DoD awards $47.4M to Boeing for guided missile parts, raising questions on competition and value

Contract Overview

Contract Amount: $47,447,137 ($47.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2006-03-31

End Date: 2014-06-30

Contract Duration: 3,013 days

Daily Burn Rate: $15.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $47.4 million to THE BOEING COMPANY for work described as: Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Long contract duration of over 8 years suggests a need for sustained supply chain support. 3. Fixed-price contract type aims to transfer risk to the contractor, but oversight is crucial. 4. Boeing's established role in defense manufacturing suggests technical capability, but also market dominance. 5. Geographic concentration in California may indicate reliance on specific regional industrial capabilities. 6. Lack of competition raises concerns about whether the government secured the best possible value.

Value Assessment

Rating: fair

The contract's value of $47.4 million over an 8-year period is difficult to benchmark without comparable sole-source awards for similar specialized parts. The firm fixed-price structure is generally favorable for cost control, but the absence of competition means there's no direct market comparison to assess if the pricing is truly competitive. Without more data on unit costs or historical pricing trends for these specific components, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution. It suggests a reliance on a single supplier for critical components.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to offer the lowest possible cost. This also reduces transparency in pricing and makes it harder to ensure public funds are being used efficiently.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the continued availability of essential components for guided missile systems. Services delivered include the manufacturing and supply of specialized parts crucial for defense readiness. The geographic impact is concentrated in California, where the contractor, The Boeing Company, likely has significant operations. Workforce implications include the potential for sustained employment within Boeing's manufacturing facilities, particularly in specialized technical roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for taxpayers.
Long contract duration may obscure potential cost efficiencies over time.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Boeing's established expertise in aerospace and defense manufacturing.
Contract ensures supply of critical components for national security.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on guided missile components. This is a highly specialized and often consolidated market where a few large prime contractors dominate. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish due to the proprietary nature of many defense components and the limited number of qualified manufacturers.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the award was made directly to The Boeing Company and there is no indication of a small business set-aside. Subcontracting opportunities for small businesses may exist within Boeing's supply chain, but this is not explicitly detailed in the provided information. The impact on the broader small business ecosystem is likely minimal unless Boeing actively engages small businesses for specialized components.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are embedded within the contract terms, including delivery schedules and quality standards. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Guided Missile Manufacturing
Aerospace Defense Contracts
Department of Defense Procurement
Sole-Source Defense Acquisitions
Defense Supply Chain Management

Risk Flags

Sole-source award lacks competitive justification.
Long contract duration may obscure cost efficiencies.
Limited public data on specific parts and pricing.
Potential for contractor market dominance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.4 million to THE BOEING COMPANY. See the official description on USAspending.

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 $47.4 million.

What is the period of performance?

Start: 2006-03-31. End: 2014-06-30.

What is Boeing's track record with similar sole-source contracts for defense components?

The Boeing Company has a long history of securing sole-source contracts with the Department of Defense, often due to its status as a primary defense contractor and its proprietary technologies. Analyzing past sole-source awards to Boeing for comparable components, such as those for aircraft or other weapon systems, could provide insight into pricing trends and performance history. However, specific data on these contracts is often sensitive and not publicly available. Generally, sole-source awards require robust justification from the agency to demonstrate why competition was not feasible, and oversight is critical to ensure fair pricing and delivery.

How does the $47.4 million value compare to similar guided missile parts contracts?

Direct comparison of the $47.4 million value is challenging without knowing the specific type and quantity of 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment' procured. The contract's duration of over 8 years (3013 days) means the annual value is approximately $6 million. This figure needs to be contextualized against the complexity, technological sophistication, and production volume of the parts. Sole-source awards inherently lack a competitive benchmark, making it difficult to definitively state if this represents good or poor value. A thorough analysis would require comparing unit costs, material costs, labor hours, and overhead against industry standards or previous contracts for similar items, if available.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract include potential overpricing due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a heightened dependence on a single supplier, which could lead to supply chain vulnerabilities. If Boeing faces production issues or delays, it could significantly impact the DoD's operational readiness. Furthermore, the long duration increases the risk of cost escalation if not managed tightly, despite the fixed-price nature. Ensuring robust oversight and performance monitoring is crucial to mitigate these risks.

How effective is the firm fixed-price contract type in managing costs for this specific procurement?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs because it places the primary responsibility for cost control on the contractor. Boeing is obligated to complete the work for the agreed-upon price, absorbing any cost overruns. This incentivizes Boeing to be efficient in its production and management. However, the effectiveness can be diminished in a sole-source environment if the initial price was not rigorously negotiated or benchmarked. While FFP shifts risk, the government must still ensure the baseline price is fair and that the contractor meets quality and delivery requirements.

What are the historical spending patterns for 'Other Guided Missile and Space Vehicle Parts' by the Department of Defense?

Historical spending patterns for 'Other Guided Missile and Space Vehicle Parts' by the Department of Defense are substantial, reflecting the ongoing need for advanced defense systems. This category encompasses a wide range of components, from raw materials and sub-assemblies to specialized electronic and mechanical parts. Spending fluctuates based on modernization programs, geopolitical factors, and specific weapon system lifecycles. While precise aggregate figures for this specific sub-category are often embedded within broader defense budgets, the overall trend indicates consistent and significant investment in maintaining and upgrading missile capabilities. Analyzing trends requires access to detailed procurement data over multiple fiscal years.

What is the significance of the contract being awarded in California?

The contract being awarded to The Boeing Company with operations in California is significant as it highlights the state's role as a major hub for the aerospace and defense industry. This concentration of expertise, skilled labor, and established infrastructure in California likely contributed to Boeing's ability to secure this sole-source contract. It also means that a substantial portion of the $47.4 million federal spending will likely flow into the Californian economy through wages, supplier payments, and related economic activity. This geographic concentration can also imply potential risks if regional economic downturns or natural disasters impact production.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3370 E MIRALOMA AVE, ANAHEIM, CA, 92806

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline