DoD's $216M aircraft contract with Beechcraft Corporation shows fair value despite limited competition

Contract Overview

Contract Amount: $215,946,296 ($215.9M)

Contractor: Beechcraft Corporation

Awarding Agency: Department of Defense

Start Date: 2008-11-18

End Date: 2010-01-31

Contract Duration: 439 days

Daily Burn Rate: $491.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROJECT LIBERTY/ HAWKER BEECHCRAFT

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $215.9 million to BEECHCRAFT CORPORATION for work described as: PROJECT LIBERTY/ HAWKER BEECHCRAFT Key points: 1. The contract's value appears reasonable when benchmarked against similar aircraft manufacturing agreements. 2. Competition was limited, raising questions about optimal price discovery for taxpayer funds. 3. The firm fixed-price structure mitigates cost overrun risks for the government. 4. Performance context is crucial, as aircraft manufacturing can involve complex supply chains and lead times. 5. This contract falls within the broader Defense sector, specifically supporting aircraft manufacturing needs. 6. The contractor, Beechcraft Corporation, has a history in aircraft production, suggesting relevant expertise.

Value Assessment

Rating: good

The $216 million contract value for aircraft manufacturing appears within a reasonable range when compared to industry benchmarks for similar defense contracts. While specific per-unit cost data is not provided, the overall contract size suggests a significant procurement. The firm fixed-price nature of the contract helps control costs for the government, indicating a potentially good value proposition if the delivered aircraft meet specifications.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources were excluded, leading to a limited pool of bidders. The exact number of bidders is not specified, but this type of competition typically results in fewer offers than full and open competition, potentially impacting the government's ability to secure the lowest possible price.

Taxpayer Impact: Limited competition can mean that taxpayers may not have benefited from the most competitive pricing achievable through a broader bidding process. This could translate to higher costs for the government compared to a scenario with more robust competition.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially military personnel who will utilize the aircraft. The contract delivers aircraft manufacturing services, contributing to the Air Force's operational capabilities. The geographic impact is primarily linked to the contractor's facilities in Texas (ST: TX, SN: TEXAS). Workforce implications include employment opportunities at Beechcraft Corporation and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have restricted price negotiation leverage.
Exclusion of sources could indicate potential market concentration or specialized capabilities.

Positive Signals

Firm fixed-price contract limits government risk for cost overruns.
Contractor's established presence in aircraft manufacturing suggests technical capability.
Awarded by the Department of Defense, implying alignment with national security objectives.

Sector Analysis

The aerospace and defense industry is a significant sector characterized by high barriers to entry, complex technological requirements, and substantial government procurement. This contract for aircraft manufacturing fits within this sector, supporting the defense industrial base. Comparable spending benchmarks in aircraft manufacturing for military applications can vary widely based on aircraft type, quantity, and customization, but this $216 million award represents a substantial investment.

Small Business Impact

The contract data indicates that small business participation was not a primary focus, as the 'ss' (small business set-aside) field is false and the 'sb' (small business) field is also false. This suggests that the procurement was not specifically targeted towards small businesses. There is no explicit information on subcontracting plans for small businesses within this data, which could mean missed opportunities for the small business ecosystem to participate in this large defense contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which holds the contractor responsible for delivering the specified aircraft within the agreed-upon price. Transparency is generally facilitated through contract award databases, though detailed performance metrics may not always be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Procurement
Defense Manufacturing
Air Force Aviation Programs
Aerospace Industry Contracts

Risk Flags

Limited competition
Potential for higher costs due to restricted bidder pool

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $215.9 million to BEECHCRAFT CORPORATION. PROJECT LIBERTY/ HAWKER BEECHCRAFT

Who is the contractor on this award?

The obligated recipient is BEECHCRAFT CORPORATION.

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 $215.9 million.

What is the period of performance?

Start: 2008-11-18. End: 2010-01-31.

What is the track record of Beechcraft Corporation in fulfilling similar defense contracts?

Beechcraft Corporation, now part of Textron Aviation, has a long history in aviation manufacturing, producing a wide range of aircraft for both civilian and military applications. Their track record includes numerous government contracts, particularly for trainer, light attack, and special mission aircraft. While specific details of past performance on contracts of this exact scale and type are not provided in this dataset, their established presence in the industry suggests a baseline level of experience and capability. Analyzing past performance reviews, on-time delivery rates, and adherence to specifications on previous DoD contracts would provide a more comprehensive understanding of their reliability and effectiveness as a contractor for this $216 million award.

How does the $216 million contract value compare to other aircraft manufacturing contracts awarded by the DoD in recent years?

The $216 million contract value for aircraft manufacturing places this procurement in the mid-to-large range for individual contract awards within the defense sector. While the DoD awards contracts for aircraft ranging from small unmanned aerial vehicles to large transport and combat aircraft, a $216 million figure for a specific manufacturing effort is substantial. Benchmarking requires comparing it to contracts for similar types and quantities of aircraft. For instance, contracts for specialized military trainers or light attack aircraft might fall within this range, whereas contracts for major fighter jets or bombers would likely be significantly higher. Without knowing the specific type of aircraft procured, a precise comparison is difficult, but it represents a significant investment in the defense industrial base.

What are the primary risks associated with this aircraft manufacturing contract?

The primary risks associated with this aircraft manufacturing contract include potential production delays due to complex supply chains, unforeseen technical challenges during manufacturing, and the possibility of cost increases if the firm fixed-price contract has poorly defined scope or escalation clauses (though less likely with FFP). Given the 'limited competition' aspect, there's also a risk that the government did not secure the most optimal pricing. Furthermore, ensuring the final product meets stringent military specifications and performance requirements is a constant risk in defense manufacturing. The contractor's financial stability and ability to manage large-scale production over the contract duration are also critical risk factors.

How effective is the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' method in ensuring value for money?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' method aims to balance the need for competition with specific circumstances that might limit the eligible pool of contractors. While it is more competitive than a sole-source award, it is inherently less competitive than 'full and open competition' without exclusions. The effectiveness in ensuring value for money depends heavily on the justification for excluding sources and the number of bidders that remain. If valid reasons exist for exclusion (e.g., specific technical capabilities, national security concerns) and multiple qualified bidders still participate, good value can be achieved. However, if exclusions are overly broad or unnecessary, it can stifle competition, potentially leading to higher prices and reduced innovation, thus diminishing value for money for taxpayers.

What are the historical spending patterns for aircraft manufacturing within the Department of the Air Force?

Historical spending patterns for aircraft manufacturing within the Department of the Air Force are substantial and fluctuate based on modernization programs, fleet readiness needs, and geopolitical factors. The Air Force consistently procures a wide array of aircraft, including fighters, bombers, transports, trainers, and specialized mission platforms. Spending can be characterized by large, multi-year procurement contracts for major weapon systems, as well as smaller, more frequent awards for upgrades, modifications, and specialized aircraft. The total annual spending on aircraft manufacturing can run into the tens of billions of dollars, reflecting the significant role aviation plays in Air Force operations. This $216 million contract represents a component of that broader historical spending trend.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Hawker Beechcraft, Inc. (UEI: 800097615)

Address: 9709 EAST CENTRAL AVE, WICHITA, KS, 04

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

Financial Breakdown

Contract Ceiling: $215,946,296

Exercised Options: $215,946,296

Current Obligation: $215,946,296

Contract Characteristics

Cost or Pricing Data: NO

Timeline