DoD awards $78.9M for Guided Missile Parts to Boeing, raising concerns about competition and value
Contract Overview
Contract Amount: $78,881,280 ($78.9M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2012-06-28
End Date: 2019-09-30
Contract Duration: 2,650 days
Daily Burn Rate: $29.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: TEST GUIDED MISSILE INSTRUMENTATION GROUP (MOD 7 WAFER) AND RELATED COMPONENTS.
Place of Performance
Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647
Plain-Language Summary
Department of Defense obligated $78.9 million to THE BOEING COMPANY for work described as: TEST GUIDED MISSILE INSTRUMENTATION GROUP (MOD 7 WAFER) AND RELATED COMPONENTS. Key points: 1. Significant award to a single large contractor, Boeing. 2. Contract covers specialized missile components, indicating a niche market. 3. Lack of competition raises questions about price reasonableness. 4. Long contract duration (2012-2019) may impact cost efficiency.
Value Assessment
Rating: questionable
The contract value of $78.9M for missile parts is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar specialized components.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there's no market pressure to offer the best price.
Taxpayer Impact: The absence of competition on this nearly $79M contract means taxpayers may have overpaid due to a lack of price negotiation leverage.
Public Impact
Taxpayers may be paying a premium for critical defense components due to lack of competition. The long performance period could mask inefficiencies or outdated technology. Dependence on a single supplier for essential missile parts poses a potential supply chain risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Potential for overpayment
- Long contract duration
Positive Signals
- Award to established defense contractor
- Supports critical defense capabilities
Sector Analysis
This contract falls within the Defense sector, specifically manufacturing parts for guided missiles. Spending in this area is often characterized by high R&D costs, specialized manufacturing, and limited competition due to national security requirements.
Small Business Impact
The contract was awarded to The Boeing Company, a large prime contractor. There is no indication that small businesses were involved as subcontractors or partners in this specific award, which is common for large, specialized defense contracts.
Oversight & Accountability
The contract was managed by the Defense Contract Management Agency. Further oversight would be needed to confirm if any cost audits or performance reviews were conducted during the contract's long lifespan to ensure value for money.
Related Government Programs
- Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award
- Lack of demonstrated price competition
- Long contract duration
- Potential for cost overruns
- Limited transparency on pricing justification
Tags
other-guided-missile-and-space-vehicle-p, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $78.9 million to THE BOEING COMPANY. TEST GUIDED MISSILE INSTRUMENTATION GROUP (MOD 7 WAFER) AND RELATED COMPONENTS.
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 $78.9 million.
What is the period of performance?
Start: 2012-06-28. End: 2019-09-30.
What was the justification for awarding this contract on a sole-source basis, and were alternative sourcing strategies considered?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent national security needs that only one contractor can meet. For this contract, the specific rationale for not competing it needs to be investigated. Alternative sourcing strategies, such as exploring potential second-source providers or developing new domestic capabilities, should have been considered to foster competition and ensure better pricing.
How was the price determined for this sole-source contract, and what mechanisms were in place to ensure cost reasonableness?
For sole-source contracts, price determination often relies on historical pricing, cost-plus-incentive-fee structures, or negotiation based on the contractor's proposed costs. Mechanisms to ensure reasonableness might include detailed cost analysis by the contracting agency, comparison to similar (though perhaps not identical) components, or independent government cost estimates. The effectiveness of these mechanisms in the absence of competitive pressure is a key area for scrutiny.
What is the long-term strategic value of this specific missile component, and does the current sole-source arrangement pose a risk to future program affordability?
The long-term strategic value lies in its role within the guided missile system, impacting national defense capabilities. The current sole-source arrangement, especially if the component is critical and has a long lifecycle, could pose a risk to future affordability. Dependence on a single supplier may lead to escalating costs over time and limit the government's ability to leverage market dynamics for better pricing or technological upgrades.
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: 5301 BOLSA AVE, HUNTINGTON BEACH, CA, 92647
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: $80,434,999
Exercised Options: $80,434,999
Current Obligation: $78,881,280
Subaward Activity
Number of Subawards: 60
Total Subaward Amount: $17,532,204
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-06-28
Current End Date: 2019-09-30
Potential End Date: 2019-09-30 00:00:00
Last Modified: 2023-09-22
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