Boeing awarded $146.7M for CH-47F Block II support, a sole-source contract for critical aircraft sustainment

Contract Overview

Contract Amount: $146,675,690 ($146.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-09-30

End Date: 2024-11-30

Contract Duration: 1,157 days

Daily Burn Rate: $126.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: DELIVERY ORDER W58RGZ21F0493 IN SUPPORT CH47F BLOCK II CONGRESSIONAL MANDATE

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $146.7 million to THE BOEING COMPANY for work described as: DELIVERY ORDER W58RGZ21F0493 IN SUPPORT CH47F BLOCK II CONGRESSIONAL MANDATE Key points: 1. Contract awarded to a single, established supplier, raising questions about price competitiveness. 2. Focus on sustainment for a key military helicopter platform indicates ongoing operational reliance. 3. Long-term delivery order suggests a sustained need for parts and support services. 4. Fixed Price Incentive contract type aims to balance cost control with performance incentives. 5. The contract's value is significant, reflecting the complexity and importance of the CH-47F program. 6. Geographic location of the contractor in Pennsylvania may have regional economic implications.

Value Assessment

Rating: fair

The contract value of $146.7 million for CH-47F Block II support is substantial. Without direct comparable sole-source contracts for similar sustainment efforts, a precise value-for-money assessment is challenging. However, the fixed-price incentive structure suggests an attempt to manage costs while ensuring performance. The lack of competition inherently limits the government's ability to benchmark pricing against market alternatives, potentially leading to higher costs than a competed contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach is typically used when a unique capability or product is required, or in situations where competition is not feasible or cost-effective. The absence of multiple bidders means the government did not benefit from competitive pricing dynamics, potentially impacting the final cost.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust government oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are the U.S. Army, ensuring the continued operational readiness of the CH-47F Chinook fleet. Services delivered include sustainment, parts, and support critical for the maintenance and operation of these heavy-lift helicopters. The geographic impact is national, supporting military operations across various theaters. Workforce implications include continued employment for skilled personnel at Boeing facilities involved in aircraft support and manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in pricing due to no competitive bidding process.
Long-term nature of the contract may reduce flexibility to adapt to changing needs or technologies.

Positive Signals

Ensures critical sustainment for a vital military asset (CH-47F Chinook).
Fixed Price Incentive contract type includes performance incentives, potentially driving efficiency.
Award to a known, experienced contractor (Boeing) reduces technical and execution risk.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft sustainment and parts. The CH-47F Chinook is a significant platform for the U.S. Army, and its continued operational readiness is paramount. Spending on aircraft sustainment is a substantial component of the defense budget, reflecting the high cost of maintaining complex military hardware over its lifecycle. Comparable spending benchmarks would involve other major aircraft sustainment contracts for platforms like the C-130, F-16, or other helicopter variants.

Small Business Impact

This contract does not appear to have a small business set-aside. As a sole-source award to a large prime contractor, there may be implications for subcontracting opportunities for small businesses. The extent to which Boeing will utilize small businesses in its supply chain for this contract will determine the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are embedded within the Fixed Price Incentive contract terms, linking payment to performance. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports are typically available through federal procurement databases.

Related Government Programs

CH-47 Chinook Helicopter Program
Department of Defense Aircraft Procurement
Aviation Logistics Support Contracts
Fixed-Wing and Rotary-Wing Aircraft Maintenance

Risk Flags

Sole-source award
Potential for price escalation without competition
Long-term contract duration
Dependence on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $146.7 million to THE BOEING COMPANY. DELIVERY ORDER W58RGZ21F0493 IN SUPPORT CH47F BLOCK II CONGRESSIONAL MANDATE

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 $146.7 million.

What is the period of performance?

Start: 2021-09-30. End: 2024-11-30.

What is the historical spending trend for CH-47F sustainment and support from the Department of Defense?

Historical spending on CH-47F sustainment and support has been significant, reflecting the platform's long service life and critical role. While specific figures for this delivery order total $146.7 million, broader contract vehicles and previous sustainment efforts for the CH-47 fleet have amounted to hundreds of millions, and potentially billions, over the years. Analyzing past spending patterns reveals a consistent need for parts, maintenance, and upgrades to ensure the Chinook's operational readiness. This sustained investment underscores the platform's importance and the ongoing costs associated with maintaining such complex aviation assets.

How does the pricing of this sole-source contract compare to potentially competed contracts for similar aircraft sustainment services?

Direct comparison of pricing for this sole-source contract to potentially competed contracts is inherently difficult due to the lack of competitive bidding. Sole-source awards often carry a price premium because the government cannot leverage market competition to drive down costs. If this contract were competed, multiple vendors could offer proposals, leading to potentially lower prices and better value. The Fixed Price Incentive (FPI) structure aims to mitigate some risk by incentivizing performance, but the baseline price is not subject to competitive validation, suggesting it may be higher than what could be achieved through open competition.

What are the key performance indicators (KPIs) and incentives within this Fixed Price Incentive (FPI) contract, and how are they monitored?

While the specific KPIs and incentive targets for this W58RGZ21F0493 delivery order are not publicly detailed, an FPI contract typically includes target cost, target profit, and a ceiling price. Incentives are usually tied to achieving cost savings below the target cost or meeting specific performance milestones related to delivery schedules, quality, or operational availability. The Defense Contract Management Agency (DCMA) would be responsible for monitoring Boeing's performance against these KPIs and ensuring compliance with the contract terms. Adjustments to profit are made based on performance relative to the negotiated targets and ceiling.

What is The Boeing Company's track record in fulfilling sustainment contracts for major military aircraft platforms?

The Boeing Company has an extensive and generally strong track record in fulfilling sustainment contracts for major military aircraft platforms, including the CH-47 Chinook itself, as well as others like the C-17 Globemaster III and various fighter aircraft. They possess deep institutional knowledge and established supply chains for these complex systems. However, like any large defense contractor, Boeing has faced challenges and scrutiny on specific contracts related to cost overruns, schedule delays, or performance issues. Their overall performance in sustainment is characterized by significant capability but also requires diligent government oversight to ensure optimal value and adherence to contract terms.

What are the potential risks associated with relying on a sole-source provider for critical aircraft parts and sustainment?

Relying on a sole-source provider like Boeing for CH-47F sustainment presents several risks. Firstly, the lack of competition can lead to higher prices and reduced value for money. Secondly, it creates a dependency on a single supplier, potentially leading to supply chain vulnerabilities if the contractor faces production issues, financial instability, or geopolitical disruptions. Thirdly, without competitive pressure, there might be less incentive for the contractor to innovate or improve efficiency. Finally, the government has limited leverage to negotiate favorable terms or pricing, potentially impacting long-term program costs and readiness.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 100 S 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: $146,675,690

Exercised Options: $146,675,690

Current Obligation: $146,675,690

Subaward Activity

Number of Subawards: 149

Total Subaward Amount: $26,401,482

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W58RGZ21D0094

IDV Type: IDC

Timeline