Boeing awarded $235M for Japan AWACS mission computing upgrade, facing no competition

Contract Overview

Contract Amount: $235,469,877 ($235.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-02-12

End Date: 2027-09-03

Contract Duration: 3,490 days

Daily Burn Rate: $67.5K/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) INSTALLATION&CHECKOUT (I&CO)

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $235.5 million to THE BOEING COMPANY for work described as: JAPAN AWACS MISSION COMPUTING UPGRADE (MCU) INSTALLATION&CHECKOUT (I&CO) Key points: 1. Contract awarded to The Boeing Company for a significant mission computing upgrade. 2. The contract is a definitive contract with a fixed-price incentive pricing structure. 3. The duration of the contract is substantial, spanning over 9 years. 4. The contract is not subject to small business set-asides. 5. The contract is for installation and checkout of the upgrade. 6. The contract is for the Japan AWACS program.

Value Assessment

Rating: fair

The total contract value is $235.5 million. Benchmarking this specific contract is challenging due to its specialized nature and the lack of publicly available comparable data for AWACS mission computing upgrades. The fixed-price incentive structure suggests an attempt to control costs while allowing for adjustments based on performance outcomes. However, without more granular cost breakdowns or comparisons to similar technological upgrades in other military platforms, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when a single contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from a bidding process that could have potentially driven down prices or spurred innovation from multiple vendors.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. The government's negotiating position is weakened without alternative offers.

Public Impact

The primary beneficiaries are the U.S. Air Force and its allies operating the AWACS aircraft in the Japan region. The services delivered include the installation and checkout of a critical mission computing upgrade. The geographic impact is focused on U.S. Air Force operations in Japan. The upgrade is expected to enhance the operational capabilities and longevity of the AWACS fleet.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced innovation.
Long contract duration could lead to cost overruns if not managed effectively.
Sole-source awards can limit opportunities for other qualified companies to participate.

Positive Signals

The contract addresses a critical upgrade for a key military asset (AWACS).
The fixed-price incentive structure aims to align contractor performance with cost objectives.
The upgrade is essential for maintaining the operational effectiveness of the aircraft.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity and significant government investment. Contracts for specialized systems like mission computing upgrades for platforms such as the AWACS are often awarded to prime contractors with deep domain expertise and established relationships. The market for such upgrades is typically concentrated, with a few large players dominating. This contract fits within the broader category of defense electronics and aircraft modernization, a substantial segment of the defense industrial base.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss: false' and 'sb: false'. Consequently, small businesses are unlikely to be direct recipients of this prime contract. However, the prime contractor, Boeing, may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data. The absence of a set-aside means that opportunities for small business participation are not guaranteed.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The fixed-price incentive (FPI) contract type implies that performance targets and cost ceilings are established, with incentives for meeting or exceeding them. Transparency would be expected through regular reporting requirements from the contractor. The Inspector General of the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Airborne Warning and Control System (AWACS) modernization programs
DoD aircraft electronics and avionics upgrades
Foreign Military Sales (FMS) support for allied nations
Mission computing and software development contracts

Risk Flags

Sole-source award
Long contract duration
Lack of detailed cost transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $235.5 million to THE BOEING COMPANY. JAPAN AWACS MISSION COMPUTING UPGRADE (MCU) INSTALLATION&CHECKOUT (I&CO)

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 $235.5 million.

What is the period of performance?

Start: 2018-02-12. End: 2027-09-03.

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

The provided data indicates a single definitive contract awarded in February 2018 with an estimated completion date in September 2027, totaling $235.5 million. This suggests that the current contract represents the primary, if not sole, significant federal expenditure for this specific MCU installation and checkout phase. Without access to prior contract vehicles or related program funding documents, it is difficult to establish a historical spending trend. However, the long duration and substantial value point to a significant, multi-year investment in this particular upgrade for the Japan AWACS fleet.

How does the per-unit cost of this AWACS MCU upgrade compare to similar systems on other aircraft?

Directly comparing the per-unit cost of this AWACS Mission Computing Upgrade (MCU) is challenging due to the unique nature of the AWACS platform and the specificity of the upgrade. The provided data does not offer a per-unit cost metric, and comparable data for similar upgrades on different aircraft platforms is not readily available in the public domain. Factors such as the complexity of the AWACS's existing systems, the scope of the MCU upgrade, and the specific technological advancements being implemented would significantly influence cost. Benchmarking would require detailed technical specifications and cost breakdowns for multiple, similar upgrade programs across various military aircraft.

What are the key performance metrics and incentives tied to this fixed-price incentive contract?

The contract type is Fixed Price Incentive (FPI), which means that the final price is determined based on the contractor's actual costs incurred, but with a target cost, a target profit, and a price ceiling. The 'incentive' aspect implies that if the contractor achieves certain performance targets (e.g., delivery schedule, quality standards, technical performance), they may earn additional profit. Conversely, if costs exceed the target, the profit is reduced, and if costs exceed the ceiling, the contractor absorbs a larger share of the overruns. Specific performance metrics and incentive clauses are typically detailed in the contract's Statement of Work (SOW) and contract clauses, which are not provided here. These would likely include factors related to the successful installation, integration, and operational testing of the new mission computing system.

What is Boeing's track record with AWACS modernization and similar complex defense systems?

The Boeing Company has a long and extensive history with the Airborne Warning and Control System (AWACS) platform, having served as the prime contractor for its development, production, and sustainment for decades. Their track record includes numerous upgrades and modifications to the AWACS fleet to maintain its relevance and capability. Boeing is also a major provider of complex defense systems across various domains, including aircraft, space, and intelligence systems. Their experience with large-scale, technologically advanced defense programs suggests a strong capability to execute contracts like the Japan AWACS MCU upgrade. However, as with any large contractor, specific performance on individual contracts can vary.

What are the potential risks associated with a sole-source award for this critical upgrade?

Sole-source awards, while sometimes necessary, carry inherent risks. For this Japan AWACS MCU upgrade, the primary risk is the potential for higher costs due to the lack of competitive pressure. Without competing bids, the government may pay more than it would in a competitive environment. Another risk is reduced incentive for the contractor to innovate or optimize performance beyond the minimum requirements, as there is no direct competitor to outperform. Furthermore, sole-source awards can sometimes indicate a lack of market research or a failure to identify potential alternative solutions or suppliers, which could be a systemic risk. Finally, it can limit opportunities for other capable companies to gain experience and market share.

How does this contract align with the Air Force's broader strategy for maintaining its AWACS fleet?

This contract for the AWACS Mission Computing Upgrade (MCU) installation and checkout directly aligns with the U.S. Air Force's strategy to modernize and extend the operational life of its aging AWACS fleet. The AWACS is a critical command and control asset, and its mission computing systems are central to its functionality. Upgrading these systems is essential to ensure the aircraft can continue to meet evolving threats and integrate with newer military technologies. This investment reflects the Air Force's commitment to maintaining situational awareness and airpower projection capabilities, particularly in strategic regions like the Western Pacific, where the Japan AWACS plays a key role.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

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: $447,034,179

Exercised Options: $257,785,435

Current Obligation: $235,469,877

Subaward Activity

Number of Subawards: 107

Total Subaward Amount: $20,625,058

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline