Boeing awarded $404M for French mid-life aircraft upgrades, facing limited competition
Contract Overview
Contract Amount: $403,959,461 ($404.0M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2009-12-18
End Date: 2025-06-30
Contract Duration: 5,673 days
Daily Burn Rate: $71.2K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: FRENCH MID LIFE UPGRADE
Place of Performance
Location: TUKWILA, KING County, WASHINGTON, 98108
Plain-Language Summary
Department of Defense obligated $404.0 million to THE BOEING COMPANY for work described as: FRENCH MID LIFE UPGRADE Key points: 1. Significant investment in maintaining and modernizing a key defense asset. 2. Contract awarded to a single, established aerospace manufacturer. 3. Long contract duration suggests a complex, multi-year upgrade process. 4. Fixed Price Incentive contract type aims to balance cost and performance. 5. Potential for cost overruns exists if performance targets are not met. 6. Geographic focus on Washington state for contract performance.
Value Assessment
Rating: fair
The total contract value of $404 million for aircraft upgrades is substantial. Benchmarking this against similar mid-life upgrade programs for comparable aircraft is challenging without more specific details on the scope of work. The Fixed Price Incentive (FPI) contract type suggests an effort to control costs, but the final price can fluctuate based on performance. Without detailed cost breakdowns or comparisons to industry standards for this specific type of upgrade, a definitive value-for-money assessment is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating that only one bidder, The Boeing Company, was considered capable of fulfilling the requirement. This lack of competition can limit price discovery and potentially lead to higher costs for the government compared to a fully competed contract. The justification for a sole-source award typically involves unique capabilities or proprietary technology.
Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from competitive pricing, potentially leading to a higher overall expenditure for this defense upgrade.
Public Impact
The French Air Force is the primary beneficiary, receiving modernized aircraft. Services delivered include upgrades and maintenance for a fleet of aircraft. Geographic impact is concentrated in Washington state where Boeing performs the work. Workforce implications include employment for skilled engineers and technicians at Boeing.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Fixed Price Incentive contract carries risk of cost overruns if performance targets are missed.
- Long contract duration increases exposure to potential scope creep or unforeseen technical challenges.
Positive Signals
- Award to a major, experienced aerospace contractor with a track record in aircraft manufacturing.
- Fixed Price Incentive contract structure incentivizes contractor performance.
- Contract supports modernization of critical defense assets for an allied nation.
Sector Analysis
The aerospace and defense sector is characterized by high R&D costs, complex supply chains, and significant government procurement. This contract falls within the aircraft manufacturing and maintenance sub-sector. Global spending on military aircraft upgrades is substantial, driven by the need to extend the service life of aging fleets and incorporate new technologies. Comparable spending benchmarks would involve other mid-life upgrade programs for similar aircraft platforms, often running into hundreds of millions of dollars.
Small Business Impact
This contract does not appear to involve small business set-asides, as it was awarded sole-source to a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within this award. The primary focus is on the prime contractor's capabilities, potentially limiting direct opportunities for small businesses unless they are part of Boeing's established supply chain.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the Fixed Price Incentive contract terms, linking payment to performance. Transparency may be limited due to the sole-source nature of the award, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight.
Related Government Programs
- Foreign Military Sales
- Aircraft Modernization Programs
- Aerospace Manufacturing Contracts
- Department of Defense Procurement
Risk Flags
- Sole-source award may limit price competition.
- Long contract duration increases risk exposure.
- Fixed Price Incentive contract requires careful performance monitoring.
Tags
defense, aircraft-manufacturing, department-of-defense, department-of-the-air-force, sole-source, fixed-price-incentive, large-contract, international-cooperation, washington, mid-life-upgrade
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $404.0 million to THE BOEING COMPANY. FRENCH MID LIFE UPGRADE
Who is the contractor on this award?
The obligated recipient is THE BOEING COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $404.0 million.
What is the period of performance?
Start: 2009-12-18. End: 2025-06-30.
What is the specific scope of the 'mid-life upgrade' for the French aircraft?
The provided data does not detail the specific technical scope of the 'FRENCH MID LIFE UPGRADE.' Mid-life upgrades typically involve enhancements to avionics, structural integrity, weapons systems, and engine performance to extend the operational life of an aircraft by 15-20 years. For this contract, the exact modifications, components to be replaced or upgraded, and the specific aircraft models are not specified. Understanding the detailed scope is crucial for assessing the value and risks associated with the $404 million price tag.
How does the $404 million cost compare to similar mid-life upgrade programs for comparable aircraft?
Directly comparing the $404 million cost without knowing the specific aircraft type, the number of aircraft being upgraded, and the scope of work is challenging. However, mid-life upgrades for major military aircraft platforms (e.g., fighter jets, transport planes) often range from tens to hundreds of millions of dollars per aircraft, depending on complexity. For instance, upgrades to older fighter jet fleets can cost upwards of $50 million per aircraft. Given this contract is for a fleet, the total cost is plausible but requires detailed benchmarking against similar programs for the specific aircraft type involved.
What are the key performance metrics and incentive structures within the Fixed Price Incentive (FPI) contract?
A Fixed Price Incentive (FPI) contract establishes a target cost, target profit, and an incentive price ceiling. The contractor is reimbursed for allowable costs up to the ceiling. If the final cost is below the target cost, both the government and contractor share in the savings based on a pre-negotiated formula. Conversely, if the final cost exceeds the target cost but remains below the ceiling, the contractor's profit is reduced. The key performance metrics would be tied to the successful completion of the upgrade tasks within the agreed-upon schedule and technical specifications. Specific metrics are not detailed in the provided data but would be critical for monitoring contractor performance and determining final payment.
What is Boeing's track record with similar sole-source defense upgrade contracts?
The Boeing Company has an extensive history of sole-source and competitively awarded contracts for aircraft manufacturing, modification, and upgrade programs for both U.S. and international customers. They are a primary contractor for numerous U.S. military aircraft platforms. Their track record with sole-source awards often stems from being the original equipment manufacturer (OEM) or possessing unique technical expertise required for specific upgrades. While generally considered reliable, specific performance on past sole-source upgrade contracts would require a deeper dive into contract performance reports and historical data.
What are the potential risks associated with the 'not available for competition' status?
The primary risk associated with a 'not available for competition' (sole-source) award is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price. Additionally, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single supplier, which can create long-term dependencies and limit future flexibility. For taxpayers, this means a higher likelihood of paying a premium for the goods or services received.
How does this contract align with broader U.S. foreign military sales and defense cooperation objectives?
This contract, likely executed under Foreign Military Sales (FMS) provisions or direct commercial sales, aligns with U.S. objectives to enhance the military capabilities of key allies. Supporting the modernization of French military assets strengthens NATO interoperability and contributes to regional security. Such sales also support the U.S. defense industrial base by providing work for major contractors like Boeing. The specific nature of the upgrade could also be tied to interoperability requirements with U.S. forces.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 7755 E MARGINAL WAY S, SEATTLE, WA, 98108
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $406,986,539
Exercised Options: $406,986,539
Current Obligation: $403,959,461
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $34,740
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: F1962801D0016
IDV Type: IDC
Timeline
Start Date: 2009-12-18
Current End Date: 2025-06-30
Potential End Date: 2025-06-30 00:00:00
Last Modified: 2025-06-26
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