Naval Air Systems Command (NAVAIR) awarded Boeing [BA] a $4 billion modification for full-rate production and delivery of 78 Block III F/A-18 Super Hornets in a multi-year procurement (MYP) contract.
This award is split between 61 F/A-18Es and 17 F/A-18Fs covering fiscal years 2018 – 2021 and converts a previously awarded advanced acquisition contract into a fixed-price-incentive-firm-target (FPIF) production and delivery contract. The Navy said this procurement covers six from FY 2018 and 72 from FY 2019-2021.
NAVAIR said this MYP model saves at least $395 million over non-multi year procurement methods. Boeing underscored the MYP award also allows the Navy and Boeing to both schedule future production.
“This multi-year purchase is a great illustration of employing team effort to drive out cost and maximize efficiency in government procurement. This acquisition strategy secures cost savings to the Navy, and the contract provisions limit Navy liability while incentivizing the cost to the contractor,” Rear Adm. Shane Gahagan, Program Executive Officer for Tactical Aircraft Programs, said in a statement.
“The program office was able to achieve significant savings while equipping our warfighters with the best capability on an accelerated timeline. This is how we keep pace with our adversaries,” Gahagan added.
Aircraft in the new Block III configuration include improvements like increased range, reduced radar signature, enhanced network capability, an enhanced communication system, and advanced cockpit system.
Last year, company officials said the first Block III Super Hornets will start production with the last six planes in the Flight 18 order in late 2020. The company previously said it plans to have finished delivering a full squadron of Block III Super Hornets to each aircraft carrier wing by 2024 (Defense Daily, May 24, 2018).
The contract includes opportunities to procure six more aircraft FY 2020 and 2021 at the lower MYP prices, using variation in quantity contract provisions.
A Boeing official agreed this contract provides savings for the Navy and helps it plan out readiness solutions.
“A multiyear contract helps the F/A-18 team seek out suppliers with a guaranteed three years of production, instead of negotiating year to year. It helps both sides with planning, and we applaud the U.S. Navy on taking the appropriate steps needed to help solve its readiness challenges,” Dan Gillian, Boeing vice president of F/A-18 and EA-18G programs, said in a statement.
The award has a target price of $4.001 billion and a ceiling price of $4.040 billion. Most of the work will occur in El Segundo, Calif., and is expected to be finished by April 2024.
NAVAIR noted as a FPIF contract this limits the Navy’s liability and incentivizes the cost of production for industry. In this award, the Navy and its industry partners agree to share any monetary overruns or underruns once production ends.
In all, $1.56 billion in FY 2018 and 2019 Navy aircraft procurement accounts are obligated at award time, with none expiring at the end of this fiscal year.