Boeing's $440M AWACS Mission Computing Upgrade contract awarded by the Air Force, facing limited competition

Contract Overview

Contract Amount: $440,347,703 ($440.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2014-10-28

End Date: 2022-04-29

Contract Duration: 2,740 days

Daily Burn Rate: $160.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: JAPAN AWACS MISSION COMPUTING UPGRADE (MCU) PROGRAM DESIGN AND PRODUCTION

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $440.3 million to THE BOEING COMPANY for work described as: JAPAN AWACS MISSION COMPUTING UPGRADE (MCU) PROGRAM DESIGN AND PRODUCTION Key points: 1. The contract's fixed-price incentive structure aims to balance cost control with performance, though actual final costs may vary. 2. Awarded as 'Other Aircraft Parts and Auxiliary Equipment Manufacturing', the contract supports critical avionics modernization for the AWACS fleet. 3. The duration of over 7 years suggests a complex, long-term upgrade program requiring sustained contractor support. 4. Limited competition raises questions about potential price premiums and the government's ability to secure the best value. 5. The contract's value places it as a significant investment in maintaining the operational readiness of a key strategic asset. 6. The absence of small business set-asides indicates a focus on large prime contractors with specialized capabilities.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without direct comparisons to similar AWACS MCU upgrades. The fixed-price incentive (FPI) contract type suggests an attempt to control costs while incentivizing performance, but the total final cost is subject to adjustments based on target costs and incentives. Given the specialized nature of the upgrade and the limited competition, it's difficult to definitively assess if the pricing represents optimal value for money without more granular cost data and market analysis.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under a limited competition, meaning not all potential sources were solicited. The specific reasons for this limitation are not detailed in the provided data, but it often stems from unique capabilities, existing system integration, or specific technical requirements that only a limited number of contractors can meet. The limited number of bidders can reduce price pressure and potentially lead to higher costs compared to a full and open competition.

Taxpayer Impact: Limited competition can mean taxpayers may not benefit from the most competitive pricing achievable through a broader solicitation process, potentially leading to higher overall expenditure for the upgrade.

Public Impact

The primary beneficiaries are the U.S. Air Force and its AWACS fleet, ensuring enhanced mission computing capabilities for surveillance and command and control. This contract delivers essential upgrades to the mission computing systems, improving reliability, performance, and potentially adding new functionalities. The geographic impact is primarily within the operational theaters where AWACS aircraft are deployed globally. Workforce implications include specialized engineering, manufacturing, and technical support roles within The Boeing Company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in higher costs for taxpayers.
The long contract duration increases the risk of cost overruns if not managed effectively.
Lack of transparency in the limited competition process hinders independent value assessment.

Positive Signals

Fixed-price incentive contract type aims to control costs while rewarding performance.
Upgrading critical mission computing enhances national security capabilities.
Boeing's established role as a major defense contractor suggests technical expertise.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft parts and auxiliary equipment manufacturing. The market for specialized avionics and mission computing upgrades is characterized by high barriers to entry due to complex technology, stringent certification requirements, and long development cycles. Spending in this area is driven by the need to maintain the technological edge of aging military fleets and adapt to evolving threats. Comparable spending benchmarks would involve other major aircraft modernization programs within the Department of Defense.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the 'sb' field is false and there's no mention of small business set-asides. This suggests that the prime contractor, The Boeing Company, is expected to handle the majority of the work, potentially utilizing its own facilities or large subcontractors. There may be opportunities for small businesses within Boeing's supply chain, but direct subcontracting goals or set-asides for small businesses are not evident from this data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the contract terms, particularly the fixed-price incentive structure, which links contractor profit to performance against cost targets. Transparency is often limited in defense contracts, especially those awarded under other than full and open competition. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Airborne Warning and Control System (AWACS) Program
Air Force Avionics Modernization Programs
Defense Contract Management Agency (DCMA) Oversight
Aerospace Manufacturing and Production

Risk Flags

Limited Competition
Potential for Cost Overruns
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $440.3 million to THE BOEING COMPANY. JAPAN AWACS MISSION COMPUTING UPGRADE (MCU) PROGRAM DESIGN AND PRODUCTION

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 $440.3 million.

What is the period of performance?

Start: 2014-10-28. End: 2022-04-29.

What is the historical spending trend for the JAPAN AWACS MCU program?

The provided data reflects a single definitive contract awarded on October 28, 2014, with an end date of April 29, 2022, totaling $440,347,703. This suggests that the spending for this specific MCU upgrade program occurred within this timeframe. Without access to historical procurement data prior to 2014 or subsequent related contracts, it's impossible to establish a broader spending trend for the AWACS MCU program. However, the significant value of this single contract indicates a substantial investment in upgrading the mission computing capabilities of the AWACS fleet during that period.

How does the per-unit cost of this AWACS MCU upgrade compare to similar programs?

Determining a precise per-unit cost for this contract is difficult without knowing the exact number of aircraft or systems being upgraded. The total contract value is $440,347,703 over a period of approximately 2740 days (roughly 7.5 years). If we assume this contract covered a significant portion of the AWACS fleet, the per-unit cost would be substantial, reflecting the complexity of avionics modernization. Direct comparisons to similar programs are challenging due to variations in upgrade scope, technology, and the specific aircraft platforms involved. However, major avionics modernization efforts for large military aircraft typically run into tens or hundreds of millions of dollars per aircraft, making this contract's value plausible within that context.

What are the key performance indicators (KPIs) for this contract and how is performance measured?

The contract type is 'FIXED PRICE INCENTIVE' (FPI), which inherently includes performance-based elements. While specific KPIs are not detailed in the provided summary, FPI contracts typically tie contractor profit to achieving certain cost, schedule, and performance targets. For an MCU upgrade, KPIs could include factors like system reliability (Mean Time Between Failures), processing speed improvements, successful integration with existing systems, adherence to delivery schedules for hardware and software, and meeting cybersecurity requirements. Performance is measured against these pre-defined targets, with deviations potentially impacting the final price paid to the contractor.

What is The Boeing Company's track record with AWACS or similar complex avionics upgrades?

The Boeing Company has a long and extensive history with the AWACS program, being the prime contractor for the aircraft itself. This deep involvement suggests a strong understanding of the platform's architecture and operational requirements. Boeing has also been a major player in numerous other complex avionics and systems integration programs for various military and commercial aircraft. Their track record includes upgrades, modifications, and new platform development, demonstrating significant capabilities in systems engineering, software development, and hardware production for sophisticated aerospace applications. This experience provides a degree of confidence in their ability to execute the MCU upgrade.

What are the potential risks associated with this limited competition award?

The primary risk associated with a limited competition award is the potential for reduced price competition, which could lead to the government paying a premium compared to a full and open competition. This can result in less value for taxpayer money. Additionally, limited competition might restrict the pool of innovative solutions available, as only a select few contractors are considered. There's also a risk that the government may not have explored all viable alternatives or that the chosen contractor's capabilities, while sufficient, might not be the absolute best available in the broader market. Ensuring robust oversight and negotiation is crucial to mitigate these risks.

How does this contract align with the Air Force's broader modernization strategy for its airborne surveillance fleet?

This contract for the AWACS Mission Computing Upgrade (MCU) directly aligns with the Air Force's ongoing strategy to modernize its aging airborne surveillance and command-and-control platforms. The AWACS, while a critical asset, relies on increasingly dated technology. Upgrading the mission computing systems is essential to maintain operational effectiveness, enhance survivability, and ensure interoperability with newer systems and evolving threat environments. This investment supports the Air Force's goal of retaining a relevant and capable airborne early warning and control capability, even as newer platforms like the E-7 Wedgetail are introduced.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 6001 S AIR DEPOT BLVD, OKLAHOMA CITY, OK, 73135

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: $440,347,703

Exercised Options: $440,347,703

Current Obligation: $440,347,703

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline