DoD Awards Boeing $973M for Aircraft Manufacturing, Sole-Source Contract Raises Oversight Concerns
Contract Overview
Contract Amount: $973,832,892 ($973.8M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2005-09-23
End Date: 2015-09-30
Contract Duration: 3,659 days
Daily Burn Rate: $266.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Place of Performance
Location: MESA, MARICOPA County, ARIZONA, 85215
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $973.8 million to THE BOEING COMPANY for work described as: Key points: 1. Significant award to a major defense contractor, Boeing. 2. Sole-source nature of the contract warrants scrutiny regarding price discovery. 3. Long contract duration (10 years) may impact adaptability to evolving needs. 4. Focus on Aircraft Manufacturing within the Defense sector.
Value Assessment
Rating: questionable
The contract value of $973M is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market alternatives. Benchmarking against similar sole-source aircraft manufacturing contracts would be necessary for a more precise valuation.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there is no competitive pressure to drive down prices. The justification for sole-source procurement needs careful review.
Taxpayer Impact: The lack of competition in this large contract could result in a higher financial burden on taxpayers than if it had been competitively awarded.
Public Impact
Taxpayers may be paying a premium due to the absence of competition. The long-term nature of the contract could mean outdated technology or capabilities by its end. Potential for reduced innovation if alternative suppliers are not considered. Ensuring robust oversight is critical for a sole-source, high-value contract.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Long contract duration
- Lack of transparency in pricing
Positive Signals
- Award to established prime contractor
- Firm fixed price contract type
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a critical component of the Defense industry. Spending in this area is typically high due to the complex nature of aircraft development and production. Benchmarks for similar sole-source contracts are essential for evaluating value.
Small Business Impact
The data does not indicate any specific subcontracting goals for small businesses on this contract. As a sole-source award to a large prime contractor, there's a risk that small business participation might be limited unless explicitly mandated and monitored.
Oversight & Accountability
Given the sole-source nature and significant value, robust oversight is crucial. The Department of Defense and the Defense Contract Management Agency must ensure rigorous monitoring of performance, costs, and adherence to contract terms to protect taxpayer interests.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award lacks competitive pricing.
- Long contract duration may lead to obsolescence.
- Potential for contractor to leverage sole-source position for higher profits.
- Limited transparency into cost drivers.
- Risk of scope creep without competitive baseline.
Tags
aircraft-manufacturing, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $973.8 million 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 $973.8 million.
What is the period of performance?
Start: 2005-09-23. End: 2015-09-30.
What was the justification for awarding this contract on a sole-source basis, and was a thorough market analysis conducted to confirm no other viable sources existed?
The justification for a sole-source award is critical for understanding the procurement strategy. Agencies typically cite reasons like unique capabilities, urgent needs, or lack of market availability. A comprehensive market analysis should have been performed to validate these claims and ensure that competition was truly not feasible, thereby safeguarding taxpayer funds from unnecessary inflation.
How will the Department of Defense ensure fair pricing and prevent cost overruns throughout the 10-year duration of this firm-fixed-price contract, especially given the lack of competition?
Despite the firm-fixed-price structure, which shifts some risk to the contractor, the absence of competition necessitates enhanced oversight. The DoD should implement stringent performance monitoring, regular cost reviews (even if not directly negotiating price), and potentially utilize independent cost estimators. Proactive risk management and clear communication channels with Boeing are vital to address potential issues early.
What mechanisms are in place to ensure the aircraft manufactured under this contract remain relevant and technologically advanced over its 10-year lifespan?
To address technological relevance over a decade, the contract might include provisions for upgrades, modifications, or phased technology insertions. The agency should actively engage with Boeing to anticipate future requirements and incorporate necessary advancements. Regular reviews of the evolving threat landscape and technological advancements in aviation will be crucial to guide these efforts.
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: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 5000 E MCDOWELL RD, MESA, AZ, 85215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2005-09-23
Current End Date: 2015-09-30
Potential End Date: 2015-09-30 00:00:00
Last Modified: 2023-07-12
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