Boeing awarded $7.5M for C-17 software upgrades, raising questions about competition and value

Contract Overview

Contract Amount: $7,485,407 ($7.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-09-28

End Date: 2027-04-30

Contract Duration: 2,040 days

Daily Burn Rate: $3.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: C-17 SOFTWARE UPGRADE SERVICES FOR INDIA AND UAE

Place of Performance

Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90808

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $7.5 million to THE BOEING COMPANY for work described as: C-17 SOFTWARE UPGRADE SERVICES FOR INDIA AND UAE Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of the contract (2040 days) suggests a long-term need for sustainment. 3. Cost-plus contract type introduces risk of cost overruns without strong performance incentives. 4. Lack of competition may indicate a lack of market alternatives or a strategic sourcing decision. 5. Focus on software upgrades for specific international partners (India and UAE) highlights a niche requirement. 6. The contract's value, while substantial, needs benchmarking against similar sustainment and upgrade services.

Value Assessment

Rating: questionable

The contract's value of $7.5 million for software upgrade services is difficult to assess without comparable data. The cost-plus incentive fee (CPIF) contract type, while allowing for flexibility, can lead to higher costs if not managed tightly. Benchmarking against similar sustainment contracts for complex aircraft systems would be necessary to determine if this represents a fair price for the services rendered. The lack of competition further complicates a value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was considered. This approach is typically used when a specific capability is only available from a single source, or in cases of urgent need. The absence of a competitive bidding process means that the government did not benefit from potential price reductions or innovative solutions that might have emerged from multiple vendors.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the best possible price for these software upgrade services, as there was no market pressure to drive down costs.

Public Impact

International partners, specifically India and UAE, will benefit from enhanced C-17 aircraft software capabilities. The U.S. Air Force will ensure the continued operational readiness and modernization of its C-17 fleet. The contract supports specialized software engineering and maintenance jobs within The Boeing Company. The upgrade services are critical for maintaining the effectiveness of a key strategic airlift asset.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost-plus contract type carries inherent risk of cost overruns if not rigorously managed.
Long contract duration (over 5 years) requires sustained oversight to ensure performance and cost control.
Lack of transparency in the sole-source justification makes it difficult to assess necessity.
Specific focus on international partners may not align with broader U.S. defense modernization priorities.

Positive Signals

Addresses critical software sustainment needs for a vital strategic airlift platform.
Awarded to the original equipment manufacturer, ensuring specialized knowledge and integration.
Includes incentive fees, which can motivate contractor performance if structured effectively.
Supports the operational readiness of C-17 aircraft used by both U.S. and allied nations.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government procurement. Contracts for aircraft sustainment and upgrades, particularly for specialized platforms like the C-17, often involve original equipment manufacturers due to proprietary knowledge and integrated systems. The market for such services is relatively concentrated, with a few major players dominating. This contract fits within the broader category of defense logistics and sustainment, a critical component of military readiness.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, The Boeing Company, is a large aerospace firm. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means that small businesses are unlikely to be the primary recipients of this contract's funding, though they may participate indirectly through subcontracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a cost-plus incentive fee contract, rigorous financial oversight and performance monitoring are crucial to ensure cost control and effective delivery. The Department of Defense's Inspector General may also conduct audits or investigations into contract performance and spending. Transparency is limited due to the sole-source nature, but contract modifications and performance reports should be available through official channels.

Related Government Programs

C-17 Globemaster III Sustainment Partnership Program
Aircraft Component Maintenance
Aerospace Systems Design and Integration
Defense Logistics and Support Services
Foreign Military Sales - Aircraft Support

Risk Flags

Sole-source award
Cost-plus contract type
Limited transparency on specific upgrades
Potential for higher costs due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.5 million to THE BOEING COMPANY. C-17 SOFTWARE UPGRADE SERVICES FOR INDIA AND UAE

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 $7.5 million.

What is the period of performance?

Start: 2021-09-28. End: 2027-04-30.

What is the specific nature of the software upgrades being performed on the C-17 aircraft for India and UAE?

The provided data does not specify the exact nature of the software upgrades. However, given the context of aircraft sustainment and modernization, these upgrades likely pertain to enhancing operational capabilities, improving system reliability, addressing obsolescence, or integrating new functionalities. This could range from avionics software updates to mission planning system enhancements or communication suite improvements. The specific details would typically be found in the contract's statement of work, which is not included in the provided data. Understanding the precise upgrades is crucial for assessing their necessity and potential impact on aircraft performance and safety.

Why was this contract awarded on a sole-source basis instead of being competed?

The data indicates the contract was awarded as 'NOT COMPETED' (ct: NOT COMPETED), which typically signifies a sole-source procurement. Common justifications for sole-source awards include the unique capability of a single contractor (in this case, likely The Boeing Company as the original equipment manufacturer), urgent and compelling needs where competition is not feasible, or specific requirements tied to existing systems that only the original provider can fulfill. Without further documentation, the precise reason for the sole-source award remains unclear, but it suggests that the Air Force determined that Boeing was the only viable source for these specific C-17 software upgrade services at the time of award.

How does the Cost Plus Incentive Fee (CPIF) contract type impact cost control and contractor performance?

A Cost Plus Incentive Fee (CPIF) contract is designed to share cost risks and rewards between the government and the contractor. The government pays the actual allowable costs incurred by the contractor, plus a fee that is adjusted based on performance against targets (e.g., cost, schedule, or technical performance). If the contractor performs better than the target (e.g., comes in under budget), both the government and the contractor share in the savings. Conversely, if performance is worse than the target, the fee is reduced. This structure incentivizes the contractor to control costs and meet performance objectives, but it still requires robust government oversight to ensure costs are reasonable and allowable, and that performance targets are meaningful.

What is the historical spending trend for C-17 software upgrade and sustainment services?

The provided data only includes information for this specific contract award. To analyze historical spending trends for C-17 software upgrades and sustainment, one would need to access historical contract databases (such as FPDS or SAM.gov) and query for similar contracts awarded to The Boeing Company or other relevant entities over previous fiscal years. This would involve looking at the total value of contracts, the number of awards, and the types of services procured. Without this historical data, it's impossible to determine if the $7.5 million award represents an increase, decrease, or consistent level of spending for these services.

What are the potential risks associated with relying solely on The Boeing Company for C-17 software upgrades?

The primary risk associated with relying solely on The Boeing Company is the lack of competitive pressure, which can lead to higher prices and potentially less innovation over time. If Boeing faces no competition, there may be reduced incentive to develop cost-saving efficiencies or cutting-edge solutions. Additionally, dependence on a single supplier can create vulnerabilities if that supplier experiences financial difficulties, production issues, or changes its strategic focus. This 'vendor lock-in' can limit the government's flexibility in future procurement decisions and potentially increase long-term sustainment costs.

How does this contract align with the U.S. Air Force's broader C-17 fleet modernization and sustainment strategy?

This contract addresses the ongoing need for software sustainment and upgrades for the C-17 fleet, which is crucial for maintaining the aircraft's operational effectiveness. The C-17 is a key strategic airlift asset for both U.S. and allied forces. Software upgrades are essential for keeping pace with evolving threats, improving system performance, and ensuring interoperability. While the specific details of the upgrades are not provided, such contracts are typically part of a larger, long-term sustainment strategy aimed at maximizing the fleet's readiness and lifespan. The inclusion of international partners (India and UAE) suggests a collaborative approach to sustainment, potentially sharing costs and expertise.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852620R0002

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $7,485,407

Exercised Options: $7,485,407

Current Obligation: $7,485,407

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