Boeing awarded $116.8M for satellite telecommunications services, a sole-source contract with a 7-year duration

Contract Overview

Contract Amount: $116,843,166 ($116.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2003-08-29

End Date: 2010-02-28

Contract Duration: 2,375 days

Daily Burn Rate: $49.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 200311!000237!5700!QA27 !AMC/CONF/LGC !FA445203C0006 !A!N! !Y! !20030829!20080831!054977306!054977306!009256819!N!BOEING COMPANY, THE !15460 LAGUNA CANYON RD !IRVINE !CA!92618!36770!059!06!IRVINE !ORANGE !CALIFORNIA!+000004361972!N!N!000036495800!D399!OTHER ADP & TELECOMMUNICATION SERVICES !S1 !SERVICES !3000!NOT DISCERNABLE OR CLASSIFIED !517410!E! !3! ! ! ! ! !99990909!B!E!N!A! !D!U!J!1!001!N!1G!Z!N!Z! ! !Y!C!N! ! ! !Z!Z!A!A!000!A!B!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: RICHARDSON, DALLAS County, TEXAS, 75080, UNITED STATES OF AMERICA

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $116.8 million to THE BOEING COMPANY for work described as: 200311!000237!5700!QA27 !AMC/CONF/LGC !FA445203C0006 !A!N! !Y! !20030829!20080831!054977306!054977306!009256819!N!BOEING COMPANY, THE !15460 LAGUNA CANYON RD !IRVINE !CA!92618!36770!059!06!IRVINE !ORANGE !CALIFORNIA!+000004361972!N!N!000036495800!D399!OTHER ADP & TELECOMMUNICATIO… Key points: 1. Contract awarded to a single, large business prime contractor. 2. Services provided are critical for national security and defense operations. 3. The contract was not competed, raising questions about potential cost efficiencies. 4. Long contract duration suggests a sustained need for these specialized services. 5. Firm Fixed Price contract type aims to control costs, but competition is key. 6. Geographic location of contractor is in California, but services likely global.

Value Assessment

Rating: fair

The total award amount of $116.8 million over approximately 7 years represents a significant investment. Without competitive bidding, it is difficult to benchmark the value for money. The firm fixed-price structure is a positive indicator for cost control, but the absence of competition means there's no market validation of the pricing. Further analysis would require comparing this to similar sole-source satellite telecommunications contracts, if available, to assess if the pricing is within a reasonable range for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed contract. It also suggests a high barrier to entry for other potential providers in this specific niche.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without a bidding process, there is less assurance that the government secured the best possible price for these essential satellite telecommunications services.

Public Impact

The Department of the Air Force benefits from critical satellite telecommunications capabilities. Services likely support national security operations, intelligence gathering, and global communications for military personnel. The geographic impact is global, enabling communication and operations across various theaters. Workforce implications are primarily within The Boeing Company, a major aerospace and defense contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can reduce innovation by limiting market entry.
Long-term reliance on a single provider can create vendor lock-in.
Transparency is reduced without a competitive bidding process.

Positive Signals

Firm Fixed Price contract type helps manage cost certainty.
The Boeing Company is a reputable and experienced contractor in aerospace and defense.
The contract duration indicates a stable and predictable service for the agency.

Sector Analysis

This contract falls within the Information Technology and Defense sectors, specifically focusing on satellite telecommunications. The market for such services is highly specialized, dominated by a few large aerospace and defense companies with the technical expertise and security clearances required. Spending in this area is critical for maintaining global command and control, intelligence, and operational readiness. Comparable spending benchmarks are difficult to establish due to the proprietary nature of satellite technology and the unique requirements of government contracts.

Small Business Impact

This contract was awarded to a large business prime contractor, The Boeing Company, and there is no indication of small business set-asides or subcontracting plans within the provided data. The sole-source nature of the award further suggests limited opportunities for small businesses to participate directly. This contract does not appear to contribute to the small business ecosystem in terms of prime contracting or mandated subcontracting goals.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. As a sole-source award, scrutiny might be higher to ensure the necessity and fair pricing. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. The firm fixed-price nature provides some level of cost accountability.

Related Government Programs

Defense Communications Services
Satellite Communications Systems
National Security Space Programs
Air Force Command and Control Systems

Risk Flags

Sole-source award lacks competitive pricing validation.
Potential for cost overruns if initial pricing is not rigorously assessed.
Long-term duration may lead to vendor lock-in.
Limited transparency due to non-competitive nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $116.8 million to THE BOEING COMPANY. 200311!000237!5700!QA27 !AMC/CONF/LGC !FA445203C0006 !A!N! !Y! !20030829!20080831!054977306!054977306!009256819!N!BOEING COMPANY, THE !15460 LAGUNA CANYON RD !IRVINE !CA!92618!36770!059!06!IRVINE !ORANGE !CALIFORNIA!+000004361972!N!N!000036495800!D399!OTHER ADP & TELECOMMUNICATION SERVICES !S1 !SERVICES !3000!NOT DISCERNABLE OR CLASSIFIED !517410!E! !3! ! ! ! ! !99990909!B!E!N!A! !D!U!J!1!001!N!1G!Z!N!Z! ! !Y!C!N! ! ! !Z!Z!A!A!000!A!B!Y! ! ! ! ! ! !0001! !

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $116.8 million.

What is the period of performance?

Start: 2003-08-29. End: 2010-02-28.

What is The Boeing Company's track record with sole-source defense contracts?

The Boeing Company has a long history of receiving sole-source contracts from the U.S. government, particularly within the defense and aerospace sectors. These awards often stem from the company's unique capabilities, proprietary technologies, or its role as a prime contractor on complex, long-term programs where competition is limited or infeasible. While sole-source awards can be efficient for acquiring specialized capabilities, they also necessitate robust government oversight to ensure fair pricing and prevent potential cost overruns. Boeing's extensive experience in these areas means they are well-positioned to execute such contracts, but the government's responsibility to justify the lack of competition and validate pricing remains paramount.

How does the $116.8 million award compare to similar satellite telecommunications contracts?

Direct comparison of this $116.8 million award for satellite telecommunications services is challenging without more specific details on the scope, duration, and technology involved. Satellite telecommunications contracts can vary widely in price based on factors like bandwidth, global coverage, encryption requirements, and the specific satellite constellations utilized. Given this was a sole-source award to Boeing over approximately seven years, the average annual value is roughly $16.7 million. This figure needs to be benchmarked against other sole-source or limited-competition contracts for similar government satellite services, considering the specific technical requirements and market conditions at the time of award. Without such comparative data, assessing the value for money is difficult.

What are the primary risks associated with a sole-source contract of this magnitude?

The primary risks associated with a sole-source contract of this magnitude ($116.8 million) include potential for inflated pricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and the risk of vendor lock-in. If the government becomes overly reliant on a single provider for critical services, it can limit future flexibility and bargaining power. There's also a risk that the government may not be receiving the most cost-effective solution available in the market. Robust contract management, clear performance metrics, and regular price reviews are crucial to mitigate these risks.

How effective are firm fixed-price contracts in controlling costs for long-term sole-source agreements?

Firm Fixed Price (FFP) contracts are designed to provide cost certainty for the buyer by shifting most of the risk to the seller. For long-term sole-source agreements like this one, an FFP structure can be effective in controlling costs, as the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently. However, the initial price negotiation is critical. If the baseline price is set too high due to the lack of competition, the FFP structure will simply lock in that higher cost. Therefore, while FFP is a good mechanism for cost control, its effectiveness in sole-source situations hinges on thorough pre-award price analysis and negotiation.

What is the historical spending pattern for satellite telecommunications within the Department of the Air Force?

Historical spending patterns for satellite telecommunications within the Department of the Air Force (and the broader Department of Defense) are substantial and have generally trended upwards, reflecting the increasing reliance on space-based assets for communication, navigation, intelligence, and surveillance. This includes spending on satellite acquisition, launch services, ground infrastructure, and operational support. Contracts like the one awarded to Boeing are part of this larger investment in maintaining a robust and secure space architecture. Analyzing historical spending would reveal a consistent need for these services, often involving large, long-term contracts with major aerospace and defense firms, and frequently involving sole-source or limited-competition awards due to the specialized nature of the technology and infrastructure.

Industry Classification

NAICS: Information › Satellite Telecommunications › Satellite Telecommunications

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 15460 LAGUNA CANYON RD, IRVINE, CA, 92618

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline