Boeing's $11.5M contract for F/A-18 modifications shows a lack of competition and potential for cost overruns

Contract Overview

Contract Amount: $11,500,469 ($11.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2005-02-22

End Date: 2011-04-23

Contract Duration: 2,251 days

Daily Burn Rate: $5.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: MODS IN E AND F MODEL F/A-18 AIRCRAFT

Place of Performance

Location: JACKSONVILLE, DUVAL County, FLORIDA, 32221

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $11.5 million to THE BOEING COMPANY for work described as: MODS IN E AND F MODEL F/A-18 AIRCRAFT Key points: 1. This contract was awarded on a sole-source basis, indicating limited or no competitive bidding. 2. The contract type (Cost No Fee) can incentivize contractors to increase costs without direct financial penalty. 3. The duration of the contract (2251 days) suggests a long-term commitment with potential for evolving requirements. 4. The award was made by the Defense Contract Management Agency, a key oversight body within the DoD. 5. The engineering services provided are critical for maintaining the operational readiness of the F/A-18 fleet. 6. The contract's value, while significant, needs to be benchmarked against similar aircraft modification efforts.

Value Assessment

Rating: questionable

The Cost No Fee contract type is a significant concern, as it offers little incentive for the contractor to control costs and can lead to overspending. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of a fee structure tied to performance or cost savings further weakens the value proposition for the government. Further analysis would be needed to compare the per-unit cost of these modifications to industry standards or previous similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one source is capable of meeting the requirement, or in cases of urgent need. The lack of competition limits the government's ability to solicit multiple bids and negotiate the best possible price. It also raises questions about whether alternative solutions or contractors were adequately explored.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers due to the absence of competitive pressure to drive down prices. This limits the government's purchasing power and potentially reduces the funds available for other critical defense needs.

Public Impact

The primary beneficiaries are the U.S. Navy and Marine Corps, who receive updated and potentially more capable F/A-18 aircraft. The services delivered include modifications to the F/A-18 aircraft, enhancing their performance, safety, or lifespan. The geographic impact is primarily within Florida, where the contract was awarded and likely performed. The contract supports a workforce of engineers and technicians involved in aircraft modification and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost No Fee contract type offers no incentive for cost control.
Sole-source award limits price discovery and potentially inflates costs.
Long contract duration increases risk of scope creep and cost escalation.
Lack of performance metrics or fee structure tied to value.
Potential for contractor to prioritize their own interests over taxpayer value.

Positive Signals

Contract awarded to a major defense contractor with established experience.
Modifications are likely essential for maintaining fleet readiness.
Contract managed by Defense Contract Management Agency, suggesting oversight.
Awarded to support critical military aircraft (F/A-18).

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft modification and engineering services. The market for such specialized services is often dominated by a few large, established defense contractors due to the high barriers to entry, including technical expertise, security clearances, and existing relationships with the military. The total addressable market for aircraft maintenance, repair, and overhaul (MRO) services within the defense sector is substantial, with significant annual spending by the DoD on fleet sustainment and upgrades.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The nature of specialized aircraft modifications often requires large, prime contractors with extensive capabilities. This could limit the direct participation of small businesses in this specific contract, although they may be involved in the broader defense supply chain.

Oversight & Accountability

The Defense Contract Management Agency (DCMA) is responsible for overseeing this contract, ensuring compliance with terms and conditions. However, the Cost No Fee contract type and sole-source award present inherent challenges for effective oversight and value for money. Transparency regarding the specific modifications and cost breakdowns would be crucial for robust accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

F/A-18 Hornet Sustainment Programs
Naval Aviation Maintenance and Repair Contracts
Defense Engineering Services Contracts
Aircraft Modification and Upgrade Programs

Risk Flags

Sole-source award
Cost No Fee contract type
Lack of competitive bidding
Potential for cost overruns
Limited transparency on specific modifications

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.5 million to THE BOEING COMPANY. MODS IN E AND F MODEL F/A-18 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 $11.5 million.

What is the period of performance?

Start: 2005-02-22. End: 2011-04-23.

What is the track record of The Boeing Company in delivering similar aircraft modification contracts for the U.S. military?

The Boeing Company has a long and extensive history of delivering aircraft, including the F/A-18, and providing modification and sustainment services to the U.S. military. They are a prime contractor for many major defense platforms. While their experience is substantial, past performance on specific modification contracts can vary. Analysis of past performance reviews, contract closeouts, and any documented issues or successes related to similar F/A-18 modification efforts would provide a clearer picture of their reliability and efficiency in executing such work. This includes examining on-time delivery rates, budget adherence on comparable fixed-price or cost-plus contracts, and any disputes or claims filed during contract performance.

How does the pricing structure of this Cost No Fee contract compare to industry benchmarks for similar engineering services?

The Cost No Fee (CNF) contract type is inherently difficult to benchmark against industry standards for value because it lacks a direct incentive for cost control. Unlike fixed-price contracts or cost-plus-incentive-fee contracts, the contractor is reimbursed for all allowable costs and receives a fixed fee, regardless of whether costs are minimized. This structure is typically used in situations where costs are highly uncertain or when the government needs maximum flexibility. To assess value, one would need to compare the total obligated amount and the scope of work to similar sole-source modification contracts awarded to other large aerospace firms, looking at metrics like cost per labor hour, cost per modification task, or total cost per aircraft. Without this comparative data, the 'value' is questionable.

What are the primary risks associated with a sole-source award for aircraft modifications, and how are they mitigated?

The primary risks associated with a sole-source award for aircraft modifications include a lack of competitive pricing, potentially leading to higher costs for the government, and reduced incentive for the contractor to innovate or optimize performance. There's also a risk that the government may not be aware of all available technological solutions or more cost-effective approaches. Mitigation strategies often involve robust government oversight, detailed technical specifications, independent cost estimates, and strong negotiation tactics by the contracting officer. However, the effectiveness of these mitigations can be limited without the leverage provided by a competitive bidding process. For this specific contract, the CNF structure exacerbates these risks.

What is the expected impact of these modifications on the operational effectiveness and lifespan of the F/A-18 aircraft?

The specific impact of these modifications on the operational effectiveness and lifespan of the F/A-18 aircraft depends entirely on the nature of the 'MODS IN E AND F MODEL F/A-18 AIRCRAFT' as stated in the data. These could range from minor avionics upgrades to significant structural enhancements or system overhauls. Generally, such modifications are intended to improve capabilities (e.g., enhanced targeting, improved communication systems, increased survivability), extend the service life of the airframe, or address obsolescence issues with aging components. Without detailed technical specifications of the modifications, it's impossible to quantify the precise impact on performance metrics like mission range, payload capacity, reliability, or the extension of the aircraft's operational life beyond its originally planned service end-date.

How has federal spending on F/A-18 aircraft modifications evolved over the past decade, and does this contract represent a significant shift?

Analyzing historical spending trends for F/A-18 modifications requires access to detailed contract databases and budget allocations over the past decade. This specific $11.5 million contract, awarded in 2005 and ending in 2011, represents a portion of the overall sustainment and upgrade costs for the F/A-18 fleet during that period. To determine if it represents a significant shift, one would need to compare its value, contract type, and scope against other F/A-18 modification contracts awarded during the same timeframe and subsequent years. Factors like the number of aircraft modified, the complexity of the upgrades, and the overall budget allocated to F/A-18 sustainment would be key indicators. Given the F/A-18's long service life and ongoing upgrades, spending in this category is typically substantial and cyclical, driven by fleet readiness requirements and modernization initiatives.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 6211 AVIATION AVE, JACKSONVILLE, FL, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $11,500,469

Exercised Options: $11,500,469

Current Obligation: $11,500,469

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0014002D1590

IDV Type: IDC

Timeline