DoD's $150.8M contract with Boeing for ordnance accessories shows a 2-bidder competition

Contract Overview

Contract Amount: $150,859,471 ($150.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2006-04-17

End Date: 2009-10-31

Contract Duration: 1,293 days

Daily Burn Rate: $116.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: SAINT LOUIS, ST. LOUIS County, MISSOURI, 63134, UNITED STATES OF AMERICA

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $150.9 million to THE BOEING COMPANY for work described as: Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 2. Limited competition suggests potential for higher pricing than a more open market. 3. The duration of 1293 days indicates a long-term need for these ordnance accessories. 4. Boeing's established presence in defense contracting positions them favorably for this award. 5. The contract's value is significant within the 'Other Ordnance and Accessories Manufacturing' sector. 6. Performance risk is moderate given the nature of ordnance production and the contractor's experience.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without detailed cost breakdowns. However, the Cost Plus Fixed Fee (CPFF) contract type, while common in defense, carries inherent risks of cost escalation. The fixed fee component provides some incentive for the contractor to control costs, but the primary profit driver remains the cost of performance. Comparing this to similar contracts for ordnance accessories would require access to detailed pricing data and scope of work comparisons.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. However, the presence of only two bidders suggests a concentrated market for this specific type of ordnance accessory or a high barrier to entry for potential competitors. This level of competition, while technically open, may not have driven the most aggressive pricing.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the full price discovery that a larger pool of competitors could have provided, potentially leading to a less optimal price.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential ordnance accessories. This contract supports the manufacturing and supply chain for critical defense materials. The geographic impact is centered in Missouri, where the contractor is located. Workforce implications include employment opportunities within Boeing's facilities in Missouri.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not managed tightly.
Limited competition (2 bidders) may result in less favorable pricing for the government.
Long contract duration (1293 days) increases exposure to potential changes in requirements or economic conditions.
The specific nature of ordnance manufacturing carries inherent safety and logistical risks.

Positive Signals

Awarded under full and open competition, allowing for broad market participation.
The contractor, The Boeing Company, is a major defense contractor with significant experience.
The contract specifies a fixed fee, providing some cost control incentive.
The contract is for a specific product category, indicating a defined need.

Sector Analysis

This contract falls within the 'Other Ordnance and Accessories Manufacturing' sector, a specialized segment of the broader defense industrial base. This sector is characterized by high technical requirements, stringent quality control, and often, limited numbers of qualified manufacturers due to specialized knowledge and facilities. Spending in this area is directly tied to military readiness and operational requirements. Comparable spending benchmarks would typically be found within broader defense procurement data for munitions and related equipment.

Small Business Impact

There is no indication of a small business set-aside for this contract, and the prime contractor is The Boeing Company, a large aerospace and defense firm. This suggests that small businesses are unlikely to be directly involved as prime contractors. However, Boeing may engage small businesses as subcontractors for specific components or services, contributing to the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Defense, specifically the Department of the Air Force, which awarded the contract. Mechanisms likely include contract performance reviews, financial audits, and quality assurance inspections. Transparency is generally maintained through contract award databases, though detailed cost and performance data may be restricted. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Procurement
Ordnance and Ammunition Manufacturing
Aerospace and Defense Industry Contracts
Air Force Supply Chain Management

Risk Flags

Limited Competition
Cost-Plus-Fixed-Fee Contract Type
Long Contract Duration
Ordnance Manufacturing Risks

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $150.9 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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $150.9 million.

What is the period of performance?

Start: 2006-04-17. End: 2009-10-31.

What is Boeing's track record with similar Cost Plus Fixed Fee (CPFF) contracts within the Department of Defense?

Boeing has a long history of executing CPFF contracts across various defense programs. These contracts are often used for complex development or production efforts where costs are difficult to estimate precisely upfront. While CPFF contracts offer flexibility, they also require robust government oversight to manage costs effectively. Boeing's extensive experience suggests a familiarity with the requirements and oversight associated with this contract type. However, a detailed analysis would involve reviewing past performance metrics, cost variances, and any documented issues on similar CPFF contracts to assess their historical success in managing cost and schedule under this pricing structure.

How does the $150.8 million contract value compare to historical spending on similar ordnance accessories by the Department of Defense?

Directly comparing the $150.8 million value requires identifying specific ordnance accessories and their historical procurement data. The 'Other Ordnance and Accessories Manufacturing' category is broad. However, given the duration of 1293 days (over 3.5 years) and the prime contractor being Boeing, this represents a significant, long-term investment. Historical spending on similar, complex ordnance components by the DoD can range from tens of millions to hundreds of millions of dollars, depending on the item's criticality, technological sophistication, and quantity. Without more granular data on the specific accessories procured, it's difficult to definitively benchmark this value, but it aligns with substantial defense procurement needs.

What are the primary risk indicators associated with this specific contract, beyond the CPFF structure?

Beyond the inherent risks of a CPFF contract, key indicators include the limited competition (only two bidders), which can impact price and innovation. The long contract duration (1293 days) increases exposure to supply chain disruptions, material cost fluctuations, and potential obsolescence of technology or requirements. Furthermore, the manufacturing of ordnance inherently carries safety and security risks that require stringent protocols. The specific nature of the 'Other Ordnance and Accessories' could also involve specialized manufacturing processes or materials, introducing technical risks if not managed meticulously. Finally, geopolitical factors or changes in military strategy could alter the demand or specifications for these accessories.

How effective is the 'full and open competition' designation when only two bidders participate?

The 'full and open competition' designation signifies that the solicitation was broadly advertised, and all responsible sources were encouraged to bid. However, its effectiveness in driving competitive pricing and innovation is diminished when only two bidders emerge. This suggests potential barriers to entry, such as high capital investment, specialized technical expertise, or existing long-term relationships that favor incumbents. While technically compliant with open competition principles, the limited number of bidders indicates a concentrated market. This scenario may lead to prices that are higher than what might be achieved in a market with more robust competition, potentially reducing the overall value for taxpayers.

What are the implications of the 'MO' (Missouri) state code on this contract's execution and economic impact?

The 'MO' state code indicates that the contract's primary performance or award location is in Missouri. This has direct implications for the economic impact, suggesting that jobs, supplier contracts, and related economic activity will be concentrated in that state. For The Boeing Company, this likely means leveraging existing facilities or establishing new ones in Missouri to fulfill the contract. It also implies that state and local economic development initiatives may be relevant to the contract's execution. The concentration of work in one state can also present logistical considerations and potential risks if regional disruptions occur.

What is the significance of the 'Other Ordnance and Accessories Manufacturing' Product Service Code (PSC) in the context of defense spending?

The PSC 'Other Ordnance and Accessories Manufacturing' signifies a category for items related to ordnance that do not fit into more specific classifications like bombs, missiles, or small arms ammunition. This often includes components, mounts, cleaning equipment, specialized tools, or other support items crucial for the effective deployment and maintenance of ordnance systems. Its significance lies in highlighting the breadth of the defense industrial base required to support military operations, extending beyond the primary weapon systems to the myriad of supporting equipment. Spending in this PSC area is vital for ensuring the operational readiness and sustainment of military forces.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Other Ordnance and Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: J S MCDONNELL BLVD, SAINT LOUIS, MO, 63166

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline