Boeing awarded $8.5M for aircraft manufacturing NRE, with limited competition and a long performance period

Contract Overview

Contract Amount: $8,500,779 ($8.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-09-28

End Date: 2026-07-31

Contract Duration: 2,132 days

Daily Burn Rate: $4.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MATERIAL IMPROVEMENT PROGRAM (MIP)-NON-RECURRING ENGINEERING (NRE) TASK ORDER

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $8.5 million to THE BOEING COMPANY for work described as: MATERIAL IMPROVEMENT PROGRAM (MIP)-NON-RECURRING ENGINEERING (NRE) TASK ORDER Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. The fixed-price contract structure shifts some risk to the government. 3. A lengthy performance period of over five years suggests a complex or evolving project. 4. The contract falls under aircraft manufacturing, a sector with significant government investment. 5. No small business set-aside was included, potentially limiting broader economic participation.

Value Assessment

Rating: fair

The contract's value of $8.5 million for non-recurring engineering (NRE) is difficult to benchmark without specific project details. Given the sole-source nature, it's challenging to assess if this represents a competitive price. The firm-fixed-price (FFP) award indicates a defined cost, but the lack of competition means there's no market-driven validation of value for money. Further analysis would require understanding the scope of the NRE tasks and comparing them to industry standards for similar engineering efforts.

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 a specific contractor possesses unique capabilities or when urgency precludes a full competition. The lack of competition means that the government did not benefit from a bidding process that could drive down prices or encourage innovation from a wider pool of suppliers.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. It also limits opportunities for other businesses to secure government contracts.

Public Impact

The primary beneficiary is the Department of the Air Force, receiving aircraft manufacturing support. Services delivered include non-recurring engineering (NRE) tasks for a material improvement program. The contract is associated with California, indicating a potential geographic impact on the state's aerospace industry. Workforce implications may include specialized engineering roles within The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and taxpayer value.
Long performance period (over 5 years) increases risk of cost overruns or scope creep without competitive checks.
Firm-fixed-price contract shifts risk to the government, especially if NRE tasks are not well-defined.
Lack of small business participation limits economic opportunity.

Positive Signals

Award to a major defense contractor like Boeing suggests access to specialized expertise.
Firm-fixed-price contract provides cost certainty if scope is well-managed.
NRE tasks are critical for program development and future improvements.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of the defense industrial base. The sector is characterized by high barriers to entry, significant R&D investment, and a reliance on a few large, established players like Boeing. Government spending in this area is substantial, often driven by national security requirements and the need for advanced technological capabilities. Benchmarking this specific NRE task order against broader aerospace engineering contracts is challenging without more granular data on the scope of work.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This means that opportunities for small businesses to participate in this specific award are limited. The absence of a small business focus in this sole-source award could mean that the prime contractor, Boeing, will perform the majority of the work, potentially impacting the broader small business ecosystem within the aerospace supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified work within the agreed price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Manufacturing
Defense Contracts
Non-Recurring Engineering (NRE)
Material Improvement Programs

Risk Flags

Sole-source award
Long performance period
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.5 million to THE BOEING COMPANY. MATERIAL IMPROVEMENT PROGRAM (MIP)-NON-RECURRING ENGINEERING (NRE) TASK ORDER

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 $8.5 million.

What is the period of performance?

Start: 2020-09-28. End: 2026-07-31.

What specific tasks are included under the 'MATERIAL IMPROVEMENT PROGRAM (MIP)-NON-RECURRING ENGINEERING (NRE) TASK ORDER'?

The provided data does not detail the specific tasks encompassed by the 'MATERIAL IMPROVEMENT PROGRAM (MIP)-NON-RECURRING ENGINEERING (NRE) TASK ORDER'. Non-recurring engineering (NRE) typically refers to the design, development, and testing activities required to bring a new product or system into existence, or to make significant modifications to an existing one. For aircraft manufacturing, this could involve redesigning components, developing new manufacturing processes, or conducting advanced simulations and prototyping. The 'Material Improvement Program' suggests the focus is on enhancing the materials used in aircraft construction or improving existing material performance. Without further documentation, the exact scope remains undefined, making it difficult to assess the appropriateness of the cost or timeline.

How does the $8.5 million contract value compare to similar NRE contracts for aircraft manufacturing?

Directly comparing the $8.5 million contract value for this NRE task order to similar contracts is challenging without more specific details on the scope of work and the specific aircraft or system involved. NRE costs can vary dramatically based on the complexity of the engineering required, the maturity of the technology, and the specific materials being improved. However, for major defense contractors like Boeing, NRE efforts for significant aircraft programs can easily run into tens or hundreds of millions of dollars. An $8.5 million award for a specific task order within a larger program suggests it might be a focused effort, such as improving a particular subsystem or material, rather than a complete aircraft redesign. The sole-source nature, however, prevents a direct market-based comparison of value.

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

The primary risks associated with this sole-source, firm-fixed-price (FFP) contract are twofold. Firstly, the sole-source nature means there was no competitive bidding process, increasing the risk that the government may not have secured the best possible price or terms. The contractor, Boeing, faces less pressure to be cost-efficient. Secondly, while FFP contracts are generally preferred for cost control, they shift the risk of cost overruns to the contractor. However, if the NRE tasks are not clearly defined or if unforeseen technical challenges arise during the long performance period (over 5 years), the contractor might seek change orders or claim that the scope has expanded, potentially leading to cost increases or delays, even under an FFP agreement. The government also bears the risk of the contractor not having the most innovative or efficient solution due to the lack of competition.

What is the historical spending pattern for similar aircraft manufacturing NRE contracts by the Department of the Air Force?

Historical spending patterns for similar aircraft manufacturing NRE contracts by the Department of the Air Force (DAF) are generally substantial, reflecting the high cost of developing and maintaining advanced aerial platforms. The DAF frequently awards large contracts for research, development, testing, and evaluation (RDT&E), which often include significant NRE components. These contracts are typically awarded to major aerospace and defense companies. While specific figures for 'MIP-NRE' task orders are not publicly itemized in aggregate, the DAF's overall RDT&E budget runs into billions of dollars annually. Contracts for NRE can range from millions for specific component improvements to hundreds of millions or billions for major system redesigns or new platform development. The trend is towards complex, technologically advanced solutions, often involving long-term sustainment and upgrade programs.

What is the significance of the contract being awarded to The Boeing Company in the context of the aerospace industry?

Awarding this contract to The Boeing Company is significant because Boeing is one of the two dominant players in the global aerospace and defense industry, particularly for large military aircraft. Its position as a major defense contractor means it possesses extensive experience, established infrastructure, and specialized expertise in areas like aircraft manufacturing and complex engineering programs. This sole-source award highlights Boeing's critical role in supporting the U.S. Air Force's fleet and its ability to secure large, long-term contracts. It also underscores the concentrated nature of the defense aerospace market, where a few large firms handle the majority of high-value government contracts due to the technical and financial barriers to entry for smaller companies.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852619R0017

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 14441 ASTRONAUTICS LN, 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: $8,500,779

Exercised Options: $8,500,779

Current Obligation: $8,500,779

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852612D0001

IDV Type: IDC

Timeline