Boeing Realty Corp. awarded $1.01B contract for aircraft structural component maintenance, spanning nearly 8 years
Contract Overview
Contract Amount: $1,009,070,909 ($1.0B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 1997-12-19
End Date: 2007-09-30
Contract Duration: 3,572 days
Daily Burn Rate: $282.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: 199812!5700!0007!GU30 !ASC/YCK !F3365797C0008 !A!*!* !19971219!20050930!074973959!074973959!009256819!N!88277!BOEING REALTY CORP !4060 N LAKEWOOD BLVD FL 5 !LONG BEACH !CA!90808!43000!037!06!LONG BEACH !LOS ANGELES !CALIFORNIA!0001!+000160556272!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1A!AIRFRAMES AND SPARES !3ADG!C-17 CARGO TRANSPORT !3728!3!*!*!*!B!A!*!C !U!R!1!001!N!1G!A!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!B!N!*!*!*!*!*!
Place of Performance
Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90807
Plain-Language Summary
Department of Defense obligated $1.01 billion to THE BOEING COMPANY for work described as: 199812!5700!0007!GU30 !ASC/YCK !F3365797C0008 !A!*!* !19971219!20050930!074973959!074973959!009256819!N!88277!BOEING REALTY CORP !4060 N LAKEWOOD BLVD FL 5 !LONG BEACH !CA!90808!43000!037!06!LONG BEACH !LOS AN… Key points: 1. Contract value of over $1 billion suggests significant long-term support needs for critical aircraft. 2. Sole-source award raises questions about potential cost efficiencies and market competition. 3. Long contract duration (nearly 8 years) indicates a stable, ongoing requirement for these services. 4. The contract's focus on structural components highlights the importance of airframe integrity for safety and performance. 5. Boeing's role as both the contractor and potentially the manufacturer of the aircraft implies deep technical knowledge. 6. The 'Cost Plus Award Fee' structure incentivizes performance while managing costs, but requires careful oversight.
Value Assessment
Rating: fair
The contract value of $1.01 billion over nearly 8 years is substantial, averaging over $126 million annually. Benchmarking this against similar maintenance contracts for large transport aircraft is difficult without more specific service details. However, the 'Cost Plus Award Fee' pricing structure suggests that while base costs are covered, significant performance incentives are tied to achieving specific metrics. This can lead to value if performance is exceptional, but also carries the risk of inflated costs if not managed tightly.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a single contractor possesses unique capabilities, proprietary knowledge, or is the only source capable of meeting the requirement. While this can ensure specialized expertise, it limits the potential for price discovery through competitive bidding and may result in higher costs for the government.
Taxpayer Impact: A sole-source award means taxpayers did not benefit from competitive pricing, potentially leading to a higher overall expenditure for these essential aircraft maintenance services.
Public Impact
The primary beneficiaries are the U.S. Air Force units operating C-17 cargo transport aircraft, ensuring their continued operational readiness. Services delivered include maintenance and repair of aircraft structural components, crucial for flight safety and longevity. The geographic impact is likely focused on locations where C-17s are based or maintained, primarily within the United States. Workforce implications include employment for skilled technicians, engineers, and support staff at Boeing and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Cost Plus Award Fee structure requires robust government oversight to prevent cost overruns.
- Long-term nature of the contract may reduce flexibility to adapt to evolving technologies or market conditions.
- Reliance on a single contractor for critical structural maintenance could pose a risk if performance degrades.
Positive Signals
- Boeing's established expertise in aircraft manufacturing and support suggests a high likelihood of technical competence.
- The 'Award Fee' component provides an incentive for high performance and quality.
- Long duration indicates a stable, predictable need, allowing for efficient resource planning.
- Contracting with the original equipment manufacturer can ensure access to specialized knowledge and parts.
Sector Analysis
This contract falls within the aerospace and defense sector, specifically focusing on aircraft maintenance, repair, and overhaul (MRO). The market for MRO services for large military aircraft is substantial, often dominated by original equipment manufacturers (OEMs) like Boeing due to the specialized knowledge and proprietary data required. Spending in this area is critical for maintaining the operational readiness of military fleets, with significant government outlays dedicated to ensuring aircraft airworthiness and longevity.
Small Business Impact
There is no explicit indication of small business set-asides within the provided data for this prime contract. However, large prime contractors like Boeing are typically required to have subcontracting plans that include goals for engaging small businesses. The extent to which small businesses will participate in this contract will depend on Boeing's subcontracting strategy and the availability of qualified small business vendors for specialized maintenance and repair services.
Oversight & Accountability
Oversight for this 'Cost Plus Award Fee' contract would primarily fall under the Defense Contract Management Agency (DCMA), responsible for monitoring contractor performance, costs, and compliance. The 'Award Fee' component necessitates rigorous evaluation criteria and government assessment to determine incentive payouts, ensuring accountability. Transparency is facilitated through contract reporting requirements, though specific details of performance evaluations may be sensitive.
Related Government Programs
- Aircraft Maintenance and Repair
- Defense Logistics and Support Services
- Air Force Aviation Programs
- C-17 Globemaster III Sustainment
Risk Flags
- Sole Source Award
- Cost Plus Award Fee Structure
- High Contract Value
- Long Contract Duration
Tags
defense, department-of-defense, dcma, boeing, aircraft-maintenance, structural-repair, c-17, cost-plus-award-fee, sole-source, california, large-contract, aerospace
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.01 billion to THE BOEING COMPANY. 199812!5700!0007!GU30 !ASC/YCK !F3365797C0008 !A!*!* !19971219!20050930!074973959!074973959!009256819!N!88277!BOEING REALTY CORP !4060 N LAKEWOOD BLVD FL 5 !LONG BEACH !CA!90808!43000!037!06!LONG BEACH !LOS ANGELES !CALIFORNIA!0001!+000160556272!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1A!AIRFRAMES AND SPARES !3ADG!C-17 CARGO TRANSPORT !3728!3!*!*!*!B!A!*!C !U!R!1!0
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 $1.01 billion.
What is the period of performance?
Start: 1997-12-19. End: 2007-09-30.
What is Boeing's track record with similar sole-source maintenance contracts for large military aircraft?
Boeing has a long history of providing sustainment and maintenance services for its major military aircraft platforms, often through sole-source or limited-competition contracts due to its OEM status. These contracts typically cover a wide range of services, from depot-level maintenance and structural repairs to component upgrades and logistics support. While specific performance metrics are often not public, Boeing generally maintains a strong reputation for technical expertise. However, the 'Cost Plus Award Fee' structure, common in such long-term agreements, necessitates diligent government oversight to ensure costs remain reasonable and performance targets are met effectively. Historical data on similar contracts would reveal patterns in cost growth and award fee payouts, providing insight into the efficiency of this contracting approach.
How does the annual cost of this contract compare to industry benchmarks for C-17 sustainment?
The annual cost for this contract averages approximately $126 million ($1.01 billion / 8 years). Benchmarking this figure against industry standards for C-17 sustainment is challenging without granular data on the specific services included (e.g., hours of labor, types of repairs, parts replaced). However, the C-17 is a large, complex military transport aircraft, and its sustainment costs are known to be significant. Industry reports and analyses by organizations like the Government Accountability Office (GAO) often highlight the high operational and sustainment costs associated with large military fleets. While $126 million per year might seem high, it could be within the expected range for comprehensive maintenance and repair of such a critical asset, especially when considering the 'Cost Plus Award Fee' structure which can inflate costs based on performance incentives.
What are the primary risks associated with a sole-source 'Cost Plus Award Fee' contract of this magnitude?
The primary risks associated with this contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved in a fully competed environment. The government relies heavily on the contractor's proposed costs and the effectiveness of the award fee structure to ensure value. Secondly, the 'Cost Plus Award Fee' (CPAF) structure, while incentivizing performance, carries inherent risks of cost escalation. If the government's oversight and evaluation of performance metrics are not rigorous, the contractor may be incentivized to incur higher costs to achieve higher award fees, rather than focusing solely on cost efficiency. This requires robust government program management and technical expertise to effectively manage the contractor's performance and costs.
What is the historical spending trend for aircraft structural component maintenance within the Department of Defense?
Historical spending trends for aircraft structural component maintenance within the Department of Defense (DoD) generally show a consistent and significant allocation of resources. As military fleets age, the need for structural repairs and component replacements increases, driving sustained or growing expenditures. The DoD's budget typically includes substantial line items for aircraft sustainment, which encompasses maintenance, repair, and overhaul (MRO) services. Factors influencing these trends include the size and age of the active aircraft inventory, the complexity of the platforms, operational tempo (how much aircraft are flown), and evolving maintenance philosophies (e.g., shifting towards performance-based logistics). Contracts like this one for the C-17 represent a portion of this larger, ongoing investment in maintaining airworthiness and operational readiness across various aircraft types.
How does the 'Airframes and Spares' Product Service Code (PSC) relate to the overall sustainment strategy for the C-17 program?
The 'Airframes and Spares' Product Service Code (PSC 3ADG) specifically relates to the procurement of airframes and spare parts essential for the C-17 program. This contract, focusing on 'MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS' (PSC 336411), is directly linked to this code. It signifies that the contract covers the labor and materials needed to maintain the structural integrity of the C-17 airframe and potentially includes the provision or repair of related structural components and spares. This is a critical aspect of the C-17's overall sustainment strategy, ensuring the aircraft remains airworthy and operationally capable throughout its service life. Effective management under this PSC is vital for mission readiness and safety.
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
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 2401 E WARDLOW ROAD, LONG BEACH, CA, 90807
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $160,241,348
Exercised Options: $160,241,348
Current Obligation: $1,009,070,909
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 1997-12-19
Current End Date: 2007-09-30
Potential End Date: 2007-09-30 00:00:00
Last Modified: 2022-07-27
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