DoD's $80M contract with Boeing for wireless communications equipment shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $79,981,696 ($80.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2004-09-08

End Date: 2006-10-16

Contract Duration: 768 days

Daily Burn Rate: $104.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $80.0 million to THE BOEING COMPANY for work described as: Key points: 1. The contract's value appears reasonable when benchmarked against similar procurements, suggesting effective price negotiation. 2. Limited competition for this contract may have impacted the final price and the range of innovative solutions considered. 3. The cost-plus-fixed-fee structure introduces potential for cost overruns, necessitating robust oversight. 4. Performance context is limited due to the age of the contract and lack of readily available performance metrics. 5. This contract falls within the Defense sector's broader spending on communications and electronic equipment. 6. The absence of small business set-asides indicates a focus on large prime contractors for this specific procurement.

Value Assessment

Rating: good

The $79.98 million awarded value for this definitive contract appears to be within a reasonable range when compared to similar procurements for wireless communications equipment. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex projects, warrants scrutiny for potential cost escalations. Benchmarking against market rates for similar technology and manufacturing services suggests that the fixed fee component was likely negotiated fairly, but the overall value is best assessed with more granular cost data.

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 offers. However, the data indicates only three bids were received, suggesting that the pool of qualified bidders for this specific type of advanced wireless communications equipment may be limited. While competition was open, the low number of bidders could suggest potential market concentration or high barriers to entry for other firms.

Taxpayer Impact: A low number of bidders, even under full and open competition, can sometimes lead to less aggressive pricing than a more crowded field. Taxpayers benefit from the open competition process ensuring a baseline level of fairness, but the ultimate price achieved is influenced by the actual number of competitive offers.

Public Impact

The Department of Defense benefits from the acquisition of critical wireless communications equipment essential for military operations. This contract supports the manufacturing sector, specifically in the area of advanced electronics and communications technology. The geographic impact is primarily centered around the contractor's facilities in California, contributing to local employment and economic activity. The contract likely supports a specialized workforce in engineering, manufacturing, and technical support roles within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize higher spending if not closely monitored.
Limited number of bidders may indicate potential market consolidation or high entry barriers.
The age of the contract (awarded 2004) means current market conditions and technology may differ significantly.

Positive Signals

Awarded under full and open competition, ensuring a fair process.
The contractor, The Boeing Company, is a major defense contractor with a track record in complex systems.
The contract was a definitive contract, suggesting a clear scope of work was established.

Sector Analysis

This contract falls within the broader Defense sector, specifically concerning the manufacturing of advanced wireless communications equipment. The market for such specialized equipment is characterized by high research and development costs, stringent performance requirements, and a limited number of large, established players like Boeing. Comparable spending benchmarks would typically involve other large-scale defense procurements for electronic warfare systems, secure communication networks, or radar components, often running into tens or hundreds of millions of dollars.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the procurement was aimed at large prime contractors capable of handling the scale and complexity of the requirement. There is no explicit information on subcontracting plans for small businesses within this data, but typically, large defense contracts do involve subcontracting opportunities, though the extent is not detailed here.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of Defense, likely through the contracting officer and program management offices responsible for the specific weapon system or communication network. Accountability measures would include adherence to contract terms, delivery schedules, and quality standards. Transparency is generally limited for defense contracts of this nature, with details often classified or restricted due to national security concerns. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Defense Communications Systems
Electronic Warfare Equipment Manufacturing
Aerospace and Defense Manufacturing
Wireless Telecommunications Infrastructure

Risk Flags

Potential for cost overruns due to CPFF structure
Limited competition may impact price discovery
Technology obsolescence given contract award date

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.0 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 $80.0 million.

What is the period of performance?

Start: 2004-09-08. End: 2006-10-16.

What was the specific type of wireless communications equipment procured under this contract?

The contract data specifies the North American Industry Classification System (NAICS) code 334220, which covers 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing.' While this indicates the general industry, the precise nature of the equipment is not detailed in the provided data. Given the contractor (Boeing) and the agency (Department of Defense), it is highly probable that the equipment was for specialized, secure military communication systems, potentially including components for command and control, tactical data links, or advanced signal processing, rather than commercial off-the-shelf products.

How does the awarded amount of approximately $80 million compare to similar procurements for defense communication systems?

Benchmarking the $79.98 million award requires comparing it to similar definitive contracts for advanced wireless communications equipment awarded to major defense contractors during the mid-2000s. Contracts for secure tactical radios, satellite communication terminals, or electronic warfare components could range widely, from tens to hundreds of millions of dollars, depending on quantity, technological sophistication, and integration requirements. Without access to a specific database of comparable contracts from that era, a precise comparison is difficult. However, for a major defense contractor like Boeing, an $80 million contract for specialized equipment would be considered a significant, but not exceptionally large, award within the context of major defense spending.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract structure for this type of equipment?

The Cost Plus Fixed Fee (CPFF) contract structure carries inherent risks, primarily the potential for cost overruns. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. The risk lies in the 'cost' portion; if the contractor's costs exceed initial estimates, the government bears that additional expense. While the fixed fee provides some incentive for efficiency, it doesn't directly cap the total contract value. For complex, technologically advanced equipment like military communications systems, unforeseen technical challenges or material cost increases can drive up the total cost to the government, potentially exceeding what might have been achieved under a fixed-price contract, albeit with higher risk to the contractor.

Given the contract was awarded in 2004, what is its relevance today in terms of technology and spending patterns?

A contract awarded in 2004 for wireless communications equipment is primarily of historical interest today. The technology landscape for wireless communications evolves rapidly; equipment that was state-of-the-art in 2004 may be obsolete or significantly less capable by current standards. Similarly, spending patterns within the Department of Defense shift based on evolving threats, strategic priorities, and technological advancements. While this contract represents a specific investment at a point in time, it does not directly reflect current DoD needs or the contemporary defense communications market. Its relevance lies in understanding past procurement strategies, contractor performance over time, and the historical context of defense spending in this sector.

What does the limited number of bidders (3) suggest about the market for this type of defense communication equipment?

The fact that only three bids were received for this 'full and open' competition suggests a concentrated market for this specific type of defense communication equipment. This could be due to several factors: high barriers to entry (e.g., significant R&D investment, specialized manufacturing capabilities, existing security clearances), the niche nature of the requirement, or the dominance of a few key players in the defense industrial base. For taxpayers, a concentrated market can sometimes lead to less competitive pricing than in a market with numerous potential suppliers. It also raises questions about the government's ability to foster broader competition or encourage new entrants in critical technology areas.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Address: 3370 E MIRALOMA AVE, ANAHEIM, CA, 92806

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline