Navy's $285.8M F-18 Hornet contract awarded to McDonnell Douglas in 1997, extended through 2016

Contract Overview

Contract Amount: $285,853,565 ($285.9M)

Contractor: THE Boeing Company (0674)

Awarding Agency: Department of Defense

Start Date: 1997-06-24

End Date: 2016-07-25

Contract Duration: 6,971 days

Daily Burn Rate: $41.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199712!1700!1802!AA4M0!NAVAL AIR SYSTEMS COMMAND !N0001997C0136 !A!*!* !19970624!20000530!006265946!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !LAMBERT ST LOUIS AIRPORT !SAINT LOUIS !MO!63103!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !0001!+000230000000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !2AFX!F-18 HORNET !3721!1!*!*!*!B!A!*!D !N!U!1!001!N!1A!A!N!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS CITY County, MISSOURI, 63166

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $285.9 million to THE BOEING COMPANY (0674) for work described as: 199712!1700!1802!AA4M0!NAVAL AIR SYSTEMS COMMAND !N0001997C0136 !A!*!* !19970624!20000530!006265946!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !LAMBERT ST LOUIS AIRPORT !SAINT LOUIS !MO!63103!65000!510!29!ST. LOUIS !ST. LO… Key points: 1. Contract awarded for airframes and spares for the F-18 Hornet aircraft. 2. Long contract duration suggests ongoing sustainment or production needs. 3. Awarded as a definitive contract, indicating a long-term agreement. 4. The contract was not competed, raising questions about price discovery. 5. The original awardee was McDonnell Douglas, later acquired by Boeing. 6. Significant contract value points to a substantial role in naval aviation.

Value Assessment

Rating: fair

The total value of $285.8 million over its extended lifespan indicates a significant investment in F-18 airframes and spares. Benchmarking this value is challenging without specific details on the quantity and type of parts procured. However, the extended period of performance suggests a sustained need and potentially a stable, albeit not necessarily the most competitive, pricing structure over time. The lack of competition in the award process makes a direct value-for-money assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source or limited competition scenario. Without a competitive bidding process, it is difficult to ascertain the extent of price discovery and whether the government received the best possible pricing. The rationale for not competing the award is not provided in the data, which is a common characteristic of sole-source procurements where a specific capability or existing system is being supported.

Taxpayer Impact: The lack of competition means taxpayers may not have benefited from the cost savings typically achieved through a competitive bidding process, potentially leading to higher overall expenditures for these aircraft components.

Public Impact

The primary beneficiaries are the U.S. Navy's F-18 Hornet fleet, ensuring operational readiness. Services delivered include the provision of airframes and spare parts essential for aircraft maintenance and repair. The geographic impact is national, supporting naval aviation operations across various bases and deployments. Workforce implications include supporting jobs at the contractor's facility in St. Louis, Missouri, and potentially its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits transparency and potential for cost savings.
Long contract duration without clear performance metrics raises concerns about sustained value.
The acquisition of a company (McDonnell Douglas by Boeing) during the contract's life could impact ongoing negotiations and pricing.

Positive Signals

Awarded to a major defense contractor with established experience in aircraft manufacturing.
The contract addresses a critical need for naval aviation readiness.
The extended performance period suggests a stable and reliable supply chain for essential components.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on military aircraft components. The market for military aircraft airframes and spares is dominated by a few large prime contractors. Spending in this area is driven by defense budgets and the operational requirements of military branches. Comparable spending benchmarks would involve analyzing other contracts for F-18 components or similar fighter jet sustainment programs, which often represent significant, long-term investments.

Small Business Impact

The data indicates this contract was not competed and does not specify any small business set-aside provisions or subcontracting goals. Given the nature of prime aircraft manufacturing and sustainment, large prime contractors like McDonnell Douglas (and later Boeing) typically handle the bulk of the work, with subcontracting opportunities potentially flowing down to smaller suppliers within the aerospace ecosystem. However, without specific subcontracting plans, the direct impact on small businesses is unclear.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a definitive contract, it would be subject to standard federal procurement regulations and oversight. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is limited by the sole-source nature of the award, with details on performance and pricing likely restricted.

Related Government Programs

F/A-18 Hornet Program
Naval Aviation Sustainment Contracts
Defense Aircraft Component Procurement
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award without clear justification.
Long contract duration without readily available performance metrics.
Potential for cost overruns inherent in Cost Plus Fixed Fee contracts.
Industry consolidation (McDonnell Douglas acquisition by Boeing) may impact future competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $285.9 million to THE BOEING COMPANY (0674). 199712!1700!1802!AA4M0!NAVAL AIR SYSTEMS COMMAND !N0001997C0136 !A!*!* !19970624!20000530!006265946!006265946!009256819!N!76301!MCDONNELL DOUGLAS CORPORATION !LAMBERT ST LOUIS AIRPORT !SAINT LOUIS !MO!63103!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !0001!+000230000000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !2AFX!F-18 HORNET !3721!1!*!*!*!B!A!*!D !N!U!1!0

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY (0674).

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $285.9 million.

What is the period of performance?

Start: 1997-06-24. End: 2016-07-25.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which is a classification for sole-source or limited competition awards. Specific justifications for sole-source awards typically include factors such as the urgency of the requirement, the unavailability of other sources, the need to maintain a unique capability, or when only one responsible source is capable of providing the required supplies or services. Without further documentation or context beyond the basic contract data, the precise reason for not competing this particular award remains unknown. Such justifications are usually detailed in a Justification and Approval (J&A) document filed with the contracting activity.

How does the total contract value of $285.8 million compare to other F-18 sustainment contracts?

Comparing the $285.8 million total value requires context regarding the contract's scope (e.g., specific parts, quantities, services) and duration. This contract, awarded in 1997 and extended until 2016, spanned nearly two decades. The F-18 program has seen numerous contracts for various aspects, including production, upgrades, and sustainment. While $285.8 million over such a long period might seem substantial, it needs to be evaluated against the total lifecycle cost of the F-18 fleet and other similar sustainment contracts. For instance, major overhauls or fleet-wide spare parts procurements could easily reach or exceed this figure. Without a direct comparison of contract scope and period, this value represents a significant but not necessarily outlier investment for a major aircraft platform's sustainment.

What were the key performance metrics or deliverables associated with this contract?

The provided data classifies the contract's Product or Service Code (PSC) as '76301' for Aircraft Fixed Wing, and the Federal Supply Group (FSG) as '1510' for Airframes and Spares. This indicates the primary deliverables were likely physical components – airframes and spare parts for the F-18 Hornet. Specific performance metrics, such as delivery schedules, quality standards (e.g., defect rates), or response times for spare part requests, are not detailed in the summary data. Typically, such contracts would include clauses defining acceptable quality levels, on-time delivery requirements, and potentially warranty provisions. The long duration suggests these metrics were met sufficiently to warrant extensions.

What is the significance of the contract type being 'COST PLUS FIXED FEE' (CPFF)?

The contract type is listed as 'PT: COST PLUS FIXED FEE'. This means the contractor (McDonnell Douglas) was reimbursed for all allowable costs incurred during performance, plus a predetermined fixed fee representing profit. CPFF contracts are often used when the scope of work is not precisely defined at the outset or involves a high degree of uncertainty or research and development. For the government, the risk is that costs could exceed initial estimates, although the fixed fee provides a ceiling on the contractor's profit. For the contractor, the profit is fixed regardless of the final cost, incentivizing cost control to some extent, but the primary risk lies with the government regarding cost overruns.

How has the acquisition of McDonnell Douglas by Boeing impacted this contract and future procurements?

McDonnell Douglas Corporation was acquired by The Boeing Company in 1997, the same year this contract was initially awarded. This consolidation in the defense industry means that Boeing became the successor entity responsible for fulfilling the contract's obligations. The acquisition likely streamlined operations and potentially led to cost efficiencies through integration. For future procurements related to the F-18 program, Boeing, as the sole prime contractor for the aircraft, would be the primary point of contact. This consolidation can reduce competition but also offers a single point of accountability for the platform's sustainment and development.

What is the historical spending trend for F-18 airframes and spares under this contract and similar agreements?

The provided data shows a total obligated amount of $285,853,565 for this specific contract, awarded in 1997 and ending in 2016. This represents an average annual spending of approximately $14.3 million over its 19.7-year lifespan. However, spending is rarely linear; it would likely have been higher during periods of peak F-18 fleet activity or major maintenance cycles and lower during lulls. Analyzing historical spending trends requires access to the annual funding data for this contract, which is not provided. Broader trends for F-18 sustainment would show significant investment over decades, reflecting the platform's longevity and operational tempo, with spending fluctuating based on fleet size, operational tempo, and modernization programs.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: LAMBERT ST LOUIS AIRPORT, SAINT LOUIS, MO, 63103

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline