Air Force awards $69M engineering support contract to Boeing, citing sole-source justification

Contract Overview

Contract Amount: $69,082,258 ($69.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-02-01

End Date: 2027-01-31

Contract Duration: 1,825 days

Daily Burn Rate: $37.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: ENGINEERING SUPPORT SERVICES FOR MULTIPLE PLATFORMS.

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $69.1 million to THE BOEING COMPANY for work described as: ENGINEERING SUPPORT SERVICES FOR MULTIPLE PLATFORMS. Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant duration of 5 years suggests a long-term need for these specialized engineering services. 3. Fixed Price Incentive contract type aims to balance cost control with contractor performance. 4. The award is for engineering support across multiple platforms, indicating broad applicability. 5. Boeing's established relationship with the DoD likely influenced the sole-source decision. 6. The contract's value is substantial, requiring careful monitoring of performance and costs.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without comparable bids. The fixed-price incentive structure suggests an attempt to manage costs, but the absence of competition limits direct price comparison. The total value of $69 million over five years indicates a significant investment. Further analysis would require understanding the specific engineering tasks and the market rates for such specialized services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. The Department of the Air Force would have provided a justification for this approach, likely due to specialized capabilities or existing platform integration. The lack of multiple bidders means there was no direct price discovery through competition, potentially leading to higher costs than a competed award.

Taxpayer Impact: Taxpayers may not have received the benefit of the lowest possible price due to the absence of a competitive bidding process.

Public Impact

The primary beneficiaries are the Department of the Air Force and its various platforms requiring engineering support. Services delivered include specialized engineering expertise crucial for maintaining and improving complex military systems. The geographic impact is likely nationwide, supporting Air Force operations and maintenance across different bases. Workforce implications include the potential for continued employment of skilled engineers at Boeing and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration could lead to cost overruns if not closely managed.
Lack of transparency in the sole-source justification requires scrutiny.
Fixed Price Incentive contracts can still lead to cost increases if performance targets are not met efficiently.

Positive Signals

Boeing's established expertise in aerospace engineering is a positive signal for service quality.
The fixed-price incentive structure aims to align contractor and government interests.
The contract supports critical defense platforms, ensuring operational readiness.
Long-term nature of the contract provides stability for essential engineering services.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for specialized engineering support for complex military platforms is dominated by a few large, established contractors like Boeing. Spending in this area is often driven by the need to maintain and upgrade aging fleets or develop new technologies. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded engineering support contracts for similar defense platforms.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. However, as a large prime contractor, Boeing may engage small businesses as subcontractors for specific components or services, but this is not mandated by the contract's structure.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are embedded within the Fixed Price Incentive contract type, which links profit to performance against cost targets. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight if issues arise.

Related Government Programs

Air Force Platform Engineering Support
Defense Contractor Services
Aerospace Engineering Contracts
Fixed Price Incentive Contracts
Sole-Source Defense Awards

Risk Flags

Sole-source award
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.1 million to THE BOEING COMPANY. ENGINEERING SUPPORT SERVICES FOR MULTIPLE PLATFORMS.

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 $69.1 million.

What is the period of performance?

Start: 2022-02-01. End: 2027-01-31.

What specific engineering services are encompassed by this contract, and how do they align with the Air Force's strategic objectives?

The contract broadly covers 'ENGINEERING SUPPORT SERVICES FOR MULTIPLE PLATFORMS.' This typically includes a range of activities such as systems engineering, design, analysis, testing, integration, sustainment engineering, and technical support for various Air Force aircraft, weapon systems, or related infrastructure. The specific platforms are not detailed in the provided data. These services align with strategic objectives by ensuring the continued operational readiness, modernization, and lifecycle management of critical Air Force assets, thereby maintaining air superiority and supporting national defense missions. The long duration suggests a focus on sustainment and incremental upgrades for existing or evolving platforms.

What was the justification for awarding this contract on a sole-source basis to The Boeing Company?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For The Boeing Company, this could be due to their unique position as the original manufacturer or prime integrator of specific Air Force platforms, possessing proprietary data, specialized tooling, or unique technical expertise essential for their support. Other justifications might include urgent and compelling needs where competition is not feasible, or if the cost of competition would outweigh the benefits. The specific justification document from the Department of the Air Force would provide the definitive reasons, often citing factors like industrial base limitations, critical system interdependencies, or the need for continuity of support for highly specialized systems.

How does the Fixed Price Incentive (FPI) contract type aim to manage costs and incentivize performance for this $69 million award?

The Fixed Price Incentive (FPI) contract type establishes an initial target cost, target profit, and a price ceiling. The final price is determined by the contractor's actual costs, with adjustments to profit based on performance against the target cost. If the final cost is below the target cost, the contractor's profit increases (and the government's cost decreases), up to a negotiated sharing ratio. Conversely, if the final cost exceeds the target cost, the contractor's profit decreases. However, the final price cannot exceed the established price ceiling, meaning the contractor absorbs any costs beyond that point. This structure incentivizes the contractor to control costs and perform efficiently to maximize their profit, while providing the government with a degree of cost certainty up to the ceiling.

What are the potential risks associated with a sole-source, five-year engineering support contract of this magnitude?

Several risks are associated with this contract. Firstly, the sole-source nature inherently limits price competition, potentially leading to higher costs than if multiple vendors had bid. Secondly, the long duration (five years) increases the risk of cost growth due to unforeseen technical challenges, inflation, or changes in requirements that may not be fully captured in the initial pricing. There's also a risk of contractor complacency or reduced innovation over such an extended period without competitive pressure. Furthermore, dependency on a single contractor can create strategic risks if that contractor faces financial instability or shifts its business priorities. Finally, ensuring adequate oversight and performance management over five years requires sustained effort and resources from the Air Force.

How does this contract's value and duration compare to typical engineering support contracts within the Department of Defense?

A $69 million contract over five years for engineering support is a substantial award, falling within the upper range for specialized support services. Many engineering support contracts are smaller and shorter-term, often competed. However, large, sole-source contracts for critical platforms, especially those managed by original equipment manufacturers like Boeing, are not uncommon in the defense sector. The duration reflects a need for long-term sustainment and integration support, which is typical for major defense systems. Compared to competitively bid contracts, sole-source awards of this size may represent a higher unit cost, but are often justified by specific technical requirements or the need for continuity with established systems.

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

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $69,082,258

Exercised Options: $69,082,258

Current Obligation: $69,082,258

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $3,632,450

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA810617D0002

IDV Type: IDC

Timeline