Boeing awarded $113.8M for engineering support, raising questions about competition and value

Contract Overview

Contract Amount: $113,755,754 ($113.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-02-01

End Date: 2028-01-31

Contract Duration: 1,460 days

Daily Burn Rate: $77.9K/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 $113.8 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, limiting potential cost savings from competition. 2. Fixed Price Incentive contract type suggests shared risk but requires careful monitoring of performance. 3. Long duration of 4 years indicates a significant, ongoing need for these services. 4. The contract is for engineering support across multiple platforms, suggesting broad applicability. 5. Oklahoma is the primary location for this contract, potentially impacting the local economy. 6. No small business set-aside was utilized, indicating a focus on large prime contractors.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source engineering support agreements. The fixed-price incentive structure aims to control costs, but the absence of competition means there's no direct market comparison to assess if the pricing is optimal. The total value of $113.8 million over four years suggests a substantial investment, and oversight will be critical to ensure the government receives good value for the services rendered, especially given the lack of competitive pressure.

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 bypasses the typical competitive bidding process, which usually involves multiple companies vying for the contract. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can potentially lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may face higher costs due to the lack of competitive bidding. Without multiple offers, there is less assurance that the negotiated price represents the best possible value.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which will receive critical engineering support for its platforms. Services delivered include essential engineering support, likely encompassing design, analysis, testing, and sustainment for various military aircraft or systems. The geographic impact is concentrated in Oklahoma, where the contract work will be performed, potentially creating or sustaining high-skilled jobs in the region. The contract supports a significant number of high-skilled engineering roles within The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Fixed Price Incentive contract requires diligent performance monitoring to ensure cost control.
Lack of small business participation may limit opportunities for smaller firms in the supply chain.

Positive Signals

Boeing is a well-established aerospace and defense contractor with extensive experience.
The contract addresses a long-term need for engineering support across multiple platforms.
The fixed-price incentive structure aligns contractor and government interests in achieving performance goals.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for defense engineering support is dominated by a few large, established companies like Boeing, given the specialized knowledge and security clearances required. Spending in this sector is often driven by the need to maintain and modernize complex military platforms, with contracts typically being long-term and high-value. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of defense contracts and the unique requirements of each platform.

Small Business Impact

This contract does not appear to include a small business set-aside. The award to The Boeing Company, a large prime contractor, suggests that the primary focus was on securing specialized engineering expertise. While large prime contracts can sometimes lead to subcontracting opportunities for small businesses, the absence of a specific set-aside or clear subcontracting plan in the provided data means the direct impact on the small business ecosystem is uncertain and potentially limited.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures are built into the Fixed Price Incentive contract type, which links contractor profit to performance metrics. Transparency may be limited due to the sole-source nature and the classified or sensitive aspects of defense engineering. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Engineering Services
Aerospace Platform Support
Air Force Sustainment Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award lacks competitive justification.
Potential for cost overruns due to FPI structure without robust oversight.
Limited transparency inherent in sole-source defense contracts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $113.8 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 $113.8 million.

What is the period of performance?

Start: 2024-02-01. End: 2028-01-31.

What is Boeing's track record with similar engineering support contracts for the Air Force?

The Boeing Company has a long and extensive history of providing engineering support services to the Department of Defense, including the Air Force, across a wide array of platforms. This includes work on aircraft, missile systems, and other defense technologies. Their track record generally indicates a capacity to deliver complex engineering solutions. However, specific performance metrics, past issues, or successes on highly comparable sole-source contracts would require deeper analysis of historical contract data and performance reviews, which are not fully detailed in the provided summary. Past performance evaluations, often available through government databases like the Contractor Performance Assessment Reporting System (CPARS), would offer more granular insights into their reliability and quality on previous engagements.

How does the $113.8 million value compare to similar sole-source engineering support contracts?

Directly comparing the $113.8 million value to similar sole-source engineering support contracts is challenging due to the proprietary nature of defense contracting and the unique specifications of each requirement. However, for major defense platforms requiring sustained engineering expertise over several years, contract values in the tens to hundreds of millions of dollars are not uncommon. The absence of competition means this figure represents a negotiated price rather than a market-tested one. To assess value, one would typically benchmark against the cost of performing similar work internally (if feasible), or against the cost of alternative solutions, neither of which is readily available from the provided data. The duration of four years (1460 days) suggests a sustained need, making the annual average cost approximately $28.45 million.

What are the primary risks associated with this sole-source, fixed-price incentive contract?

The primary risks associated with this sole-source, Fixed Price Incentive (FPI) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to a higher price than if the contract were competed. The government lacks the benefit of multiple bids to ensure the best possible value. Secondly, while the FPI structure aims to incentivize performance by sharing cost overruns and underruns between the government and contractor, it still carries inherent risks. If the target cost is set too high or the incentive sharing is unfavorable, the government could end up paying more than anticipated. Conversely, if the target cost is too low, the contractor might cut corners on quality to meet financial goals. Effective oversight is crucial to manage these risks.

How effective is the Fixed Price Incentive (FPI) contract type in ensuring program effectiveness for engineering services?

The Fixed Price Incentive (FPI) contract type can be effective in ensuring program effectiveness for engineering services by aligning the interests of the government and the contractor. It establishes a target cost, a target profit, and an incentive ceiling. If the final cost is below the target, both parties share in the savings according to a predetermined formula. If the final cost exceeds the target, they share in the overruns up to the incentive ceiling. This structure encourages the contractor to control costs while meeting performance specifications. For complex engineering tasks, where the exact costs might be uncertain at the outset, the FPI provides flexibility and motivation for the contractor to perform efficiently and effectively, thereby enhancing program success.

What are the historical spending patterns for engineering support services by the Department of the Air Force?

Historical spending patterns for engineering support services by the Department of the Air Force typically show significant and consistent investment due to the complexity and lifecycle needs of its advanced platforms. The Air Force relies heavily on specialized engineering expertise for research, development, sustainment, modernization, and upgrades of aircraft, space systems, and command and control networks. Spending in this category often fluctuates based on major acquisition programs, modernization initiatives, and readiness requirements. While specific aggregate figures vary year to year, engineering support consistently represents a substantial portion of the Air Force's overall procurement and operations and maintenance budgets, often awarded through a mix of competitive and sole-source contracts to large aerospace and defense firms.

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: $113,755,754

Exercised Options: $113,755,754

Current Obligation: $113,755,754

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $2,692,718

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