DoD's $259M Airborne Broadband SATCOM Services Contract with Boeing Raises Questions on Competition and Value

Contract Overview

Contract Amount: $259,455,609 ($259.5M)

Contractor: Boeing Aerospace Operations, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-03-01

End Date: 2015-05-31

Contract Duration: 1,917 days

Daily Burn Rate: $135.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SLC3S-A AIRBORNE BROADBAND SATCOM SVCS

Place of Performance

Location: KENT, KING County, WASHINGTON, 98032

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $259.5 million to BOEING AEROSPACE OPERATIONS, INC. for work described as: SLC3S-A AIRBORNE BROADBAND SATCOM SVCS Key points: 1. Significant contract value of $259.5 million awarded to a single vendor. 2. Lack of competition raises concerns about potential overpricing and limited innovation. 3. Long contract duration (5 years) may not reflect current market conditions or technological advancements. 4. Sector context: Satellite telecommunications are critical for defense operations, but competition is key to cost-efficiency.

Value Assessment

Rating: questionable

The contract value of $259.5 million for airborne broadband SATCOM services is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to offer competitive pricing.

Taxpayer Impact: The absence of competition likely results in a higher cost to taxpayers than if the contract had been awarded through a competitive process.

Public Impact

Taxpayers may be overpaying for essential satellite communication services due to the lack of competition. Limited opportunities for other qualified vendors to provide these services, potentially stifling innovation in the sector. The long duration of the contract means taxpayers are committed to this pricing structure for an extended period.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for overpricing
Long contract duration
No small business participation

Positive Signals

Critical service for Department of Defense operations
Established vendor with known capabilities

Sector Analysis

The Department of Defense relies heavily on satellite telecommunications for global operations. Benchmarks for similar large-scale SATCOM contracts are often influenced by technological complexity and bandwidth requirements, but competitive bidding is crucial for cost control.

Small Business Impact

The data indicates that small businesses were not involved in this contract, either as prime contractors or potentially as subcontractors. This represents a missed opportunity to support small business growth within the defense industrial base.

Oversight & Accountability

The sole-source nature of this contract warrants closer oversight to ensure the government is receiving the best possible value and that the vendor is meeting all performance requirements effectively.

Related Government Programs

Satellite Telecommunications
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for cost overruns due to lack of competition.
No small business participation.
Long contract duration may not reflect current market value.
Limited transparency on justification for sole-source award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $259.5 million to BOEING AEROSPACE OPERATIONS, INC.. SLC3S-A AIRBORNE BROADBAND SATCOM SVCS

Who is the contractor on this award?

The obligated recipient is BOEING AEROSPACE OPERATIONS, INC..

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 $259.5 million.

What is the period of performance?

Start: 2010-03-01. End: 2015-05-31.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award is critical for understanding the necessity of bypassing competition. Agencies typically cite reasons such as unique capabilities, urgent needs, or lack of available alternatives. Without this information, it's difficult to assess if taxpayer funds were used judiciously or if a more competitive approach could have yielded better pricing and potentially innovative solutions.

How does the per-unit cost of these SATCOM services compare to industry benchmarks for similar capabilities, especially considering the lack of competition?

Assessing the per-unit cost against industry benchmarks is challenging without competitive data. However, a lack of competition often inflates costs. If benchmarks suggest significantly lower prices for comparable services, it indicates potential overpayment and warrants a review of the contract's pricing structure and future procurement strategies.

What measures are in place to ensure the effectiveness and efficiency of the services provided under this sole-source contract, given the absence of competitive pressure?

With no competitive pressure, robust performance monitoring and clear service level agreements are paramount. The government must actively manage the contract, conduct regular performance reviews, and ensure the vendor consistently meets or exceeds defined metrics to guarantee service effectiveness and prevent complacency.

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

Solicitation ID: FA445209R0004

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 3373 BRECKINRIDGE BLVD, RICHARDSON, TX, 75082

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

Financial Breakdown

Contract Ceiling: $259,455,609

Exercised Options: $259,455,609

Current Obligation: $259,455,609

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline