Boeing awarded $28.3M for rotary rudder parts, highlighting specialized defense manufacturing needs

Contract Overview

Contract Amount: $28,303,622 ($28.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2017-07-14

End Date: 2019-08-31

Contract Duration: 778 days

Daily Burn Rate: $36.4K/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: BLADE,ROTARY RUDDER

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $28.3 million to THE BOEING COMPANY for work described as: BLADE,ROTARY RUDDER Key points: 1. Contract value represents a significant investment in critical aircraft components. 2. Sole-source nature suggests limited market alternatives for this specific part. 3. Long-term contract duration indicates ongoing operational requirements. 4. Fixed-price contract type shifts cost risk to the contractor. 5. Awarded by the Defense Logistics Agency, underscoring military supply chain importance. 6. Parts manufactured in Missouri, potentially impacting regional employment.

Value Assessment

Rating: fair

The contract value of $28.3 million for rotary rudder parts appears substantial, but without specific unit cost data or comparable contract benchmarks, a precise value-for-money assessment is challenging. The fixed-price nature is a positive indicator for cost control, assuming the initial pricing was competitive. However, the lack of open competition raises concerns about potential overpayment compared to a more robustly competed scenario. Further analysis of historical pricing for similar components would be necessary to definitively benchmark its value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under 'full and open competition after exclusion of sources,' which is a form of sole-source procurement. This indicates that while the initial solicitation may have been broad, only one source was ultimately deemed capable or available to fulfill the requirement. The limited competition means that price discovery through market forces was constrained, potentially leading to higher costs for the government.

Taxpayer Impact: The lack of broad competition means taxpayers may not have benefited from the most competitive pricing achievable in a wider market. This could translate to a less efficient use of public funds for essential defense components.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring operational readiness of aircraft equipped with these parts. Services delivered include the manufacturing and supply of critical rotary rudder components. Geographic impact is concentrated in Missouri, where the parts are manufactured. Workforce implications include employment opportunities within the specialized aerospace manufacturing sector in Missouri.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in the 'exclusion of sources' process hinders full understanding of competition limitations.
Reliance on a single contractor for critical parts creates supply chain vulnerability.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Award to a major defense contractor like Boeing suggests adherence to established quality and production standards.
Contract duration indicates a stable, long-term supply of essential components.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized components like rotary rudders is often characterized by high barriers to entry due to technical expertise, stringent quality requirements, and established relationships with defense agencies. Spending in this sub-sector is driven by military modernization, maintenance, and operational needs, with significant government investment typically seen in areas requiring advanced engineering and manufacturing capabilities.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. The award to a large prime contractor like Boeing suggests that subcontracting opportunities may exist for small businesses within their supply chain. However, the primary contract itself is not directly benefiting small businesses through a set-aside mechanism. The impact on the broader small business ecosystem would depend on Boeing's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. Accountability measures are inherent in the firm fixed-price structure, which places cost risk on the contractor. Transparency is somewhat limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics
Aerospace Components
Rotary Wing Aircraft Support
Military Aircraft Maintenance

Risk Flags

Sole Source Award
Limited Competition
Critical Component Supply

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 million to THE BOEING COMPANY. BLADE,ROTARY RUDDER

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 Logistics Agency).

What is the total obligated amount?

The obligated amount is $28.3 million.

What is the period of performance?

Start: 2017-07-14. End: 2019-08-31.

What is the historical spending trend for rotary rudder parts by the Department of Defense?

Analyzing historical spending on rotary rudder parts by the Department of Defense requires access to detailed procurement databases and specific part identification. Generally, spending in this category fluctuates based on aircraft fleet age, modernization programs, and operational tempo. Contracts for such specialized components are often long-term due to the lengthy qualification processes and the need for consistent supply. Without specific historical data for this exact part number (336413), it's difficult to provide precise figures. However, the defense sector consistently allocates significant budgets towards aircraft sustainment and component replacement, with values often in the millions or tens of millions for critical systems over several years.

How does the $28.3 million contract value compare to similar aircraft component procurements?

Comparing the $28.3 million contract value for rotary rudder parts to similar procurements requires identifying contracts for comparable components (e.g., main rotor blades, tail rotors, complex transmission parts) for similar aircraft types (e.g., helicopters like Black Hawks, Chinooks, Apaches). Given that this is a sole-source award for a critical component, the price might be higher than if it were fully competed. However, specialized aerospace parts often command high prices due to complex manufacturing, rigorous testing, and low production volumes. A benchmark might involve looking at other sole-source or limited-competition awards for high-value, low-volume aircraft parts within the DoD. Without specific comparable data, it's challenging to definitively state if $28.3 million is high or low, but it represents a significant investment in a single component category.

What are the primary risks associated with a sole-source award for critical defense components?

The primary risks associated with a sole-source award for critical defense components like rotary rudder parts include inflated pricing due to lack of competition, potential for complacency from the sole supplier leading to quality issues or delays, and significant supply chain vulnerability. If the sole contractor experiences production problems, financial instability, or decides to discontinue the product line, the government has limited immediate alternatives, potentially grounding aircraft. Furthermore, the 'exclusion of sources' process, while sometimes necessary for proprietary technology or unique capabilities, can obscure the true extent of available competition and may not always represent the most cost-effective solution for taxpayers.

What is The Boeing Company's track record with Defense Logistics Agency (DLA) contracts?

The Boeing Company has a long and extensive track record of contracting with the Defense Logistics Agency (DLA) and other Department of Defense entities. As one of the largest aerospace and defense contractors globally, Boeing consistently secures numerous contracts for aircraft, components, maintenance, and support services. DLA relies on major contractors like Boeing to supply a vast array of parts and equipment essential for military readiness. Boeing's history with DLA generally involves large-value, complex contracts, often involving sole-source or limited-competition awards for specialized systems where they are the original equipment manufacturer or possess unique production capabilities. Performance can vary across contracts, but their overall engagement signifies a deep integration into the DoD supply chain.

How does the contract type (Firm Fixed Price) mitigate cost risks for the government?

The Firm Fixed Price (FFP) contract type is designed to mitigate cost risks for the government by establishing a ceiling price that is not subject to adjustment based on the contractor's cost experience. Under an FFP contract, the contractor assumes the primary responsibility for all costs incurred and for any cost overruns. This provides the government with cost certainty, making budgeting more predictable. For the government, the main risk shifts from cost overruns to ensuring the contractor can deliver the required quality and quantity within the agreed-upon price. This structure incentivizes the contractor to manage its costs efficiently and to perform the work effectively to maximize profit.

What are the implications of the contract being for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing'?

The classification 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS code 336413) indicates that this contract is for components that are essential for aircraft operation but may not fall into more specific categories like engines or airframes. This broad category suggests a diverse range of potential parts, including those related to control systems, structural elements, or support equipment. For the government, it means procuring specialized items that are critical for maintaining the functionality and safety of aircraft fleets. The 'other' designation can sometimes imply less standardized parts or those produced by a smaller number of specialized manufacturers, potentially contributing to limited competition scenarios.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134

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: $56,853,522

Exercised Options: $56,853,522

Current Obligation: $28,303,622

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: SPE4A114G0007

IDV Type: BOA

Timeline