Boeing awarded $46M for B-52 engineering services, but competition was limited

Contract Overview

Contract Amount: $46,088,554 ($46.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-09-28

End Date: 2023-03-31

Contract Duration: 1,645 days

Daily Burn Rate: $28.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: B-52 ENGINEERING SERVICES/GPS IU EMD

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $46.1 million to THE BOEING COMPANY for work described as: B-52 ENGINEERING SERVICES/GPS IU EMD Key points: 1. The contract focuses on engineering and program management for the B-52 bomber's GPS navigation system. 2. This award represents a significant investment in maintaining and upgrading a critical legacy aircraft. 3. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited innovation. 4. Performance is rated as 'OK', suggesting satisfactory but not exceptional delivery. 5. The contract duration of over 4 years indicates a long-term commitment to this specific system. 6. The use of Cost Plus Fixed Fee pricing may incentivize cost overruns if not closely monitored.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without comparable bids. The Cost Plus Fixed Fee (CPFF) structure, while common for complex engineering, carries inherent risks of cost escalation. Without competitive pressure, it's difficult to ascertain if the pricing reflects optimal value for the taxpayer. Further analysis would require access to detailed cost breakdowns and historical pricing for similar B-52 sustainment efforts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach is typically justified when a specific contractor possesses unique capabilities or intellectual property essential for the requirement. However, the lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from potential cost savings that could arise from multiple companies bidding for the work.

Public Impact

The U.S. Air Force benefits from continued engineering support for the B-52 bomber fleet's navigation systems. This contract ensures the operational readiness and modernization of a key strategic asset. The services provided are critical for maintaining the B-52's role in national defense. The contract supports specialized engineering and technical jobs within the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed stringently.
Lack of transparency in pricing due to sole-source nature.
Long contract duration may reduce flexibility for future technological advancements.
Performance rating of 'OK' suggests room for improvement in service delivery.

Positive Signals

Contract addresses critical sustainment needs for a vital strategic asset.
Boeing's established expertise with the B-52 platform likely ensures continuity.
The contract aims to upgrade essential navigation capabilities.
Clear end date provides a defined period for service delivery.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and sustainment. The B-52 bomber is a long-standing strategic asset, and contracts for its maintenance and upgrades are crucial for national security. Spending in this area often involves specialized engineering services and long-term support agreements, reflecting the complexity and longevity of such platforms. Comparable spending benchmarks would involve other major aircraft sustainment programs within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The primary awardee is a large aerospace corporation. The focus on specialized engineering for a legacy platform suggests that the core work is likely performed by the prime contractor or its large subcontractors, with limited direct impact on the broader small business ecosystem in this specific instance.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA). The 'OK' performance rating suggests that DCMA is monitoring the contractor's delivery. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency regarding the specific oversight mechanisms and any Inspector General involvement would require further investigation into the contract's detailed reporting requirements and audit history.

Related Government Programs

B-52 Bomber Modernization Programs
Air Force Sustainment and Logistics Contracts
Avionics and Navigation System Engineering
Defense Contract Management Agency Oversight

Risk Flags

Sole-source award
Cost Plus Fixed Fee pricing structure
Potential for cost overruns
Limited competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.1 million to THE BOEING COMPANY. B-52 ENGINEERING SERVICES/GPS IU EMD

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 $46.1 million.

What is the period of performance?

Start: 2018-09-28. End: 2023-03-31.

What is Boeing's track record with B-52 sustainment contracts?

The Boeing Company has a long-standing relationship with the B-52 program, having been involved in its manufacturing and sustainment for decades. Their historical performance on similar contracts generally indicates a deep understanding of the aircraft's systems and maintenance requirements. While specific performance metrics for past B-52 contracts are not detailed here, their continued selection for such critical work suggests a generally satisfactory track record. However, the 'OK' rating on this specific contract indicates that while requirements are being met, there may be opportunities for enhanced performance or efficiency. A comprehensive review would involve examining past performance reviews, any incurred penalties or awards, and the timeliness and cost-effectiveness of previous sustainment efforts.

How does the $46 million cost compare to similar B-52 engineering contracts?

Direct comparison of the $46 million total award value for this specific contract is difficult without access to detailed breakdowns of the services rendered and the contract duration. However, B-52 sustainment and modernization efforts are known to be substantial, often running into hundreds of millions or even billions of dollars over the life cycle of the aircraft. This $46 million appears to cover a specific phase of engineering services for the GPS Integrated Unit (IU) Embedded Module (EMD). To benchmark effectively, one would need to compare the cost per year, cost per system, or cost per hour of engineering effort against other B-52 avionics upgrades or engineering support contracts awarded over similar timeframes, ideally those also competed to provide a clearer value assessment.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for B-52 engineering?

The primary risks associated with this sole-source, Cost Plus Fixed Fee (CPFF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved in a competitive bidding process. The government may not be getting the best possible value. Secondly, the CPFF structure, while providing flexibility for evolving requirements, shifts much of the financial risk to the government. The contractor is reimbursed for allowable costs plus a negotiated fixed fee. This can incentivize cost overruns, as the contractor may incur higher costs but still receive their fixed profit margin. Effective mitigation requires stringent government oversight, detailed cost auditing, and clear definition of allowable costs to prevent contractor inefficiency from inflating the final price.

How effective is the 'OK' performance rating in assessing contractor performance?

An 'OK' performance rating signifies that the contractor is meeting the minimum requirements of the contract but is not exceeding expectations. While it indicates that the services are being delivered as specified, it does not necessarily imply optimal efficiency, innovation, or proactive problem-solving. For a critical system like the B-52's navigation, an 'OK' rating suggests that while the lights are on, there might be opportunities for improvement in areas such as timeliness, cost control, or technical execution. It provides a baseline indication of satisfactory performance but warrants closer monitoring to ensure that performance does not degrade and to identify areas where the contractor could enhance value delivery.

What is the historical spending trend for B-52 engineering and sustainment services?

Historical spending on B-52 engineering and sustainment services has been substantial and is expected to continue due to the aircraft's extended service life. The U.S. Air Force has invested billions over the decades to maintain and modernize the fleet. This includes major programs like the re-engining initiative and various avionics and structural upgrades. Annual spending can fluctuate significantly based on the specific modernization phases and sustainment needs. Contracts for engineering services, like the one awarded to Boeing, are a consistent component of this overall spending, reflecting the ongoing requirement for technical expertise to keep the aging B-52 fleet operationally relevant and safe.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

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

Financial Breakdown

Contract Ceiling: $46,138,194

Exercised Options: $46,138,194

Current Obligation: $46,088,554

Actual Outlays: $1,447,927

Subaward Activity

Number of Subawards: 35

Total Subaward Amount: $5,713,964

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862810D1000

IDV Type: IDC

Timeline