Boeing awarded $16.6M for Command Receiver Decoder systems, a sole-source engineering services contract

Contract Overview

Contract Amount: $16,603,224 ($16.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2007-10-29

End Date: 2011-07-31

Contract Duration: 1,371 days

Daily Burn Rate: $12.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: COMMAND RECEIVER DECODER (CRD) RETURN TO FLIGHT

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $16.6 million to THE BOEING COMPANY for work described as: COMMAND RECEIVER DECODER (CRD) RETURN TO FLIGHT Key points: 1. Contract awarded for critical flight hardware, indicating specialized capabilities. 2. Sole-source award suggests limited market availability or unique contractor expertise. 3. Cost-plus-fixed-fee structure may incentivize cost control but requires close oversight. 4. Contract duration of over three years implies a significant project scope. 5. Performance occurred primarily in California, a hub for aerospace and defense contracting. 6. The contract's value is moderate within the context of major defense procurements.

Value Assessment

Rating: fair

The $16.6 million awarded to Boeing for the Command Receiver Decoder (CRD) system represents a significant investment in specialized aerospace technology. Benchmarking this contract's value is challenging due to its sole-source nature and the specific, likely proprietary, nature of the CRD. However, cost-plus-fixed-fee contracts, while providing flexibility, can sometimes lead to higher overall costs if not managed diligently. The absence of competitive bidding means direct price comparisons are not feasible, making a definitive value-for-money assessment difficult without further insight into the technical requirements and the contractor's cost structure.

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 is typically employed when a product or service is unique, proprietary, or when only one source possesses the necessary expertise or capability. The lack of competition means that price discovery through market forces was bypassed, potentially leading to a higher price than if multiple bids had been considered. The justification for a sole-source award would need to demonstrate why other qualified sources could not be identified or utilized.

Taxpayer Impact: For taxpayers, sole-source awards carry a higher risk of inflated costs compared to competitively bid contracts. Without competitive pressure, the government may pay a premium for the goods or services received.

Public Impact

The primary beneficiaries are likely the military branches utilizing the Command Receiver Decoder (CRD) systems, ensuring operational readiness and mission success. The services delivered involve the development, production, or sustainment of critical flight hardware essential for aircraft or missile systems. The geographic impact is concentrated in California, supporting the aerospace industry and its associated workforce in that region. Workforce implications include employment for engineers, technicians, and manufacturing personnel at Boeing and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract type requires robust oversight to manage costs effectively.
Lack of transparency in the sole-source justification could mask potential inefficiencies.
The specific nature of the CRD system makes independent cost verification difficult.

Positive Signals

Contract awarded to a major, established defense contractor (Boeing) with a proven track record.
The CRD system likely addresses a critical and unique defense requirement.
The contract duration suggests a stable, long-term need for the system.
Performance in California aligns with a strong regional aerospace industrial base.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and long product lifecycles. Contracts like this, for specialized components such as the Command Receiver Decoder (CRD), are typical within this industry. The market is often dominated by a few large prime contractors who possess the necessary security clearances, engineering expertise, and manufacturing capabilities. Spending in this sector is heavily influenced by national security priorities and technological advancements. Comparable spending benchmarks are difficult without knowing the exact function of the CRD, but similar critical avionics or electronic warfare systems can range from millions to billions of dollars.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, as it was awarded to The Boeing Company. Furthermore, the 'sb' (small business) indicator is false. While Boeing may utilize small business subcontractors, the primary award is not directed towards small businesses. The implications for the small business ecosystem are indirect; if Boeing is a significant user of small business suppliers for this contract, it could provide opportunities, but the direct impact is limited by the prime contractor's procurement practices.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), given the Department of Defense agency. As a cost-plus-fixed-fee contract, rigorous financial oversight is crucial to monitor expenditures and ensure costs are reasonable and allocable. Transparency regarding the sole-source justification and the contractor's cost reporting would be key accountability measures. The specific Inspector General jurisdiction would likely be that of the Department of Defense Inspector General.

Related Government Programs

Avionics Systems Procurement
Aerospace Engineering Services
Defense Electronics Manufacturing
Flight Control Systems
Command and Control Systems

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns without competition
Reliance on a single supplier for critical component

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.6 million to THE BOEING COMPANY. COMMAND RECEIVER DECODER (CRD) RETURN TO FLIGHT

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 $16.6 million.

What is the period of performance?

Start: 2007-10-29. End: 2011-07-31.

What is the specific function and criticality of the Command Receiver Decoder (CRD) system?

The Command Receiver Decoder (CRD) system is a critical component within aerospace and defense platforms, likely responsible for receiving, interpreting, and processing command signals from external sources. Its function is vital for the operation of aircraft, missiles, or other defense assets, enabling them to execute missions based on received instructions. The criticality stems from its role in the command and control chain; failure or malfunction of the CRD could lead to mission failure, loss of control, or compromised operational effectiveness. While the exact technical specifications are proprietary, its designation as a 'decoder' implies a role in translating encoded data into actionable commands for the system it serves.

How does the cost-plus-fixed-fee (CPFF) contract structure impact the overall cost and risk for the government in this sole-source award?

The Cost-Plus-Fixed-Fee (CPFF) structure means the contractor (Boeing) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. For the government, this structure offers flexibility, especially when project scope or costs are uncertain, as is often the case with specialized defense systems. However, it shifts much of the cost risk to the government. Because the fee is fixed, there's less incentive for the contractor to control costs compared to fixed-price contracts. In a sole-source scenario, this risk is amplified, as there's no competitive pressure to drive down costs. Robust government oversight is therefore essential to scrutinize incurred costs and ensure they are reasonable, allocable, and allowable to prevent cost overruns.

What are the potential risks associated with a sole-source award for critical defense components like the CRD?

Sole-source awards for critical defense components like the Command Receiver Decoder (CRD) present several risks. Primarily, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process, as the government loses the benefit of market forces driving cost efficiency. There's also a potential risk of complacency from the sole provider, who may face less pressure to innovate or improve performance without competitive alternatives. Furthermore, reliance on a single source can create supply chain vulnerabilities; if the sole provider experiences production issues, financial instability, or ceases operations, the government may face significant disruptions in acquiring or maintaining critical capabilities. Ensuring the sole-source justification is robust and periodically reviewed is crucial to mitigate these risks.

Can the performance period and contract value provide insights into the scale and complexity of the CRD system's development or sustainment?

The contract was awarded on October 29, 2007, with an end date of July 31, 2011, spanning a period of approximately 3 years and 9 months (1371 days). The total award value was $16.6 million. This duration and value suggest a moderately complex project, likely involving either the development of a new CRD system, significant upgrades to an existing one, or sustained production and support over several years. It's not a small, short-term procurement, nor is it a multi-billion dollar program indicative of developing an entire new platform. The value is consistent with specialized electronic systems or components requiring significant engineering effort and potentially low-to-medium volume production runs.

What is Boeing's general track record with Department of Defense engineering and electronics contracts?

The Boeing Company has an extensive and long-standing track record as a prime contractor for the Department of Defense (DoD), involved in a vast array of complex systems, including aircraft, spacecraft, and defense electronics. They are a major player in aerospace engineering services, systems integration, and the production of sophisticated components. Boeing has historically secured numerous large-scale, sole-source, and competitively awarded contracts across various defense programs. While specific performance metrics for individual contracts vary, their overall position as one of the largest defense contractors indicates a generally accepted capability to meet DoD requirements, though like any large entity, they have faced scrutiny and challenges on specific programs regarding cost, schedule, and performance.

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

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 5301 BOLSA AVENUE, HUNTINGTON BEACH, CA, 92647

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $22,877,269

Exercised Options: $22,877,269

Current Obligation: $16,603,224

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline