DoD awarded Boeing $196M for R&D, with a significant portion potentially going to Missouri

Contract Overview

Contract Amount: $196,094,223 ($196.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2002-12-31

End Date: 2008-06-30

Contract Duration: 2,008 days

Daily Burn Rate: $97.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $196.1 million to THE BOEING COMPANY for work described as: Key points: 1. Contract awarded for research and development, indicating investment in future capabilities. 2. The contract's duration spans over five years, suggesting a long-term project. 3. Boeing, a major aerospace and defense contractor, is the sole awardee. 4. The contract type is Cost Plus Award Fee, which incentivizes performance. 5. Awarded by the Department of Defense, aligning with national security objectives. 6. A substantial portion of the contract value may be associated with Missouri. 7. The contract was awarded under full and open competition.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging due to its specialized nature and the inherent uncertainties in research. The Cost Plus Award Fee structure allows for flexibility in pricing based on performance, which can be beneficial but also requires careful oversight to ensure value. Without specific performance metrics or comparable R&D projects, a definitive value-for-money assessment is difficult. However, the total award amount of $196 million over six years suggests a significant investment in technological advancement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete for the work. The presence of two bids suggests a reasonable level of competition for this specialized R&D effort. While full and open competition is generally preferred for ensuring fair pricing and access to the best solutions, the specific nature of advanced R&D can sometimes limit the number of qualified bidders.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially more competitive pricing and the assurance that the government sought the most capable contractor for the required research and development.

Public Impact

The primary beneficiaries are the Department of Defense and potentially the U.S. military, through advancements in technology and capabilities. The contract supports research and development activities, the specific outcomes of which are not detailed but are expected to enhance defense systems. A significant portion of the contract value is indicated to be associated with Missouri, suggesting potential economic and workforce impacts in that state. The contract may foster innovation within the aerospace and defense sector, potentially leading to broader technological advancements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts require diligent oversight to ensure award fees are justified by performance and do not inflate costs.
The long duration of the contract could present challenges in adapting to evolving technological requirements or market conditions.
As a sole-source awardee for this specific contract, Boeing faces less direct competitive pressure during execution, necessitating strong internal controls and government oversight.

Positive Signals

Awarded under full and open competition, suggesting a robust initial selection process.
The Cost Plus Award Fee structure incentivizes contractor performance and efficiency.
Boeing's established track record in defense contracting provides a degree of confidence in execution capabilities.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This sector is critical for national security and technological advancement, with significant government investment. The aerospace and defense industry, where Boeing is a major player, heavily relies on R&D to maintain a technological edge. Comparable spending benchmarks in this area are highly variable, depending on the specific research domain and project scope.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though Boeing may engage small businesses as part of its broader supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), given the agency listed. The Cost Plus Award Fee structure necessitates rigorous monitoring of performance against established criteria to ensure that award fees are earned appropriately. Transparency would be facilitated through contract reporting mechanisms, though specific details of R&D progress may be sensitive.

Related Government Programs

Defense Research and Development Programs
Aerospace Technology Development
Advanced Engineering Research Contracts
Cost Plus Award Fee Contracts

Risk Flags

Cost Overruns Risk
Performance Measurement Difficulty
Technological Obsolescence
Long-Term Project Management Challenges

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $196.1 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $196.1 million.

What is the period of performance?

Start: 2002-12-31. End: 2008-06-30.

What is Boeing's track record with Cost Plus Award Fee (CPA) contracts with the Department of Defense?

Boeing has a long history of working with the Department of Defense (DoD) on various contract types, including Cost Plus Award Fee (CPA) contracts. CPA contracts are common for R&D and complex system development where performance outcomes are critical but difficult to define precisely upfront. Boeing's experience with these contracts means they are familiar with the performance metrics, reporting requirements, and award fee determination processes. However, like any large contractor, Boeing's performance on specific CPA contracts can vary. Analyzing past performance would involve reviewing individual contract award fee scores, any associated audits or investigations, and overall program success metrics. Without access to specific historical performance data for Boeing on similar CPA contracts, it's difficult to provide a definitive assessment, but their extensive experience suggests a capacity to manage such agreements, subject to robust government oversight.

How does the $196 million award compare to typical R&D spending in the aerospace and defense sector?

The $196 million award for research and development is a substantial sum, reflecting the significant investment required for advanced technological projects within the aerospace and defense sector. However, 'typical' R&D spending in this sector can vary dramatically based on the specific technology area, the maturity of the research, and the size and scope of the project. Major defense contractors like Boeing often manage portfolios of R&D contracts ranging from tens of millions to billions of dollars. This particular contract, awarded over approximately six years (from 2002 to 2008), averages around $32.7 million per year. This annual figure is significant but falls within the expected range for major R&D initiatives undertaken by large defense firms. To provide a more precise comparison, one would need to benchmark against R&D spending on similar technological domains (e.g., aerospace systems, advanced materials, propulsion) by peer companies or government agencies.

What are the primary risks associated with a Cost Plus Award Fee (CPA) contract for R&D?

The primary risks associated with a Cost Plus Award Fee (CPA) contract for Research and Development (R&D) revolve around cost control and the objective measurement of performance. For the government, the risk is that costs could escalate beyond initial expectations, and that the 'award fee' component might be awarded too liberally, not truly reflecting exceptional performance. Ensuring that the criteria for earning award fees are clear, measurable, and objectively assessed is crucial. For the contractor, the risk lies in not meeting the performance targets required to earn the award fee, thus reducing their overall profit margin. R&D inherently involves uncertainty, making it challenging to pre-define success metrics. Therefore, effective risk mitigation requires strong government oversight, clear communication, well-defined performance metrics, and a robust process for evaluating contractor achievements against those metrics.

What does the indication of 'MISSOURI' (SN) associated with this contract imply?

The 'SN': 'MISSOURI' designation, likely referring to the state where a significant portion of the contract's work or value is associated, implies a potential economic impact on Missouri. This could translate to job creation, utilization of local facilities, and contributions to the state's technology and manufacturing base within the aerospace and defense industry. For the Department of Defense, associating contract work with specific geographic locations can be part of strategic sourcing or industrial base considerations. It suggests that Boeing's operations or facilities in Missouri will be heavily involved in fulfilling the R&D requirements of this contract. This could also influence state-level economic development initiatives and workforce training programs aimed at supporting the defense sector.

How does the contract's duration (2008) impact the assessment of its value and relevance today?

The contract's completion date of 2008 means that the R&D work was concluded over 15 years ago. Assessing its current value and relevance requires understanding the nature of the R&D conducted and its long-term impact. If the research led to foundational technologies that are still in use or have evolved into current systems, its value remains high. However, if the technology was superseded or did not yield practical applications, its direct relevance diminishes. For historical spending analysis, the $196 million represents a past investment. When evaluating its effectiveness, one must consider whether the anticipated benefits materialized and how the resulting technologies have shaped subsequent defense capabilities. The long lead times in defense R&D mean that contracts awarded a decade or more ago can still be relevant if they laid the groundwork for current operational systems or strategic advantages.

What is the significance of 'THE BOEING COMPANY' being the sole awardee for this contract?

The fact that 'THE BOEING COMPANY' is the sole awardee for this contract, despite being awarded under 'FULL AND OPEN COMPETITION', suggests that while multiple entities may have been eligible and potentially bid, Boeing was ultimately selected as the most advantageous offeror. This could be due to a combination of factors, including superior technical approach, lower evaluated risk, specialized expertise, or a more competitive overall proposal. For a sole-source awardee in execution, the government relies heavily on the contractor's integrity and performance. It also underscores Boeing's significant capabilities and established position within the defense R&D landscape. However, it also means that the government did not secure the benefits of ongoing competition during the contract's performance period, making robust oversight even more critical to ensure continued value and performance.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline