Boeing awarded $106.6M for CH-47 aircraft manufacturing, a sole-source contract with a 1035-day duration

Contract Overview

Contract Amount: $106,604,688 ($106.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-03-02

End Date: 2024-12-31

Contract Duration: 1,035 days

Daily Burn Rate: $103.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CH-47 AIRCRAFT

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $106.6 million to THE BOEING COMPANY for work described as: CH-47 AIRCRAFT Key points: 1. Contract awarded to a single supplier, raising questions about price competitiveness. 2. Long contract duration suggests a sustained need for aircraft manufacturing services. 3. The firm-fixed-price structure shifts cost risk to the contractor. 4. No small business set-aside indicates potential for large prime contractor involvement. 5. The contract falls under aircraft manufacturing, a critical defense sector.

Value Assessment

Rating: questionable

The contract's value of $106.6 million for CH-47 aircraft manufacturing is difficult to benchmark without comparable sole-source awards. Given the lack of competition, it's challenging to assess if the pricing represents fair market value. The firm-fixed-price contract type, however, is generally favorable for the government as it caps potential cost overruns. Further analysis would require data on historical pricing for similar sole-source CH-47 components or services.

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 bypasses the competitive bidding process, which typically leads to better price discovery and potentially lower costs for the government. The justification for a sole-source award would need to be thoroughly reviewed to understand why full and open competition was not feasible.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding.

Public Impact

The primary beneficiary is the Department of Defense, ensuring continued availability of CH-47 aircraft. Services delivered include the manufacturing of CH-47 aircraft components or related support. The geographic impact is primarily tied to Boeing's manufacturing facilities, likely in Pennsylvania. Workforce implications include skilled labor in aerospace manufacturing and engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated pricing.
Sole-source nature limits opportunities for new market entrants.
Long-term contract could reduce flexibility to adapt to changing needs.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Award to incumbent supplier ensures continuity of critical aircraft production.
Long duration provides stability for production planning and execution.

Sector Analysis

The aerospace manufacturing sector is a significant part of the defense industrial base, characterized by high barriers to entry and substantial R&D investment. The CH-47 Chinook is a heavy-lift helicopter with a long operational history, making its continued production and support vital for military readiness. Spending in this area is often concentrated among a few large, established prime contractors due to the complexity and scale of aircraft manufacturing.

Small Business Impact

The absence of a small business set-aside on this contract suggests that the primary awardee is a large business, The Boeing Company. While Boeing may utilize small businesses as subcontractors, the direct award does not prioritize small business participation. This could limit direct contracting opportunities for small businesses in this specific award, though their role in the broader supply chain remains possible.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods or services at an agreed-upon price. Transparency may be limited due to the sole-source nature, but contract award details are generally publicly available.

Related Government Programs

CH-47 Chinook Helicopter Program
Defense Helicopter Manufacturing
Aerospace Component Production
Military Aircraft Sustainment

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $106.6 million to THE BOEING COMPANY. CH-47 AIRCRAFT

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 $106.6 million.

What is the period of performance?

Start: 2022-03-02. End: 2024-12-31.

What is the historical spending trend for CH-47 aircraft manufacturing by the Department of Defense?

Historical spending on CH-47 aircraft manufacturing by the Department of Defense has been substantial, reflecting the platform's long service life and critical role. While specific figures for 'manufacturing' alone can be difficult to isolate from broader sustainment and upgrade contracts, the overall investment in the CH-47 program runs into billions of dollars over decades. This includes initial procurement, upgrades, spare parts, and ongoing maintenance. The current $106.6 million award represents a portion of this continuous investment. Analyzing past sole-source awards for similar components or aircraft could provide context for the current pricing, though direct comparisons are often challenging due to evolving specifications and market conditions.

What is the justification for awarding this contract on a sole-source basis?

The justification for awarding this contract on a sole-source basis would typically stem from specific circumstances outlined in federal acquisition regulations. Common reasons include the existence of unique capabilities held by only one contractor, urgent and compelling needs where competition is not feasible, or if the contract is a follow-on to a previously competed effort where only the original contractor possesses the necessary knowledge or tooling. For The Boeing Company and the CH-47, it's plausible that their proprietary knowledge, specialized manufacturing facilities, or existing production lines for this specific aircraft model necessitate a sole-source award to ensure continuity and avoid significant delays and costs associated with transferring production or developing new capabilities elsewhere.

How does the firm-fixed-price (FFP) contract type benefit the government in this scenario?

The firm-fixed-price (FFP) contract type is generally advantageous for the government, especially in scenarios involving sole-source awards where price certainty is paramount. Under an FFP contract, the contractor, The Boeing Company, assumes the majority of the cost risk. This means that Boeing is obligated to complete the work for the agreed-upon price, regardless of whether their actual costs exceed their estimates. This structure provides the government with budget predictability and protects it from potential cost overruns that could occur with cost-reimbursement contracts. It incentivizes the contractor to manage its costs efficiently to maximize profit.

What are the potential risks associated with a sole-source contract for aircraft manufacturing?

Sole-source contracts for aircraft manufacturing carry several potential risks. The most significant is the lack of price competition, which can lead to the government paying a higher price than if multiple bidders were involved. This can reduce the overall value for money. Additionally, sole-sourcing can stifle innovation and prevent smaller, potentially more agile companies from entering the market or contributing their unique capabilities. There's also a risk of contractor complacency, where the absence of competitive pressure might reduce the incentive for the sole provider to optimize efficiency or quality over the long term. Dependence on a single supplier can also create supply chain vulnerabilities.

What is The Boeing Company's track record with CH-47 aircraft production and similar defense contracts?

The Boeing Company has an extensive and long-standing track record as the prime contractor for the CH-47 Chinook helicopter program. They have been responsible for the design, manufacturing, and sustainment of these aircraft for decades, serving numerous U.S. military branches and international customers. Boeing is a major defense contractor with vast experience in large-scale aerospace manufacturing, including other rotorcraft and fixed-wing aircraft. Their history with the CH-47 specifically suggests a deep understanding of the platform's complexities, production processes, and performance requirements. While specific performance metrics for individual contracts are not always public, their continued role as the primary provider indicates a generally satisfactory performance history with this critical defense asset.

How does this contract's duration (1035 days) compare to typical aircraft manufacturing contracts?

A duration of 1035 days, approximately 2.8 years, for an aircraft manufacturing contract is not unusual, particularly for complex platforms like the CH-47 Chinook. Such durations often reflect the time required for specialized manufacturing processes, supply chain coordination, quality assurance, and delivery schedules for major defense systems. Shorter durations might be typical for component production or specific upgrade packages, while full aircraft production runs or significant sustainment efforts often span multiple years. This duration suggests a sustained production requirement rather than a short-term need, aligning with the long operational life cycles of military aircraft.

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

Pricing Type: FIRM FIXED PRICE (J)

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: $106,604,688

Exercised Options: $106,604,688

Current Obligation: $106,604,688

Subaward Activity

Number of Subawards: 173

Total Subaward Amount: $35,133,238

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ18D0082

IDV Type: IDC

Timeline