detailed comparison to similar aircraft manufacturing agreements. Given the long duration of 2047 days (approximately 5.6 years), the annual spending averages around $11.6M. The firm-fixed-price structure suggests that cost overruns are primarily the contractor's responsibility, which can be a positive indicator for value if managed effectively. However, without specific details on the deliverables and market rates for comparable services, a precise value-for-money assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES'. This indicates that while the competition was ultimately open, certain sources were initially excluded. The specific reasons for this exclusion are not detailed, but it suggests a potentially narrower field of bidders than a purely open competition. The number of bidders is not specified, but the 'exclusion of sources' phrasing implies it may not have been as broad as possible.

Taxpayer Impact: The limited competition may have implications for taxpayers by potentially reducing the downward pressure on pricing that a wider field of bidders could exert. It is crucial to understand the justification for excluding sources to ensure fair market access and optimal pricing.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring specialized aircraft manufacturing. Services delivered likely include the manufacturing, assembly, or modification of aircraft components or entire aircraft. The geographic impact is centered around the contractor's facilities in Pennsylvania, contributing to the local economy. Workforce implications include employment opportunities for skilled labor in the aerospace and manufacturing sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition due to 'exclusion of sources' could impact price discovery.
Long contract duration (2047 days) increases exposure to market fluctuations and technological obsolescence.
Firm Fixed Price contracts can sometimes lead to scope creep if not managed meticulously.

Positive Signals

The Boeing Company is a well-established and experienced aerospace manufacturer, suggesting a high likelihood of successful delivery.
Firm Fixed Price contract structure shifts cost risk to the contractor, potentially benefiting the government.
The contract supports critical defense capabilities, aligning with national security objectives.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically Aircraft Manufacturing. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality and security requirements. The market size for defense aerospace manufacturing is substantial, driven by government procurement. This contract with The Boeing Company, a major player, fits within the established spending patterns for military aircraft procurement and sustainment.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). There is no explicit information on subcontracting plans for small businesses. Without this information, it is difficult to assess the direct impact on the small business ecosystem. However, large prime contractors like Boeing often engage small businesses as subcontractors, which could provide indirect opportunities.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Army. Accountability measures are inherent in the firm-fixed-price contract type, which penalizes the contractor for cost overruns. Transparency is facilitated through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Manufacturing
Defense Procurement
Aerospace Industry
Military Aircraft Production

Risk Flags

Potential for reduced competition due to source exclusion.
Long contract duration increases risk of obsolescence and price volatility.
Lack of detailed performance metrics makes value assessment challenging.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $65.2 million to THE BOEING COMPANY. COOLS KITS

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 $65.2 million.

What is the period of performance?

Start: 2014-07-22. End: 2020-02-28.

What is the historical spending pattern for The Boeing Company with the Department of Defense for aircraft manufacturing services?

Analyzing historical spending patterns for The Boeing Company with the Department of Defense reveals a long-standing and substantial relationship. Boeing is a primary contractor for numerous military aircraft programs, including fighter jets, bombers, helicopters, and transport aircraft. Over the years, the total value of contracts awarded to Boeing by the DoD has been in the hundreds of billions of dollars. This specific $65.2M contract for aircraft manufacturing services, awarded in 2014 and ending in 2020, represents a segment of this broader historical engagement. It aligns with consistent DoD investment in maintaining and expanding its aerial fleet capabilities, often through sole-source or limited-competition contracts with established prime contractors like Boeing due to the specialized nature of the work and existing platforms.

How does the pricing structure of this contract compare to similar aircraft manufacturing contracts awarded by the DoD?

This contract utilizes a Firm Fixed Price (FFP) pricing structure. FFP contracts are common in defense procurement when the scope of work is well-defined and the government wants to transfer cost risk to the contractor. Compared to other aircraft manufacturing contracts, FFP generally aims for predictable costs for the government. However, the 'value' derived from FFP depends heavily on the initial negotiation and the contractor's ability to manage costs efficiently. If the market rate for the specific manufacturing services is well-understood, FFP can yield good value. Conversely, if the scope is complex or subject to change, FFP can sometimes lead to less favorable outcomes if the contractor underbid or if change orders become extensive. Without specific benchmarks for the exact services rendered, a direct comparison is difficult, but FFP is generally viewed as a mechanism to control government expenditure on price.

What are the primary risks associated with a contract of this duration and type?

The primary risks associated with this contract, given its 2047-day duration (over 5.6 years) and Firm Fixed Price (FFP) nature, include potential for technological obsolescence, market price fluctuations, and contractor performance issues. For long-duration FFP contracts, there's a risk that the technology or specifications may become outdated before the contract concludes, requiring costly modifications or rendering the end product less effective. Market prices for raw materials or labor could increase significantly, impacting the contractor's profitability and potentially leading to requests for equitable adjustments or performance issues if margins become unsustainable. Furthermore, the long timeline increases the probability of unforeseen production challenges or quality control issues that the contractor must manage within the fixed price, potentially affecting delivery schedules or final product quality.

What is the significance of the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type signifies a procurement process that, while ultimately open to all responsible sources, initially involved a step where certain potential bidders were excluded. The reasons for exclusion are not specified in the provided data but could range from pre-qualification requirements, specific technical capabilities, past performance issues, or proprietary technology access. This approach suggests that the agency may have had specific needs or concerns that narrowed the initial pool of interested parties before opening the competition more broadly. While it aims to ensure that the final award is made under competitive conditions, the initial exclusion might limit the breadth of innovation and price competition compared to a purely open solicitation from the outset. Understanding the rationale behind the exclusion is key to assessing the true level of competition achieved.

How does this contract contribute to the overall mission of the Department of Defense?

This contract directly contributes to the Department of Defense's mission by ensuring the availability of critical aircraft manufacturing capabilities. The DoD relies on a robust industrial base to produce, maintain, and upgrade its aerial assets, which are essential for national security operations, power projection, intelligence gathering, and logistical support. By awarding this contract to a major aerospace manufacturer like The Boeing Company, the DoD secures the necessary production capacity and expertise to meet its strategic requirements. Whether this contract is for new aircraft production, modification of existing platforms, or specialized component manufacturing, it underpins the operational readiness and technological superiority of the U.S. military's air power.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $65,216,024

Exercised Options: $65,216,024

Current Obligation: $65,216,024

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $50,786,778

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline