Boeing awarded $5.8M for ALCM engineering services, facing no competition

Contract Overview

Contract Amount: $5,809,138 ($5.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-07-01

End Date: 2027-04-01

Contract Duration: 1,004 days

Daily Burn Rate: $5.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: AIR LAUNCHED CRUISE MISSILE (ALCM) ENGINEERING SERVICES

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $5.8 million to THE BOEING COMPANY for work described as: AIR LAUNCHED CRUISE MISSILE (ALCM) ENGINEERING SERVICES Key points: 1. Contract awarded to a single, established provider, raising questions about price competitiveness. 2. Engineering services for a critical defense asset suggest a high degree of technical specialization. 3. The contract duration of nearly three years indicates a long-term need for these services. 4. Lack of competition may limit opportunities for innovation and cost savings from alternative providers. 5. Performance is currently rated as 'OK', suggesting no immediate issues but room for improvement. 6. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely managed.

Value Assessment

Rating: fair

Benchmarking the value of this specific engineering service is challenging without comparable contract data. The $5.8 million total value over approximately 34 months suggests a monthly spend of around $170,000. Given the specialized nature of Air Launched Cruise Missile (ALCM) engineering, this figure may be within a reasonable range for highly technical support. However, the absence of competition prevents a direct comparison to assess if this represents the best value for taxpayers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Air Force did not solicit bids from multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when urgency dictates a rapid award. The lack of a competitive bidding process means that the government did not benefit from the price discovery that typically occurs when multiple companies vie for a contract.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to secure the most economical solution.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which receives essential engineering support for the ALCM program. Services delivered include engineering expertise critical for the sustainment, modification, and potential upgrades of the ALCM. The geographic impact is likely concentrated around facilities involved in ALCM operations and maintenance, potentially in Oklahoma where the contract is managed. Workforce implications include the retention of specialized engineering talent within The Boeing Company, crucial for maintaining national defense capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs than a competed contract.
Cost Plus Fixed Fee contract type requires diligent oversight to prevent cost escalation.
Sole-source award limits opportunities for new entrants and innovation.

Positive Signals

Awarded to a known contractor with existing expertise in the platform.
Contract duration suggests a stable, ongoing need for critical engineering support.
Performance is currently rated 'OK', indicating satisfactory execution to date.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on engineering services for a missile system. The aerospace and defense industry is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Spending on defense engineering services is substantial, supporting the development, sustainment, and modernization of military platforms. Comparable spending benchmarks are difficult to establish without more specific details on the scope of engineering work, but contracts for specialized defense systems often run into millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a large prime contractor like Boeing typically means that any small business involvement would be at the subcontracting level, which is not explicitly detailed here. This limits direct opportunities for small businesses to engage with the government on this specific contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officers and program managers within the Department of the Air Force. The Cost Plus Fixed Fee (CPFF) contract type necessitates robust financial oversight to ensure costs are reasonable and allocable. Transparency is generally maintained through contract reporting systems, though detailed performance metrics and cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Air Launched Cruise Missile (ALCM) Sustainment
Air Force Weapon Systems Engineering
Defense Contract Engineering Services
Aerospace Engineering Support
Missile Systems Development

Risk Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type requires diligent oversight.
Lack of transparency on specific engineering tasks and deliverables.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.8 million to THE BOEING COMPANY. AIR LAUNCHED CRUISE MISSILE (ALCM) ENGINEERING SERVICES

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 $5.8 million.

What is the period of performance?

Start: 2024-07-01. End: 2027-04-01.

What is The Boeing Company's track record with Air Force engineering contracts?

The Boeing Company has a long and extensive history of contracting with the U.S. Air Force, providing a wide array of engineering, manufacturing, and support services for numerous aircraft and weapon systems. Their track record includes major programs such as the B-52, B-1, B-2, and F-15, as well as various missile systems. While generally considered a reliable partner, like any large defense contractor, they have experienced both successes and challenges, including cost overruns and schedule delays on certain complex programs. For ALCM engineering services specifically, their historical performance would need to be assessed based on past contract data and performance reviews, which are not detailed in this summary.

How does the $5.8 million value compare to similar ALCM engineering contracts?

Direct comparison of the $5.8 million value for ALCM engineering services is difficult without access to historical contract data for similar scopes of work. The total contract value spread over approximately 34 months (from July 2024 to April 2027) equates to an average annual spend of roughly $2 million. This figure represents the total estimated cost plus fixed fee. Without knowing the specific engineering tasks (e.g., sustainment, upgrades, diagnostics, testing), it's hard to benchmark. However, given the complexity and criticality of missile systems, this level of annual investment for specialized engineering support is not unusual within the defense sector.

What are the primary risks associated with a sole-source award for critical engineering services?

The primary risks associated with a sole-source award for critical engineering services like those for the ALCM include: 1. **Higher Costs:** Without competition, the contractor may not be incentivized to offer the lowest possible price, potentially leading to higher costs for the government. 2. **Reduced Innovation:** A lack of competitive pressure can stifle innovation, as the incumbent contractor may have less incentive to develop novel or more efficient engineering solutions. 3. **Vendor Lock-in:** The government becomes dependent on a single provider, making it difficult and costly to switch vendors in the future, even if performance or pricing becomes unsatisfactory. 4. **Potential for Complacency:** The contractor might become complacent due to the guaranteed business, potentially impacting the quality or timeliness of services.

How effective is the Cost Plus Fixed Fee (CPFF) contract type in managing engineering projects?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex engineering projects where the scope is not fully defined at the outset, or where innovation is a key objective. It aims to provide the contractor with cost certainty (the fixed fee) while allowing flexibility in managing project costs. The government pays the actual allowable costs incurred by the contractor plus a predetermined fixed fee, which represents the contractor's profit. While CPFF can encourage innovation and flexibility, it carries risks. If not managed diligently, it can lead to cost overruns, as the contractor is reimbursed for all allowable costs. Effective oversight, clear definition of allowable costs, and robust negotiation of the fixed fee are crucial for ensuring value and controlling expenditures under a CPFF contract.

What is the historical spending trend for ALCM engineering services?

Historical spending data for ALCM engineering services specifically is not provided in the current data extract. However, the Air Force's overall budget for weapon system sustainment and modernization is substantial and tends to fluctuate based on strategic priorities, aging platforms, and new technology insertions. Given that the ALCM is a long-standing weapon system, there has likely been consistent, albeit variable, spending on its engineering support over the years. Without access to detailed historical contract databases (e.g., FPDS), it is impossible to determine specific spending trends, year-over-year increases or decreases, or the total amount spent on ALCM engineering over the system's lifecycle.

What are the implications of the 'OK' performance rating for this contract?

An 'OK' performance rating suggests that the contractor, The Boeing Company, is currently meeting the basic requirements and expectations outlined in the contract for ALCM engineering services. It indicates that services are being delivered satisfactorily, without significant deficiencies or major successes that would warrant a higher rating (e.g., 'Exceptional'). For the government, an 'OK' rating implies that the contract is functioning as intended but may not be exceeding expectations in terms of efficiency, innovation, or cost savings. It signals that while there are no immediate red flags, continued monitoring is necessary to ensure performance does not degrade and to identify opportunities for improvement or potential issues before they become critical.

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

Solicitation ID: FA812817R0001

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: $5,809,138

Exercised Options: $5,809,138

Current Obligation: $5,809,138

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $403,657

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA812817D0001

IDV Type: IDC

Timeline