Boeing awarded $110.6M for GPS satellite support, a sole-source contract with potential for extended duration
Contract Overview
Contract Amount: $110,643,895 ($110.6M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2017-01-01
End Date: 2025-02-28
Contract Duration: 2,980 days
Daily Burn Rate: $37.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: IGF::CT::IGF LETTER CONTRACT - GPS IIA/IIF ON-ORBIT SUPPORT
Place of Performance
Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80916
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $110.6 million to THE BOEING COMPANY for work described as: IGF::CT::IGF LETTER CONTRACT - GPS IIA/IIF ON-ORBIT SUPPORT Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. Long-term nature of the contract suggests a need for ongoing, specialized support. 3. Fixed-price incentive structure aims to align contractor performance with cost objectives. 4. Lack of competition indicates potential for higher costs compared to a fully competed scenario. 5. Contract performance period extends over several years, requiring sustained oversight. 6. Specialized nature of GPS satellite support likely limits the pool of qualified bidders.
Value Assessment
Rating: fair
This contract's value is difficult to benchmark without comparable sole-source GPS support contracts. The fixed-price incentive (FPI) structure suggests an attempt to control costs, but the absence of competition means there's no direct market comparison to assess if the pricing is optimal. The total value of $110.6 million over its potential duration needs careful monitoring to ensure it aligns with the services rendered and avoids cost overruns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one contractor, The Boeing Company, was solicited. This approach is typically used when a unique capability or specialized expertise is required, and competition is not feasible or practical. The lack of multiple bidders means that price discovery through competitive bidding was bypassed, potentially leading to higher costs for the government.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, the government relies heavily on negotiation and oversight to ensure a fair price.
Public Impact
Ensures the continued operational readiness and functionality of the Global Positioning System (GPS) satellites. Benefits national security and civilian users who rely on GPS for navigation, timing, and positioning. Supports critical infrastructure and services across various sectors, including defense, transportation, and emergency services. Maintains the integrity and reliability of a vital space-based asset. The contract supports specialized technical jobs within The Boeing Company.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition, potentially increasing costs for taxpayers.
- Long contract duration requires sustained vigilance to prevent scope creep and cost overruns.
- Reliance on a single contractor for critical satellite support poses a risk if performance falters.
- Lack of transparency in pricing due to sole-source nature makes value assessment challenging.
Positive Signals
- Fixed-price incentive contract structure incentivizes contractor efficiency and cost control.
- Award to an experienced contractor with a proven track record in aerospace and defense.
- Contract ensures continuity of essential GPS services, vital for national security and civilian use.
- Long-term support contract provides stability for critical space asset maintenance.
Sector Analysis
This contract falls within the aerospace and defense sector, specifically focusing on satellite operations and support. The market for specialized satellite on-orbit support is highly concentrated, with a few large, experienced companies like Boeing dominating. Spending in this area is critical for maintaining national security assets and ensuring the continued functionality of essential services like GPS. Comparable spending benchmarks are difficult to establish due to the unique nature of each satellite system and its support requirements.
Small Business Impact
This contract does not appear to include a small business set-aside. Given the specialized nature of GPS satellite support and the sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal. However, 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 opportunities for small businesses to directly compete for this prime contract were not available.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of the Air Force, with specific program offices responsible for monitoring performance, costs, and adherence to contract terms. The fixed-price incentive structure includes mechanisms for cost control and performance incentives. Transparency may be limited due to the sole-source nature, but regular reporting requirements and potential reviews by the Government Accountability Office (GAO) or the Inspector General's office would provide accountability.
Related Government Programs
- GPS III/IIF Satellite Operations
- Space-Based PNT Services
- DoD Satellite Communications
- National Security Space Programs
- Aerospace Engineering Services
Risk Flags
- Sole-source award
- Long contract duration
- Potential for cost overruns
- Reliance on single contractor
Tags
defense, department-of-defense, department-of-the-air-force, satellite-operations, gps, sole-source, fixed-price-incentive, large-contract, long-term, aerospace, colorado, telecommunications
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $110.6 million to THE BOEING COMPANY. IGF::CT::IGF LETTER CONTRACT - GPS IIA/IIF ON-ORBIT SUPPORT
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 $110.6 million.
What is the period of performance?
Start: 2017-01-01. End: 2025-02-28.
What is The Boeing Company's track record with GPS satellite support contracts?
The Boeing Company has a long and established history of involvement with the GPS program, including the manufacturing and support of various GPS satellite generations. They have been a key contractor for the GPS IIA and IIF programs, which this contract appears to support. Their extensive experience in aerospace, defense, and satellite systems suggests a strong technical capability and understanding of the complex requirements for maintaining these critical assets. Past performance reviews and contract histories would provide more granular detail on their specific successes and any challenges encountered in previous GPS support roles.
How does the fixed-price incentive (FPI) structure aim to control costs in this contract?
A Fixed-Price Incentive (FPI) contract establishes a target cost, a target profit, and a price ceiling. The final price is determined by the relationship between the final incurred cost and the target cost, with adjustments to profit. If the final cost is below the target cost, both the contractor and the government share in the savings (cost underrun). If the final cost exceeds the target cost, the contractor bears a portion of the increased cost up to the price ceiling. This structure incentivizes the contractor to control costs and perform efficiently to maximize their profit, while the price ceiling protects the government from unlimited cost increases.
What are the primary risks associated with a sole-source contract for critical satellite support?
The primary risks of a sole-source contract for critical satellite support include a lack of competitive pricing, potentially leading to higher costs for the government. There is also a reduced incentive for the contractor to innovate or improve efficiency beyond what is contractually required, as there is no competitive pressure. Furthermore, the government becomes heavily reliant on a single provider, creating a vulnerability if the contractor experiences performance issues, financial instability, or decides to exit the market. This dependence necessitates robust oversight and strong contract management to mitigate these risks.
How does this contract's duration and value compare to similar federal spending on satellite operations?
The duration of this contract, potentially extending to February 2025 (approximately 8 years from the start date of Jan 2017), and its value of $110.6 million are significant. However, comparing it directly to 'similar' federal spending is challenging due to the unique nature of satellite systems and their support requirements. Large-scale satellite programs, especially those for national security, often involve multi-year contracts with values in the tens or hundreds of millions of dollars for operations and sustainment. The specific value and duration here appear consistent with the long-term, high-cost nature of maintaining complex space assets.
What are the potential implications for the future of GPS satellite support if this contract is not competitively re-awarded?
If this contract is not competitively re-awarded upon its expiration, it could signal a continued reliance on sole-source providers for critical GPS support. This might perpetuate higher costs and limit innovation. Conversely, it could indicate that the specialized nature of this support genuinely restricts competition to a few highly qualified entities. The long-term strategy for GPS sustainment, including potential future satellite generations and evolving support needs, will dictate whether future procurements are structured for competition or continue on a sole-source basis.
Industry Classification
NAICS: Information › Other Telecommunications › All Other Telecommunications
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 320 WOOTEN RD, COLORADO SPRINGS, CO, 80916
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $395,782,910
Exercised Options: $112,362,444
Current Obligation: $110,643,895
Actual Outlays: $3,617,540
Subaward Activity
Number of Subawards: 12
Total Subaward Amount: $655,751
Contract Characteristics
Consolidated Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-01-01
Current End Date: 2025-02-28
Potential End Date: 2025-02-28 00:00:00
Last Modified: 2025-04-22
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