Boeing's C-17 aircraft production contract awarded at over $2.3 billion, with no competition

Contract Overview

Contract Amount: $2,331,851,656 ($2.3B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2009-02-06

End Date: 2010-11-17

Contract Duration: 649 days

Daily Burn Rate: $3.6M/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION OF C-17 AIRCRAFT

Place of Performance

Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90807

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $2.33 billion to THE BOEING COMPANY for work described as: PRODUCTION OF C-17 AIRCRAFT Key points: 1. Significant taxpayer investment in critical defense asset production. 2. Sole-source award raises questions about price justification and market alternatives. 3. Long-term production contracts can present risks if demand fluctuates. 4. This contract supports a key platform for global military airlift capabilities. 5. The firm-fixed-price structure shifts some cost risk to the contractor. 6. Geographic concentration of production in California may have local economic benefits.

Value Assessment

Rating: fair

Assessing the value for this sole-source contract is challenging without competitive benchmarks. The total award of over $2.3 billion for C-17 aircraft production represents a substantial commitment. While the firm-fixed-price contract type offers some cost certainty, the lack of competition means direct comparison to market rates for similar aircraft manufacturing services is not feasible. The value is inherently tied to the strategic importance and unique capabilities of the C-17 platform.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning The Boeing Company was the only bidder. This approach is typically used when a unique capability or proprietary technology is involved, or when only one responsible source exists. The absence of competition limits the government's ability to leverage market forces to drive down prices and may indicate a lack of alternative suppliers for this specific aircraft.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price is achieved.

Public Impact

The U.S. Air Force and allied nations benefit from the continued production of the C-17 Globemaster III, a vital strategic airlift aircraft. This contract ensures the delivery of essential military transport capabilities for global deployment of troops and equipment. Production activities are concentrated in California, potentially supporting a significant local workforce and related industries. The contract contributes to maintaining the industrial base necessary for producing large, complex military aircraft.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated pricing.
Sole-source awards can reduce government leverage in future negotiations.
Dependence on a single contractor for critical defense assets poses a long-term risk.
Potential for cost overruns if not rigorously managed, despite fixed-price structure.

Positive Signals

Firm-fixed-price contract provides cost predictability.
Boeing has a proven track record in producing the C-17.
The C-17 is a critical and unique capability for the U.S. military.
Contract supports ongoing production of a key strategic asset.

Sector Analysis

The aircraft manufacturing sector, particularly for large military platforms, is characterized by high barriers to entry, significant R&D investment, and a limited number of major players. This contract falls within the defense industrial base, specifically supporting the production of strategic airlift aircraft. Comparable spending benchmarks are difficult to establish due to the specialized nature of the C-17, but overall defense procurement for aircraft represents a substantial portion of the federal budget.

Small Business Impact

There is no indication of small business set-asides or subcontracting requirements explicitly mentioned for this specific award. As a sole-source contract for a large, complex aircraft, the primary contractor, Boeing, likely manages most of the production. However, Boeing's broader supply chain may involve small businesses, but their specific inclusion and the impact on the small business ecosystem are not detailed in the provided data.

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 would include performance monitoring against delivery schedules and quality standards. Transparency is limited due to the sole-source nature, but contract awards and basic details are usually publicly available through federal procurement databases. Inspector General involvement would be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

C-17 Globemaster III Sustainment
Air Mobility Command Aircraft Procurement
Defense Production Act Investments
Major Defense Acquisition Programs

Risk Flags

Sole-source award
Lack of competition
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.33 billion to THE BOEING COMPANY. PRODUCTION OF C-17 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 $2.33 billion.

What is the period of performance?

Start: 2009-02-06. End: 2010-11-17.

What is the historical spending trend for C-17 aircraft production under The Boeing Company?

Historical spending data for C-17 aircraft production under The Boeing Company reveals a significant and sustained investment over many years. While the specific $2.3 billion figure pertains to a particular contract period (2009-2010), the overall program has seen multi-billion dollar allocations annually in various forms, including production, upgrades, and sustainment. The C-17 program has been a cornerstone of U.S. air mobility capabilities, leading to consistent, albeit fluctuating, funding appropriations. Analyzing trends requires examining annual defense budgets and specific contract awards over the program's lifecycle, which often extend beyond a single fiscal year or contract. The program's longevity suggests a stable, long-term commitment from the Department of Defense, reflecting the aircraft's critical role.

How does the per-unit cost of the C-17 compare to other strategic airlift aircraft, considering this contract's value?

Direct per-unit cost comparisons for the C-17 are complex due to its unique capabilities and the nature of its production contracts, especially sole-source awards like this one. The C-17 is designed for heavy-lift, intercontinental strategic airlift, a niche filled by few other platforms. Historically, the flyaway cost per C-17 has varied, often cited in the range of $200-$300 million in earlier years, but this figure typically excludes R&D, program management, and sustainment costs. This specific contract, valued at over $2.3 billion for an unspecified number of aircraft and potentially including associated support, makes a precise per-unit calculation difficult without more detail. Competitors like the Airbus A400M Atlas serve a similar role but have different design philosophies and cost structures, and are often procured by different international partners. The lack of competition for this Boeing contract further complicates direct benchmarking against market alternatives.

What are the primary risks associated with a sole-source contract for major defense equipment like the C-17?

The primary risks associated with a sole-source contract for major defense equipment like the C-17 include potential price inflation due to the absence of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and a lack of alternative suppliers should the incumbent contractor face production issues or go out of business. Taxpayers may bear a higher cost than if the contract were competed. Furthermore, the government's negotiating leverage is diminished, potentially leading to less favorable terms. Dependence on a single source also creates strategic vulnerabilities. Robust oversight, stringent performance metrics, and thorough cost analysis are crucial to mitigate these risks, but they cannot fully replicate the benefits of a competitive environment.

What is The Boeing Company's track record with the C-17 program and similar defense contracts?

The Boeing Company has an extensive and generally positive track record with the C-17 Globemaster III program. Boeing has been the sole manufacturer of the C-17 since its inception, delivering over 270 aircraft to the U.S. Air Force and international partners. The aircraft has proven to be a highly reliable and capable strategic airlift platform, fulfilling critical military logistics missions worldwide. Boeing's experience in producing large, complex military aircraft is substantial, encompassing numerous other programs. While specific contract performance can vary, the C-17 program itself is widely regarded as a success in terms of meeting operational requirements. However, like many large defense programs, it has faced scrutiny regarding costs and production timelines over its multi-decade history.

How does this contract align with the U.S. Department of Defense's overall strategy for air mobility and logistics?

This contract for the production of C-17 aircraft directly aligns with the U.S. Department of Defense's (DoD) overarching strategy for maintaining robust air mobility and global logistics capabilities. The C-17 is a cornerstone platform for the Air Mobility Command, enabling the rapid deployment of troops, equipment, and humanitarian aid across vast distances. Continued production ensures the modernization and sustainment of this critical asset, supporting force projection and power projection requirements. The DoD relies on a mixed fleet of air mobility assets, and the C-17's unique capabilities in terms of payload, range, and field performance make it indispensable. Therefore, securing production capacity, even through sole-source means when necessary, is vital for national security objectives and maintaining global reach.

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: 2401 E WARDLOW RD, LONG BEACH, CA, 90807

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $2,331,851,656

Exercised Options: $2,331,851,656

Current Obligation: $2,331,851,656

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861406D2006

IDV Type: IDC

Timeline