DOE awards $173M to Boeing for facilities support, raising questions on competition and value
Contract Overview
Contract Amount: $172,882,604 ($172.9M)
Contractor: THE Boeing Company
Awarding Agency: Department of Energy
Start Date: 1999-10-15
End Date: 2026-12-31
Contract Duration: 9,939 days
Daily Burn Rate: $17.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Other
Place of Performance
Location: CANOGA PARK, LOS ANGELES County, CALIFORNIA, 91303
Plain-Language Summary
Department of Energy obligated $172.9 million to THE BOEING COMPANY for work described as: Key points: 1. Contract awarded via "not competed" route, limiting price discovery and potentially increasing costs. 2. Long contract duration (over 27 years) suggests a need for robust performance monitoring. 3. Cost-plus incentive fee structure may incentivize cost overruns if not carefully managed. 4. Boeing's extensive experience in large-scale government contracts provides a baseline for performance. 5. Focus on facilities support services indicates a critical operational role for the contractor. 6. Geographic concentration in California for services warrants attention to local economic impacts.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging due to its unique nature and long duration. The cost-plus incentive fee (CPIF) structure, while common for complex projects, requires careful oversight to ensure costs remain reasonable. Without comparable sole-source facilities support contracts of this scale and duration, it's difficult to definitively assess if the $173 million represents excellent value. However, the extended period suggests a potentially favorable long-term arrangement if performance is consistently high.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded using a 'not competed' procedure, indicating that the Department of Energy did not solicit bids from multiple offerors. This approach is typically reserved for situations where only one source is capable of meeting the requirement, or in cases of urgent need. The lack of competition means that taxpayers did not benefit from the price discovery that typically occurs in a competitive bidding process.
Taxpayer Impact: The absence of competition means that the government may not have secured the lowest possible price for these essential facilities support services. This could translate to higher overall spending for taxpayers over the life of the contract.
Public Impact
The Department of Energy benefits from continuous and reliable facilities support services, crucial for its operations. Boeing, as the contractor, receives significant revenue and maintains its role as a key government service provider. The primary geographic impact is in California, where the facilities are located and where local jobs may be supported. Workforce implications include potential job creation or retention for individuals involved in facilities management and support within California.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition raises concerns about potential overpricing and reduced incentive for cost efficiency.
- The extended contract duration (over 27 years) increases the risk of performance degradation or evolving needs not being met.
- Cost-plus incentive fee contracts can lead to higher costs if not rigorously managed and monitored.
- The sole-source nature limits transparency and public scrutiny of the contract's financial terms.
Positive Signals
- Boeing's established track record in large-scale government contracting suggests a capacity to manage complex operations.
- The long duration may indicate a stable, long-term partnership beneficial for consistent service delivery.
- The CPIF structure, if well-defined with appropriate incentives, can align contractor and government interests towards achieving specific performance goals.
Sector Analysis
Facilities support services represent a significant segment of the government contracting market, encompassing a wide range of activities from maintenance and repair to logistics and security. This contract falls within the broader professional, scientific, and technical services sector. While specific benchmarks for sole-source facilities support contracts of this magnitude are scarce, the Department of Energy's reliance on such services underscores their critical importance to national infrastructure and operations. Comparable spending in this area often involves long-term agreements with established providers.
Small Business Impact
This contract does not appear to include a small business set-aside. Given the sole-source nature and the prime contractor being The Boeing Company, there is a potential for limited subcontracting opportunities for small businesses. The extent to which Boeing will engage small businesses for specialized services will be a key factor in assessing the contract's broader economic impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract will primarily reside within the Department of Energy's contracting and program management offices. Given the sole-source award and the CPIF structure, rigorous performance monitoring and financial auditing will be crucial to ensure accountability and prevent cost overruns. Transparency may be limited due to the non-competitive nature, but regular reporting requirements should provide some insight into contract execution. The Inspector General's office would likely have jurisdiction for audits and investigations if any irregularities arise.
Related Government Programs
- Department of Energy Facilities Management Contracts
- Large-Scale Government Support Services
- Sole-Source Federal Contracts
- Cost-Plus Incentive Fee Contracts
Risk Flags
- Sole-source award
- Long contract duration
- Cost-plus contract type
Tags
facilities-support, department-of-energy, california, definitive-contract, large-contract, sole-source, cost-plus-incentive-fee, boeing, facilities-management, government-services
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $172.9 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 Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $172.9 million.
What is the period of performance?
Start: 1999-10-15. End: 2026-12-31.
What is Boeing's track record with similar facilities support contracts for federal agencies?
The Boeing Company has a long and extensive history of performing large-scale support services for various federal agencies, including complex logistical, maintenance, and operational support. While specific details on facilities support contracts of this exact nature and duration are not readily available in the public domain, Boeing's general experience with managing vast government programs suggests a capability to handle the scope of this contract. Their involvement in defense, aerospace, and other critical sectors often requires sophisticated facilities management. However, the 'not competed' aspect for this particular DOE contract warrants scrutiny regarding the specific reasons for sole-sourcing and whether past performance was the sole determinant.
How does the $173 million contract value compare to market rates for similar services?
Directly comparing the $173 million contract value to market rates is difficult due to several factors. Firstly, the contract is sole-sourced, meaning competitive market forces were not applied to determine the price. Secondly, the contract spans over 27 years (from 1999 to 2026), making a direct annual comparison complex, as it likely includes inflation adjustments and evolving service requirements. Thirdly, the specific scope of 'Facilities Support Services' for the Department of Energy is likely highly specialized and tailored to government needs, which may differ significantly from commercial offerings. Without detailed breakdowns of the services provided and the specific performance metrics, a precise market rate comparison is not feasible. However, the extended duration and CPIF structure suggest a need for ongoing monitoring to ensure cost-effectiveness.
What are the primary risks associated with a sole-source, long-term contract like this?
The primary risks associated with this sole-source, long-term contract include a lack of price competition, which can lead to higher costs for the government compared to a competitively bid contract. There's also a risk of complacency from the contractor, as there is no immediate threat of losing the business to a competitor, potentially impacting service quality or innovation over time. The extended duration increases the risk that the contract's terms may become misaligned with evolving government needs or technological advancements, requiring costly modifications or renegotiations. Furthermore, sole-source awards can reduce transparency and public accountability, making it harder to ensure taxpayer funds are being used efficiently and effectively.
How effective is the Cost Plus Incentive Fee (CPIF) structure in managing costs for this contract?
The Cost Plus Incentive Fee (CPIF) structure aims to incentivize the contractor to control costs by sharing in any savings or overruns relative to a target cost. If Boeing meets or exceeds cost targets, they earn a higher fee; if costs exceed targets, their fee is reduced. The effectiveness hinges on the realism of the target cost, the clarity of the incentive metrics, and the rigor of government oversight. For this contract, the effectiveness depends on how well the DOE has established these parameters and how diligently they monitor performance against them. Without detailed insight into the target cost and incentive clauses, it's difficult to definitively assess its effectiveness, but the structure itself provides a mechanism for cost control if properly implemented and managed.
What is the historical spending pattern for facilities support services at the Department of Energy?
Historical spending patterns for facilities support services at the Department of Energy are generally characterized by long-term contracts awarded to large, established companies, often through competitive processes, but sometimes through sole-source or limited competition avenues for specialized or legacy sites. The DOE manages a vast portfolio of research, production, and administrative facilities, requiring continuous investment in maintenance, operations, and upgrades. Spending can fluctuate based on infrastructure needs, modernization projects, and shifts in energy policy or research priorities. While specific aggregate historical data for facilities support is not provided here, the nature of government facility management suggests consistent, substantial annual expenditures over decades.
Industry Classification
NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services
Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE RESTORATION ACTIVITIES
Competition & Pricing
Extent Competed: NOT COMPETED
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Contractor Details
Address: 2201 SEAL BEACH BLVD, SEAL BEACH, CA, 90740
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $64,012,464
Exercised Options: $110,030,236
Current Obligation: $172,882,604
Actual Outlays: $42,464
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 1999-10-15
Current End Date: 2026-12-31
Potential End Date: 2026-12-31 00:00:00
Last Modified: 2025-12-22
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