DoD's $43.3M Boeing contract for laser advancement research shows limited competition and potential value concerns
Contract Overview
Contract Amount: $43,274,099 ($43.3M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2024-10-21
End Date: 2029-10-20
Contract Duration: 1,825 days
Daily Burn Rate: $23.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: STARFIRE ELECTRO-OPTICS, LASER LAB ADVANCEMENT (STELLA)
Place of Performance
Location: KIRTLAND AFB, BERNALILLO County, NEW MEXICO, 87117
Plain-Language Summary
Department of Defense obligated $43.3 million to THE BOEING COMPANY for work described as: STARFIRE ELECTRO-OPTICS, LASER LAB ADVANCEMENT (STELLA) Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. Research and Development focus in a specialized field, potentially justifying higher costs. 3. Long contract duration of 5 years may indicate complex, multi-phase research objectives. 4. Geographic concentration in New Mexico for this significant federal investment. 5. The 'Cost Plus Fixed Fee' structure can incentivize cost overruns if not closely monitored. 6. Lack of small business involvement noted, with no set-aside provisions.
Value Assessment
Rating: fair
The contract's value is difficult to benchmark without more detailed cost breakdowns and comparisons to similar R&D efforts. The 'Cost Plus Fixed Fee' (CPFF) pricing structure, while common for research, carries inherent risks of cost escalation. Boeing's extensive experience in aerospace and defense suggests a capacity to perform the work, but the absence of competitive bidding prevents a clear assessment of whether the fixed fee represents optimal value for the government. Further analysis of the contractor's historical performance on similar CPFF contracts would be beneficial.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning no other vendors were solicited or considered. This approach is typically justified when a specific contractor possesses unique capabilities, intellectual property, or is deemed essential for national security reasons. The lack of competition means the government did not benefit from a price discovery process driven by multiple bids, potentially leading to a higher overall cost than if the contract had been competed.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without a bidding process, there is less assurance that the negotiated price reflects the lowest possible cost for the research and development services.
Public Impact
The Department of the Air Force benefits from advanced laser technology research critical for defense applications. This contract supports cutting-edge research and development in electro-optics and laser systems. The primary geographic impact is in New Mexico, where the research activities will likely be conducted. The contract may indirectly benefit the scientific and engineering workforce through specialized R&D roles.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
- Cost-plus contract type can lead to cost overruns if not rigorously managed.
- Lack of small business participation means missed opportunities for smaller innovative firms.
- Long contract duration may obscure performance issues over time.
Positive Signals
- Awarded to a prime contractor with extensive experience in complex defense systems.
- Focus on advanced R&D aligns with strategic defense modernization goals.
- Clear contract end date provides a defined period for research objectives.
Sector Analysis
The contract falls within the Research and Development sector, specifically focusing on physical sciences and engineering. This area is characterized by high innovation, significant government investment, and often involves specialized contractors like Boeing. The market for advanced electro-optics and laser technology is competitive among large defense firms, but R&D contracts can sometimes be sole-sourced due to unique technological requirements or existing program integration. Comparable spending benchmarks are difficult to establish without knowing the specific technological advancements sought.
Small Business Impact
This contract does not include any small business set-aside provisions, nor is there any indication of subcontracting goals for small businesses. The award to a large prime contractor like Boeing suggests that the primary focus is on leveraging established capabilities. This approach may limit opportunities for smaller, innovative firms to participate in cutting-edge defense research and development, potentially impacting the broader small business ecosystem in this specialized sector.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the 'Cost Plus Fixed Fee' structure, requiring detailed reporting and justification of costs against the fixed fee. Transparency may be limited due to the sole-source nature and the proprietary aspects of R&D. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.
Related Government Programs
- Department of Defense Research and Development Programs
- Air Force Advanced Technology Initiatives
- Electro-Optical and Laser Systems Development
- Advanced Materials Research Contracts
Risk Flags
- Sole-source award
- Cost-plus contract type
- Lack of small business participation
Tags
research-and-development, department-of-defense, department-of-the-air-force, new-mexico, definitive-contract, cost-plus-fixed-fee, sole-source, large-business, electro-optics, laser-technology, advanced-technology
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $43.3 million to THE BOEING COMPANY. STARFIRE ELECTRO-OPTICS, LASER LAB ADVANCEMENT (STELLA)
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 $43.3 million.
What is the period of performance?
Start: 2024-10-21. End: 2029-10-20.
What is the historical track record of The Boeing Company on similar Cost Plus Fixed Fee (CPFF) R&D contracts with the Department of Defense?
The Boeing Company has a long and extensive history of performing complex research and development contracts for the Department of Defense, including those utilizing Cost Plus Fixed Fee (CPFF) structures. Historically, Boeing has been awarded numerous large-scale R&D contracts across various domains, including aerospace, defense systems, and advanced technologies. While specific performance metrics for individual CPFF contracts are often not publicly detailed, Boeing's continued selection for such high-value, complex work suggests a generally satisfactory performance record in meeting technical requirements and managing costs within negotiated parameters. However, like any large contractor, there may be instances of cost overruns or schedule delays on specific projects, which are typically addressed through contract modifications and ongoing program management oversight. A deeper dive into specific contract performance data, if available, would be necessary for a precise assessment.
How does the $43.3 million contract value compare to similar laser advancement R&D contracts awarded by the DoD in the past three years?
Benchmarking the $43.3 million value of this specific laser advancement R&D contract against similar Department of Defense (DoD) awards requires access to detailed contract databases and specific technical scope definitions. However, R&D contracts in advanced fields like electro-optics and laser technology can vary significantly in cost based on the complexity, duration, and novelty of the research. Contracts for fundamental research might be in the millions, while those for developing mature prototypes or integrated systems could easily reach tens or even hundreds of millions of dollars. Given that this is a five-year contract awarded to a major defense contractor like Boeing, $43.3 million appears to be within a reasonable range for a significant R&D effort. Without more granular data on the specific technological objectives and the number of bidders for comparable contracts, a precise value-for-money assessment is challenging.
What are the primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for advanced R&D?
The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for advanced R&D are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to a higher price than might be achieved through bidding. The government does not benefit from the price discovery mechanism inherent in a competitive procurement. Secondly, the CPFF structure, while providing flexibility for R&D where costs can be uncertain, carries a risk of cost escalation. The contractor is reimbursed for allowable costs plus a fixed fee, which can incentivize less rigorous cost control if oversight is not robust. The government bears the risk of cost overruns, and the fixed fee may not adequately compensate for the contractor's effort if costs significantly exceed initial estimates. Effective oversight, clear performance metrics, and strong program management are crucial to mitigate these risks.
What are the potential implications for national security if this laser advancement research is not successfully completed or faces significant delays?
The potential implications for national security if this laser advancement research is not successfully completed or faces significant delays depend heavily on the specific strategic objectives this research aims to achieve. Advanced laser technologies are critical for various defense applications, including directed energy weapons, advanced targeting systems, missile defense, and secure communications. Delays or failure in this R&D effort could mean the U.S. military falls behind potential adversaries in developing or fielding these crucial capabilities. This could impact strategic deterrence, battlefield effectiveness, and overall technological superiority. The 'STELLA' program's specific goals would dictate the precise national security risks, but generally, falling behind in cutting-edge defense technology development can have profound long-term consequences for military readiness and global standing.
How does the geographic concentration in New Mexico for this contract align with broader federal R&D investment trends?
The concentration of this $43.3 million contract in New Mexico aligns with the state's established role as a hub for federal research and development, particularly in defense and aerospace. New Mexico hosts significant federal installations like Kirtland Air Force Base, Los Alamos National Laboratory, and Sandia National Laboratories, which foster a rich ecosystem of scientific talent, specialized infrastructure, and related industries. Federal R&D investments often leverage existing strengths and infrastructure within specific geographic regions to maximize efficiency and impact. Therefore, awarding a contract for advanced electro-optics and laser research to a contractor operating in or near New Mexico is consistent with leveraging this established R&D environment. This trend reflects a strategic approach to federal spending, aiming to capitalize on regional expertise and existing federal investments.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 4411 THE 25 WAY NE STE 350, ALBUQUERQUE, NM, 87109
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: $277,054,837
Exercised Options: $169,947,149
Current Obligation: $43,274,099
Actual Outlays: $29,491
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2024-10-21
Current End Date: 2029-10-20
Potential End Date: 2033-10-20 00:00:00
Last Modified: 2025-12-29
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