Air Force awards Boeing $21.1M for engineering support, raising questions on competition and value

Contract Overview

Contract Amount: $21,115,570 ($21.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-09-06

End Date: 2026-12-31

Contract Duration: 846 days

Daily Burn Rate: $25.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

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 $21.1 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, limiting price discovery and potentially increasing costs. 2. The fixed-fee structure on a cost-plus contract warrants scrutiny for potential cost overruns. 3. Boeing's extensive experience in aerospace engineering suggests a capable contractor, but lacks competitive validation. 4. The contract duration of nearly three years indicates a significant, long-term need for these services. 5. Geographic concentration in Oklahoma for engineering services may not reflect broader national needs. 6. Lack of small business participation noted, with no set-aside or subcontracting requirements specified.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive bids. The cost-plus, fixed-fee structure, while common for complex engineering, can lead to higher final costs if not tightly managed. Comparing the $21.1 million award to similar sole-source engineering support contracts for complex platforms would be necessary to assess if the pricing is reasonable. However, the absence of competition inherently limits the ability to ensure optimal value for taxpayer dollars.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Air Force did not solicit bids from multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency precludes a full and open competition. The lack of competition means there was no direct price comparison or market pressure to drive down costs, potentially leading to a higher price than if multiple firms had competed.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding processes, potentially resulting in a less efficient use of funds.

Public Impact

The primary beneficiary is the Department of the Air Force, receiving critical engineering support for multiple platforms. Services delivered include essential engineering expertise to maintain and enhance complex aerospace systems. The geographic impact is concentrated in Oklahoma, where the engineering services will be performed. The contract supports a highly specialized engineering workforce, likely within Boeing's existing employee base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially inflating costs.
Cost-plus, fixed-fee structure carries inherent risk of cost overruns.
Lack of transparency in the justification for sole-source award.
No small business participation or subcontracting requirements noted.

Positive Signals

Boeing is a well-established aerospace contractor with extensive experience.
The contract addresses a clear need for ongoing engineering support for critical platforms.
The fixed-fee component provides some cost certainty compared to pure cost-reimbursement.

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 for sustainment, modernization, and upgrades of existing defense assets. Comparable spending benchmarks would involve analyzing other sole-source or competitively awarded engineering support contracts for similar defense platforms.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor are there explicit requirements for subcontracting to small businesses. This suggests that the primary contract is intended for a large business, and opportunities for small businesses to participate in this specific award are limited. Without subcontracting goals, the broader small business ecosystem may not benefit from this significant federal expenditure.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. Accountability measures will be tied to the delivery order requirements and performance metrics outlined in the contract. Transparency is limited due to the sole-source nature of the award, with the justification for this approach being a key area for review. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Air Force Platform Sustainment Programs
Aerospace Engineering Services Contracts
Department of Defense Research and Development
Defense Contractor Support Services

Risk Flags

Sole-source award lacks competitive justification.
Cost-plus contract type poses risk of cost escalation.
No small business participation requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.1 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 $21.1 million.

What is the period of performance?

Start: 2024-09-06. End: 2026-12-31.

What is the specific justification provided by the Air Force for awarding this contract to The Boeing Company on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as "only one responsible source and no other supplies or services will satisfy the agency requirements" (FAR 6.302-1) or "brand name" requirements. For this contract, the Air Force would need to document why only Boeing could provide the necessary engineering support for multiple platforms, potentially citing proprietary data, unique technical expertise, or critical integration requirements that only Boeing possesses. Without this documentation, it's difficult to fully assess the necessity of the sole-source approach and its impact on value.

How does the cost-plus fixed-fee (CPFF) structure compare to other contract types for similar engineering support services, and what are the associated risks?

Cost-plus fixed-fee (CPFF) contracts are common for research and development or complex engineering efforts where the scope is not fully defined at the outset, making it difficult to establish a firm fixed price. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to firm-fixed-price (FFP) contracts, CPFF offers more flexibility for the government if requirements change but carries a higher risk of cost overruns, as the contractor has less incentive to control costs beyond what is necessary to complete the work. The fixed fee, however, provides some ceiling on profit. For routine engineering support, FFP or fixed-price incentive fee (FPIF) contracts might offer better cost control if the scope is well-defined.

What is Boeing's historical performance record with the Department of Defense, particularly on similar engineering support contracts?

The provided data does not include Boeing's historical performance record. A comprehensive analysis would require accessing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) for Boeing on similar contracts. Generally, Boeing is a major defense contractor with a long history of delivering complex systems and support services. However, past performance is contract-specific. Key indicators to examine would include on-time delivery, cost control, quality of work, and responsiveness to government direction on previous engineering support engagements. Without this specific data, we assume a baseline of capability but cannot confirm exceptional past performance for this particular service area.

What is the estimated total value of engineering support services procured by the Air Force annually, and how does this $21.1M award fit into that spending pattern?

The provided data does not offer a broader context of the Air Force's annual spending on engineering support services. To assess how this $21.1 million award fits into the overall pattern, one would need to analyze historical spending data for the Air Force's procurement of engineering services across all branches and platforms. This would involve looking at total obligations for NAICS code 541330 (Engineering Services) or similar codes. Without this broader context, it's difficult to determine if $21.1 million represents a significant portion of annual spending, a routine amount for such support, or an outlier. It suggests a substantial, but not necessarily massive, investment in a specific area.

Are there any specific performance metrics or milestones associated with this contract that will be used to measure Boeing's success and ensure accountability?

The provided data does not detail the specific performance metrics or milestones for this contract. However, as a cost-plus fixed-fee contract for engineering services, it is highly probable that performance will be evaluated against defined technical objectives, delivery schedules for engineering reports or designs, and adherence to project milestones. The 'fixed fee' component implies that achieving these objectives is tied to the contractor earning their profit. The Air Force's contracting officer and technical representatives would be responsible for monitoring progress and ensuring Boeing meets the contract's requirements. Specific metrics would typically be detailed in the contract's Statement of Work (SOW) or Performance Work Statement (PWS).

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: 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: $21,115,570

Exercised Options: $21,115,570

Current Obligation: $21,115,570

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $9,227,483

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