Department of Defense procures new aircraft for $57.6M, awarding contract to Beechcraft Corporation

Contract Overview

Contract Amount: $57,599,687 ($57.6M)

Contractor: Beechcraft Corporation

Awarding Agency: Department of Defense

Start Date: 2008-07-11

End Date: 2011-03-01

Contract Duration: 963 days

Daily Burn Rate: $59.8K/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: PROCUREMENT OF NEW AIRCRAFT

Place of Performance

Location: WICHITA, SEDGWICK County, KANSAS, 67206

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $57.6 million to BEECHCRAFT CORPORATION for work described as: PROCUREMENT OF NEW AIRCRAFT Key points: 1. The contract's firm fixed-price structure aims to control costs and provide predictability. 2. Awarded under full and open competition after exclusion of sources, suggesting a deliberate procurement strategy. 3. The duration of 963 days indicates a significant, long-term need for the aircraft. 4. The contract's value of $57.6 million places it as a substantial investment within the defense sector. 5. The North American Industry Classification System (NAICS) code 336411 points to aircraft manufacturing, a specialized industry. 6. The contract was managed by the Defense Contract Management Agency, ensuring oversight. 7. The base contract value of $59.8 million suggests potential for growth or modifications. 8. The contract was awarded in Kansas, potentially impacting the local economy and workforce.

Value Assessment

Rating: good

The firm fixed-price contract type is generally favorable for cost control. Benchmarking this specific aircraft procurement against similar contracts would require detailed specifications of the aircraft and its intended use. However, the base value of $59.8 million for a 963-day duration suggests a significant investment in specialized aviation assets. Without more granular data on the aircraft's capabilities and market comparables, a precise value-for-money assessment is challenging, but the fixed-price nature mitigates some risk.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while the competition was intended to be open, specific sources were excluded, possibly due to specialized requirements or prior relationships. The number of bidders is not specified, but the 'exclusion of sources' suggests a potentially narrowed field compared to a truly unrestricted full and open competition. This approach can sometimes lead to less aggressive pricing if the pool of qualified bidders is significantly reduced.

Taxpayer Impact: The exclusion of certain sources, even within an open competition framework, could mean taxpayers may not have benefited from the absolute lowest possible price achievable in a completely unrestricted bidding process.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring new aircraft. The services delivered include the manufacturing and delivery of new aircraft, crucial for military readiness. The geographic impact is primarily in Kansas, where the contract was awarded and likely fulfilled. Workforce implications include employment in the aerospace manufacturing sector in Kansas and potentially supporting industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for higher costs due to exclusion of sources limiting competitive pressure.
Long contract duration (963 days) increases exposure to economic fluctuations and potential scope creep if not managed tightly.
Reliance on a single contractor (Beechcraft Corporation) for a critical asset could pose supply chain risks.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established manufacturer like Beechcraft Corporation suggests a focus on reliability and proven capabilities.
Managed by the Defense Contract Management Agency, indicating established oversight processes.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically aircraft manufacturing (NAICS 336411). This is a highly specialized and capital-intensive industry. The global aerospace market is substantial, with significant government spending driven by defense needs. Comparable spending benchmarks would involve other large-scale aircraft procurement contracts by military branches, which often run into tens or hundreds of millions of dollars depending on the aircraft type and quantity.

Small Business Impact

The contract details indicate that small business participation was not a primary focus, as the 'sb' field is false. There is no explicit mention of small business set-asides or subcontracting requirements. This suggests that the prime contractor, Beechcraft Corporation, is likely a large business, and the procurement was not specifically structured to benefit small businesses directly through set-asides. Subcontracting opportunities for small businesses may exist but are not mandated by the contract's primary structure.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), which provides contract administration services to the Department of Defense. Oversight mechanisms would include monitoring contract performance, ensuring compliance with terms and conditions, and verifying delivery schedules and quality standards. Accountability is established through the firm fixed-price contract, which holds the contractor responsible for delivering the aircraft within the agreed-upon price. Transparency is generally facilitated through contract databases, though specific performance details may be sensitive.

Related Government Programs

Military Aircraft Procurement
Aerospace Manufacturing Contracts
Defense Logistics and Support
Fixed-Price Defense Contracts

Risk Flags

Limited Competition
Potential for Cost Overruns (inherent in long-term manufacturing)
Supply Chain Vulnerability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.6 million to BEECHCRAFT CORPORATION. PROCUREMENT OF NEW AIRCRAFT

Who is the contractor on this award?

The obligated recipient is BEECHCRAFT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $57.6 million.

What is the period of performance?

Start: 2008-07-11. End: 2011-03-01.

What is the specific type of aircraft being procured and its intended mission?

The provided data does not specify the exact type of aircraft or its intended mission. The NAICS code 336411 indicates aircraft manufacturing, and the agency is the Department of Defense. This suggests a military-grade aircraft, potentially for transport, surveillance, training, or light attack roles, depending on Beechcraft's product line relevant to military contracts. Without further details, the specific capabilities and operational context remain unknown. Further investigation would require accessing the contract's statement of work or associated documentation.

How does the $57.6 million contract value compare to similar aircraft procurements by the DoD?

The $57.6 million contract value is a significant sum, but its comparability depends heavily on the type and quantity of aircraft. For instance, procuring a fleet of small training aircraft would be vastly different in cost from acquiring a few specialized surveillance or transport planes. Beechcraft Corporation manufactures a range of aircraft, from turboprops to light jets. If this contract is for a small number of specialized aircraft, $57.6 million could be within the expected range. However, if it's for a larger quantity or more complex platform, it might represent a favorable price or indicate a smaller scope than other major DoD aircraft programs.

What are the key risks associated with this firm fixed-price contract for aircraft manufacturing?

While firm fixed-price contracts offer cost certainty, risks can still arise. For the government, the primary risk is that the contractor may cut corners on quality or performance to maintain profitability if unforeseen issues arise during manufacturing. For the contractor, the risk lies in underestimating production costs, leading to financial losses. Given the long duration (963 days), risks related to material cost escalation, supply chain disruptions, and potential design changes or requirement creep (if not strictly managed) are also present. The 'exclusion of sources' aspect also introduces a risk of not achieving the most competitive pricing.

What is Beechcraft Corporation's track record with similar Department of Defense contracts?

Beechcraft Corporation (now part of Textron Aviation) has a long history of supplying aircraft to military and government entities. They are known for producing a range of turboprop and jet aircraft often used for training, light attack, surveillance, and transport roles. Their track record with the DoD typically involves delivering reliable platforms. However, specific performance metrics, past issues, or successes related to contracts of this magnitude and type would require a deeper dive into historical contract data, performance reviews, and any associated litigation or disputes.

How does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' procurement method impact cost-effectiveness?

This procurement method is a nuanced approach. 'Full and open competition' aims for the widest possible participation, theoretically driving down prices. However, 'after exclusion of sources' means that certain potential bidders were deliberately not considered. This exclusion could be based on specific technical requirements, security clearances, or other criteria. If the excluded sources were capable of offering a competitive price or a superior product, their exclusion might lead to a higher final price for the government than if all capable sources had been allowed to bid. The cost-effectiveness hinges on whether the exclusions were justified by essential requirements and if the remaining competition was still robust.

What are the potential long-term implications of this contract for the defense industrial base?

This contract supports a segment of the defense industrial base focused on aircraft manufacturing, specifically within Beechcraft Corporation's capabilities. Awarding a substantial contract like this helps sustain jobs, maintain specialized manufacturing skills, and potentially fund research and development for future aircraft. It reinforces the role of established prime contractors in meeting critical defense needs. The long duration also provides a degree of stability for the workforce and supply chain involved. However, over-reliance on a few large prime contractors can also raise concerns about market concentration and long-term innovation if smaller, innovative firms are consistently excluded.

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: TWO STEP

Solicitation ID: N0001907R0083

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Textron Inc (UEI: 001338979)

Address: 9709 E CENTRAL, WICHITA, KS, 67206

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $59,475,657

Exercised Options: $57,599,687

Current Obligation: $57,599,687

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline