DoD awarded Boeing a $8.34B aircraft manufacturing contract, with a $4.72M initial award, over 1765 days
Contract Overview
Contract Amount: $8,338,684,281 ($8.3B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2000-01-31
End Date: 2004-11-30
Contract Duration: 1,765 days
Daily Burn Rate: $4.7M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Place of Performance
Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90807
Plain-Language Summary
Department of Defense obligated $8.34 billion to THE BOEING COMPANY for work described as: Key points: 1. The contract's value suggests a significant investment in aircraft manufacturing capabilities. 2. Competition dynamics for this large-scale defense contract are crucial for ensuring fair pricing. 3. Performance context is essential to understand if the delivered aircraft met military specifications. 4. The duration of the contract indicates a long-term commitment to a specific aircraft program. 5. Sector positioning highlights the critical role of major aerospace contractors in national defense.
Value Assessment
Rating: fair
The initial award of $4.72M for a contract valued at over $8.34B suggests a phased approach to funding. Benchmarking this contract's value against similar large-scale aircraft manufacturing agreements would provide a clearer picture of its cost-effectiveness. Without detailed performance metrics and cost breakdowns, it's challenging to definitively assess value for money. The firm fixed-price nature aims to control costs, but the overall value realization depends on successful program execution and delivery.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of two bidders suggests a competitive environment, which typically drives better pricing and innovation. However, the specific details of the bidding process, including the number of proposals received and the evaluation criteria, are needed to fully assess the effectiveness of the competition in achieving optimal value for the government.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a marketplace where contractors compete on price and performance, leading to potentially lower costs and higher quality.
Public Impact
The primary beneficiaries are the U.S. Department of Defense, which receives critical aircraft for its operations. The contract delivers advanced aircraft manufacturing services, contributing to national security capabilities. The geographic impact is primarily centered around the contractor's facilities in California, with potential ripple effects on the national aerospace supply chain. Workforce implications include employment opportunities for skilled engineers, technicians, and manufacturing personnel within the aerospace sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if not managed tightly under the firm fixed-price structure.
- Risk of schedule delays impacting operational readiness for the DoD.
- Dependence on a single large contractor could limit future flexibility.
- Ensuring the technology remains current throughout the contract's long duration.
Positive Signals
- Firm fixed-price contract provides cost certainty for the government.
- Full and open competition suggests a robust selection process.
- Long contract duration allows for economies of scale and program stability.
- Award to a major established contractor like Boeing implies significant manufacturing expertise.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, a critical industry for national security. The market is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Spending in this sector is heavily influenced by government defense budgets and geopolitical factors. Comparable spending benchmarks would involve analyzing other large-scale aircraft procurement contracts awarded by the DoD or allied nations.
Small Business Impact
While this contract is with a large prime contractor, it's essential to understand subcontracting plans. Large defense contracts often include provisions for small business participation. Analysis of subcontracting goals and actual performance would reveal the extent to which small businesses benefit from this award and contribute to the overall program. The impact on the small business ecosystem depends on the specific opportunities created and the success of those businesses in securing subcontracts.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms, quality standards, and delivery schedules. Accountability measures are embedded in the contract's performance requirements and payment milestones. Transparency is facilitated through contract reporting requirements, although detailed operational data may be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Military Aircraft Procurement
- Aerospace Manufacturing Services
- Department of Defense Major Weapon Systems
- Defense Industrial Base Contracts
Risk Flags
- Long contract duration may increase risk of technological obsolescence.
- Firm Fixed Price contracts can be susceptible to cost increases if not managed tightly.
- Dependence on a single large contractor for critical defense assets.
Tags
defense, department-of-defense, aircraft-manufacturing, the-boeing-company, definitive-contract, firm-fixed-price, full-and-open-competition, california, large-contract, aerospace, national-security
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $8.34 billion to THE BOEING COMPANY. See the official description on USAspending.
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 $8.34 billion.
What is the period of performance?
Start: 2000-01-31. End: 2004-11-30.
What is the historical spending pattern for aircraft manufacturing contracts awarded to The Boeing Company by the Department of Defense?
The Department of Defense has historically awarded substantial contracts to The Boeing Company for aircraft manufacturing, reflecting Boeing's long-standing role as a key defense contractor. Analyzing historical data reveals a consistent pattern of significant investment in various aircraft platforms, including commercial derivatives, military transports, and specialized mission aircraft. For instance, prior to this $8.34B contract, Boeing has secured multi-billion dollar deals for programs like the KC-46 tanker, P-8 Poseidon, and various fighter jet components. These historical awards underscore a strategic reliance on Boeing's capabilities for fulfilling critical aerial requirements. The volume and value of these contracts fluctuate based on defense budgets, modernization priorities, and the specific needs for new or upgraded aircraft. Understanding these patterns is crucial for assessing the long-term financial commitment and the strategic importance of Boeing within the defense industrial base.
How does the per-unit cost of aircraft produced under this contract compare to similar defense aircraft programs?
Determining the precise per-unit cost for aircraft under this specific $8.34B contract is challenging without access to detailed production data and the exact number of units to be delivered. However, for large-scale defense aircraft programs, per-unit costs can vary significantly based on complexity, technology, and production volume. For example, advanced fighter jets can cost tens to hundreds of millions of dollars per unit, while large transport or tanker aircraft might range from $100 million to over $300 million per unit. The firm fixed-price nature of this contract suggests an effort to cap costs, but the initial award of $4.72M is a small fraction of the total contract value, indicating a long production run. Benchmarking would require comparing this contract's unit cost against programs with similar specifications, such as other large military transport or specialized aircraft, considering factors like engine type, avionics sophistication, and required performance characteristics.
What are the key performance indicators (KPIs) used to measure the success of this aircraft manufacturing contract?
Key performance indicators (KPIs) for a large aircraft manufacturing contract like this typically revolve around schedule adherence, quality control, cost management, and technical performance. For the Department of Defense, critical KPIs would include on-time delivery of aircraft, meeting stringent quality standards (e.g., defect rates, structural integrity), and staying within the firm fixed-price budget. Technical performance KPIs might involve ensuring the aircraft meets specified operational requirements, such as range, payload capacity, speed, and survivability. Compliance with safety regulations and successful completion of testing and acceptance trials are also paramount. The success of the contract is ultimately measured by the DoD's ability to field reliable and effective aircraft that meet their mission needs, contributing to national security objectives.
What is the track record of The Boeing Company in delivering large-scale defense aircraft manufacturing contracts on time and within budget?
The Boeing Company has a long and extensive track record in delivering large-scale defense aircraft manufacturing contracts, marked by both significant successes and notable challenges. Historically, Boeing has been instrumental in producing iconic military aircraft, often meeting demanding specifications and contributing to U.S. military superiority. However, like many large aerospace programs, some of Boeing's contracts have experienced delays and cost overruns, particularly those involving new technologies or complex integration. For instance, the KC-46 tanker program, while ultimately delivered, faced significant hurdles. The firm fixed-price nature of this current contract suggests a strong emphasis on budget control. Boeing's ability to manage complex supply chains, integrate advanced systems, and adhere to rigorous DoD requirements are critical factors in its historical performance and will be key to the success of this $8.34B award.
What are the potential risks associated with the long duration (1765 days) of this aircraft manufacturing contract?
The long duration of this aircraft manufacturing contract, spanning approximately 4.8 years, introduces several potential risks. Firstly, technological obsolescence is a concern; aircraft designed and manufactured over such a period might face challenges remaining cutting-edge by the time of delivery or initial deployment, especially in rapidly evolving defense environments. Secondly, economic volatility and inflation could impact the cost of materials and labor, potentially straining the firm fixed-price agreement if not adequately hedged. Thirdly, geopolitical shifts could alter the strategic requirements for the aircraft, necessitating costly modifications or program re-evaluation. Finally, long-term contracts can sometimes lead to complacency or reduced agility in responding to unforeseen issues, making robust oversight and proactive risk management essential throughout the contract's lifecycle.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Contractor Details
Address: 2401 E WARDLOW RD, LONG BEACH, CA, 90807
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2000-01-31
Current End Date: 2004-11-30
Potential End Date: 2004-11-30 00:00:00
Last Modified: 2018-01-18
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