Boeing's B-52 sustainment contract awarded in 1999 for over $432 million, with a significant portion for engineering services

Contract Overview

Contract Amount: $432,103,516 ($432.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 1999-11-02

End Date: 2012-06-30

Contract Duration: 4,624 days

Daily Burn Rate: $93.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200002!5700!000001!GD80 !OC-ALC/LHD (B52) !F3460199C0006 !A!*!P00026 !19991102!20081231!007237241!009256819!009256819!N!82918!THE BOEING COMPANY !3801 S OLIVER ST !WICHITA !KS!67210!79000!173!20!WICHITA !SEDGWICK !KANSAS !0001!+000000742262!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1A!AIRFRAMES AND SPARES !3ABC!B-52 STRATO FORTRESS !3728!3!*!*!C!B!A!*!D !N!Y!1!001!N!1A!C!Y!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!B!N!*!*!*!Y!*!

Place of Performance

Location: WICHITA, SEDGWICK County, KANSAS, 67210

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $432.1 million to THE BOEING COMPANY for work described as: 200002!5700!000001!GD80 !OC-ALC/LHD (B52) !F3460199C0006 !A!*!P00026 !19991102!20081231!007237241!009256819!009256819!N!82918!THE BOEING COMPANY !3801 S OLIVER ST !WICHITA !KS!67210!79000!173!20!WICHITA !SED… Key points: 1. Contract awarded for a long duration, indicating a need for sustained support. 2. Significant portion of the contract value allocated to engineering services. 3. The contract was not competed, raising questions about potential cost efficiencies. 4. The contractor, Boeing, is a major aerospace manufacturer with extensive experience. 5. The contract's value suggests a critical role in maintaining a key defense asset. 6. The contract was awarded as a definitive contract, implying a long-term agreement.

Value Assessment

Rating: fair

The total award amount of over $432 million for this definitive contract spanning nearly 13 years suggests a substantial investment in B-52 sustainment. While specific performance metrics and value-for-money assessments are not detailed in the provided data, the lengthy duration and the nature of engineering services often imply complex, ongoing requirements. Benchmarking this against similar long-term sustainment contracts for legacy aircraft would be necessary for a more precise value assessment. The cost-plus award fee structure allows for flexibility but requires robust oversight to ensure optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach is often taken when a specific contractor possesses unique capabilities, intellectual property, or is the original equipment manufacturer, as is likely the case with Boeing for the B-52. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids were solicited. However, it can also ensure continuity and access to specialized expertise.

Taxpayer Impact: The absence of competition for this significant contract means taxpayers may not have benefited from potential cost savings that could arise from a competitive bidding process. The government relied on negotiation and oversight to ensure a fair price.

Public Impact

The primary beneficiaries are the U.S. Air Force and its B-52 bomber fleet, ensuring the continued operational readiness of a strategic asset. Services delivered include essential engineering support, likely encompassing maintenance, repair, modifications, and technical expertise for the aircraft. The geographic impact is national, supporting a critical component of U.S. airpower readiness across various bases where B-52s are stationed. Workforce implications include the employment of engineers, technicians, and support staff at Boeing facilities, particularly in Wichita, Kansas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have limited price negotiation leverage for the government.
Long contract duration increases the risk of cost overruns if not managed tightly.
Reliance on a single source for critical engineering services can create dependency.

Positive Signals

Contractor is the original equipment manufacturer, ensuring deep technical knowledge.
Long-term nature of the contract provides stability for sustainment planning.
Award fee structure incentivizes contractor performance.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and engineering services. The market for such services is dominated by large aerospace manufacturers who possess the original design data and manufacturing expertise for their platforms. The total value of this contract, over $432 million, is significant and reflects the long operational life and strategic importance of the B-52 bomber. Comparable spending benchmarks would involve analyzing other long-term sustainment contracts for major weapon systems.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting plans for this contract. As a sole-source award to a large prime contractor like Boeing, the direct impact on small businesses is likely through Boeing's own subcontracting activities, which are not detailed here. Without specific subcontracting goals, it's difficult to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms, quality standards, and financial accountability. The cost-plus award fee structure necessitates rigorous monitoring of costs and performance to justify award fees. Transparency is generally limited for sole-source, non-competed contracts, with detailed oversight reports often being internal or classified.

Related Government Programs

B-52 Bomber Sustainment Programs
Air Force Materiel Command Engineering Services
Aerospace Engineering and Technical Support Contracts
Long-Term Defense Service Contracts

Risk Flags

Sole-source award bypasses competitive pricing.
Long contract duration requires sustained oversight.
Cost-plus award fee structure necessitates detailed performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $432.1 million to THE BOEING COMPANY. 200002!5700!000001!GD80 !OC-ALC/LHD (B52) !F3460199C0006 !A!*!P00026 !19991102!20081231!007237241!009256819!009256819!N!82918!THE BOEING COMPANY !3801 S OLIVER ST !WICHITA !KS!67210!79000!173!20!WICHITA !SEDGWICK !KANSAS !0001!+000000742262!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1A!AIRFRAMES AND SPARES !3ABC!B-52 STRATO FORTRESS !3728!3!*!*!C!B!A!*!D !N!Y!

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 $432.1 million.

What is the period of performance?

Start: 1999-11-02. End: 2012-06-30.

What was the specific breakdown of the $432 million award between engineering services and other potential costs?

The provided data indicates a total award of $432,103,516. While the primary service listed is 'SYSTEMS ENGINEERING SERVICES', the data also includes a Product Service Code (PSC) which is blank, and a North American Industry Classification System (NAICS) code of 541330 for Engineering Services. The contract type is 'COST PLUS AWARD FEE'. Without further detailed financial breakdowns within the contract documentation, it's challenging to precisely segregate the exact dollar amount allocated solely to 'engineering services' versus other potential costs like materials, overhead, or profit margins that are part of the overall award. However, given the NAICS code and the description, a substantial majority of the contract's value is presumed to be tied to engineering and related technical support for the B-52 platform.

How does the per-unit cost of sustainment for the B-52 compare to other legacy aircraft in the Air Force inventory?

Direct per-unit cost comparisons for aircraft sustainment are complex and require detailed data on flight hours, maintenance actions, parts replaced, and labor hours for each specific aircraft type. The provided data focuses on the total contract value for B-52 sustainment services rather than per-flight-hour or per-maintenance-action costs. Benchmarking against other legacy platforms like the C-130, F-15, or KC-135 would necessitate accessing similar detailed sustainment cost data for those aircraft. Factors such as aircraft age, complexity, operational tempo, and the availability of spare parts significantly influence sustainment costs, making direct comparisons challenging without a standardized methodology and comprehensive data sets for each platform.

What are the key performance indicators (KPIs) used to assess Boeing's performance under this contract, and how has the company historically performed against them?

The provided data indicates the contract type is 'Cost Plus Award Fee' (CPAF). Under a CPAF contract, the contractor is reimbursed for allowable costs plus a fee that is composed of a base fee (typically fixed) and an award fee. The award fee is earned based on the contractor's performance against pre-defined criteria and metrics, which are outlined in the contract's Performance Evaluation Plan (PEP). These KPIs could include factors such as on-time delivery of services, quality of engineering work, responsiveness to technical issues, cost control, and achievement of specific program milestones. However, the specific KPIs and Boeing's historical performance against them are not detailed in the summary data. Accessing contract performance reports or historical award fee determinations would be necessary to evaluate Boeing's track record on this specific contract.

Given this was a sole-source award, what mechanisms were in place to ensure fair and reasonable pricing?

For sole-source contracts, especially those of significant value like this one, the government employs several mechanisms to ensure fair and reasonable pricing. These typically include mengadakan a price analysis, which involves evaluating the proposed prices against historical prices, prices for similar items, or independent government cost estimates. For Cost Plus Award Fee contracts, the government closely scrutinizes the contractor's proposed costs (direct labor, indirect costs, materials) and profit/fee structure. The 'Award Fee' component itself incentivizes the contractor to perform efficiently and effectively to maximize their earned fee, indirectly promoting cost consciousness. Furthermore, the Defense Contract Audit Agency (DCAA) often performs audits of the contractor's cost proposals to verify their accuracy and allowability. Robust negotiation between the contracting officer and the contractor is also crucial.

What is the historical spending trend for B-52 sustainment, and does this $432 million award represent a significant increase or decrease compared to previous periods?

The provided data pertains to a single definitive contract awarded in 1999 with an end date in 2012, totaling over $432 million. This represents a specific period of sustainment funding. To understand historical spending trends, one would need to examine contract awards for B-52 sustainment prior to 1999 and potentially subsequent contracts awarded after 2012. Analyzing these historical data points would reveal whether the spending under this particular contract was consistent with, higher than, or lower than previous sustainment efforts. Factors influencing trends could include changes in operational tempo, modernization programs, aging of the fleet, and evolving sustainment strategies. Without access to a broader historical contract database for B-52 sustainment, it's impossible to definitively state if this award represents a significant increase or decrease in overall spending.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 6001 S AIR DEPOT BLVD, OKLAHOMA CITY, OK, 73135

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline