Boeing awarded $3.68B for C-17 sustainment, impacting global aircraft operations and logistics

Contract Overview

Contract Amount: $3,679,519,283 ($3.7B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2015-03-31

Contract Duration: 1,277 days

Daily Burn Rate: $2.9M/day

Competition Type: NOT COMPETED

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: THIS ORDER PROVIDES SUPPORT AND SUSTAINMENT SERVICES TO THE GOVERNMENT PRODUCT SUPPORT MANAGER (PSM)/ PRODUCT SUPPORT INTEGRATOR (PSI) FOR THE C-17 WEAPON SYSTEM. SUPPORT SHALL INCLUDE PROGRAM MANAGEMENT; LOGISTICS DATA, SUSTAINMENT ENGINEERING; QUALITY ASSURANCE; MATERIAL AND EQUIPMENT MANAGEMENT; AIRCRAFT DEPOT MAINTENANCE AND MODIFICATION; INTERNATIONAL PARTNERSHIP SUPPORT; FIELD SERVICES, F117 PROPULSION MAINTENANCE AND MANAGEMENT, LONG-TERM SUSTAINMENT (LTS) PLANNING; AND AIR LOGISTICS CENTER PARTNERING SUPPORT FOR THE WORLDWIDE FLEET OF THE C-17 AIRCRAFT THROUGH THE VIRTUAL FLEET CONCEPT.

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $3.68 billion to THE BOEING COMPANY for work described as: THIS ORDER PROVIDES SUPPORT AND SUSTAINMENT SERVICES TO THE GOVERNMENT PRODUCT SUPPORT MANAGER (PSM)/ PRODUCT SUPPORT INTEGRATOR (PSI) FOR THE C-17 WEAPON SYSTEM. SUPPORT SHALL INCLUDE PROGRAM MANAGEMENT; LOGISTICS DATA, SUSTAINMENT ENGINEERING; QUALITY ASSURANCE; MATERIAL AND EQ… Key points: 1. Contract focuses on comprehensive support for the C-17 weapon system, including program management, logistics, engineering, and maintenance. 2. Services extend to depot maintenance, modification, and field support for the worldwide C-17 fleet. 3. The contract duration spans over 3 years, indicating a significant long-term commitment to aircraft readiness. 4. This award is a substantial investment in maintaining a critical military airlift capability. 5. The scope includes specialized support for F117 propulsion systems and international partnership assistance. 6. Emphasis on virtual fleet concepts suggests a modern approach to global asset management.

Value Assessment

Rating: fair

The total award of $3.68 billion for C-17 sustainment services over approximately 3.5 years represents a significant expenditure. Benchmarking this against similar large-scale aerospace sustainment contracts is challenging due to the unique nature of weapon system support. However, the contract type (Time and Materials) can sometimes lead to cost overruns if not closely managed. The provided data does not allow for a detailed price assessment or comparison to market rates for specific services, making a definitive value-for-money judgment difficult without further cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source action, meaning it was not competed. This approach is often taken for specialized sustainment of complex weapon systems where a single contractor possesses unique knowledge, facilities, or intellectual property. While this can ensure continuity of support, it limits the potential for price competition and may result in higher costs compared to a competed procurement. The lack of competition means the government did not benefit from multiple offers to drive down prices.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure to secure the best possible price for these critical sustainment services. This increases the risk of paying a premium for the support provided.

Public Impact

The primary beneficiaries are the U.S. Air Force and allied nations operating the C-17 Globemaster III, ensuring the continued operational readiness of this vital airlift platform. Services delivered include program management, logistics, engineering, maintenance, and specialized propulsion support, all crucial for maintaining a global fleet. The geographic impact is worldwide, supporting the global deployment and operational needs of the C-17 fleet. This contract supports a significant workforce within The Boeing Company and its subcontractors, likely in engineering, maintenance, and program management roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Time and Materials contract type carries inherent risk of cost escalation if not rigorously managed.
Lack of detailed cost breakdowns in the provided data hinders thorough value assessment.
Dependence on a single contractor for critical sustainment raises long-term strategic risk.

Positive Signals

Ensures continuity of essential support for a critical military airlift asset.
Comprehensive scope of services addresses a wide range of sustainment needs.
Focus on virtual fleet concepts indicates a forward-looking approach to asset management.
Supports global operations and international partnerships for the C-17 fleet.

Sector Analysis

The aerospace and defense sector is characterized by long-term, high-value contracts for the development, production, and sustainment of complex weapon systems. The C-17 sustainment contract falls squarely within this domain, representing a significant portion of the government's spending on maintaining its strategic airlift capabilities. The market for such specialized sustainment is often dominated by the original equipment manufacturer or a limited number of highly qualified firms due to the proprietary nature of the technology and the extensive expertise required. Comparable spending benchmarks would typically involve other major weapon system sustainment programs, which often run into billions of dollars over their lifecycles.

Small Business Impact

The provided data indicates that small business participation was not a primary focus for this specific contract, as indicated by 'sb': false. There is no mention of small business set-asides or specific subcontracting goals. This suggests that the primary contractor, The Boeing Company, is expected to handle the majority of the work, potentially with limited direct subcontracting opportunities for small businesses within the scope of this particular delivery order. The impact on the small business ecosystem is likely minimal for this contract, as it appears to be a direct award for specialized services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management structures, likely through the Defense Contract Management Agency (DCMA), given the agency listed. Accountability measures would be embedded in the contract's terms and conditions, performance metrics, and reporting requirements. Transparency is generally limited for sole-source defense contracts, although contract awards are publicly reported. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

C-17 Globemaster III Sustainment Program
Air Mobility Command Logistics Support Contracts
Propulsion System Maintenance Contracts
Aerospace Weapon System Support Services
Department of Defense Logistics and Maintenance Contracts

Risk Flags

Sole-source procurement
Time and Materials contract type
Lack of detailed cost transparency
Potential for cost overruns
Dependence on single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.68 billion to THE BOEING COMPANY. THIS ORDER PROVIDES SUPPORT AND SUSTAINMENT SERVICES TO THE GOVERNMENT PRODUCT SUPPORT MANAGER (PSM)/ PRODUCT SUPPORT INTEGRATOR (PSI) FOR THE C-17 WEAPON SYSTEM. SUPPORT SHALL INCLUDE PROGRAM MANAGEMENT; LOGISTICS DATA, SUSTAINMENT ENGINEERING; QUALITY ASSURANCE; MATERIAL AND EQUIPMENT MANAGEMENT; AIRCRAFT DEPOT MAINTENANCE AND MODIFICATION; INTERNATIONAL PARTNERSHIP SUPPORT; FIELD SERVICES, F117 PROPULSION MAINTENANCE AND MANAGEMENT, LONG-TERM SUSTAINMENT (LTS) PLANNING; AND AIR LOGISTICS CENT

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 $3.68 billion.

What is the period of performance?

Start: 2011-10-01. End: 2015-03-31.

What is The Boeing Company's track record with C-17 sustainment prior to this contract?

The Boeing Company has been the prime contractor for the C-17 program since its inception, including development, production, and sustainment. Their extensive experience with the C-17 weapon system provides them with unique institutional knowledge, technical data, and established processes for maintaining the fleet. This long-standing relationship suggests a deep understanding of the aircraft's operational requirements and maintenance needs. Prior sustainment efforts would have laid the groundwork for the comprehensive support outlined in this contract, likely involving similar logistical, engineering, and maintenance functions, albeit potentially at different scales or with evolving technological requirements.

How does the $3.68 billion cost compare to other large aircraft sustainment contracts?

Comparing the $3.68 billion cost for C-17 sustainment requires context regarding the contract's duration and scope. This figure represents the total value over approximately 3.5 years. Large aircraft sustainment contracts, especially for strategic airlift or fighter platforms, often span decades and can accumulate costs well into the tens or hundreds of billions. For instance, contracts for maintaining fleets like the F-35 or B-2 bomber involve similar long-term, high-value commitments. While $3.68 billion is substantial, its 'value for money' is relative to the number of aircraft supported, the complexity of the required services (including depot-level maintenance and modifications), and the operational tempo. Without detailed cost breakdowns and direct comparisons of service scope and duration, it's difficult to definitively state if this is high or low relative to similar programs.

What are the primary risks associated with this sole-source sustainment contract?

The primary risks associated with this sole-source sustainment contract are centered around cost and contractor performance. Firstly, the lack of competition inherent in a sole-source award means the government may not be achieving the lowest possible price, potentially leading to cost inefficiencies. Secondly, the Time and Materials (T&M) contract type, while flexible, carries a risk of cost escalation if not meticulously managed and monitored by the government. Unforeseen technical issues or scope creep could drive costs significantly above initial estimates. Thirdly, there's a strategic risk associated with relying on a single provider for such a critical capability; any disruption to Boeing's ability to perform could severely impact the C-17 fleet's operational readiness.

How effective is the 'virtual fleet concept' mentioned in the contract description?

The 'virtual fleet concept' aims to optimize the sustainment of geographically dispersed assets, like the worldwide C-17 fleet, by centralizing management and leveraging data analytics. Its effectiveness hinges on robust data sharing, predictive maintenance capabilities, and efficient logistics coordination. By treating the fleet as a unified entity, the concept can enable proactive maintenance scheduling, better inventory management, and optimized resource allocation, potentially reducing downtime and costs. The success of this approach depends heavily on the underlying IT infrastructure, data integration across various support functions (e.g., maintenance, supply chain), and the analytical capabilities of the support team. While promising for enhancing global fleet readiness and efficiency, its practical effectiveness requires continuous monitoring and adaptation.

What are the historical spending patterns for C-17 sustainment?

Historical spending on C-17 sustainment has been substantial, reflecting the aircraft's critical role in military airlift operations over its service life. The U.S. Air Force has consistently allocated significant portions of its budget towards ensuring the readiness and operational capability of the C-17 fleet. This includes funding for spare parts, depot maintenance, modifications, engineering support, and contractor logistics support. Over the years, these sustainment costs have evolved, influenced by factors such as fleet size, aircraft age, operational tempo, and advancements in maintenance technologies and strategies. The total lifecycle cost of sustainment for major weapon systems like the C-17 typically represents a significant multiple of the initial acquisition cost, underscoring the long-term financial commitment involved.

What is the significance of the F117 propulsion system maintenance within this contract?

The specific inclusion of 'F117 Propulsion Maintenance and Management' highlights the critical importance of the engines powering the C-17 aircraft. The F117 engine, a variant of the Pratt & Whitney PW2000 series, is essential for the C-17's heavy-lift capabilities. Maintaining these complex and powerful engines requires specialized expertise, tooling, and facilities. Integrating this propulsion support directly into the broader C-17 sustainment contract ensures a cohesive approach to aircraft readiness, preventing potential disconnects between airframe and engine maintenance. It signifies a commitment to comprehensive lifecycle support, recognizing that engine health is paramount to the aircraft's overall operational availability and safety.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 14441 ASTRONAUTICS LN, HUNTINGTON BEACH, CA, 92647

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: $4,020,587,626

Exercised Options: $4,020,587,626

Current Obligation: $3,679,519,283

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852612D0001

IDV Type: IDC

Timeline