Boeing awarded $99.7M for engineering support, with limited competition and a cost-plus-fixed-fee structure

Contract Overview

Contract Amount: $99,713,659 ($99.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-09-30

End Date: 2026-03-31

Contract Duration: 1,643 days

Daily Burn Rate: $60.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SUPPORT SERVICES UK FMS.

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $99.7 million to THE BOEING COMPANY for work described as: ENGINEERING SUPPORT SERVICES UK FMS. Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. The cost-plus-fixed-fee structure may incentivize cost overruns, requiring robust oversight. 3. Limited competition suggests potential for higher prices than a fully competed contract. 4. The contract duration extends over five years, indicating a long-term need for these services. 5. The specific nature of engineering support for Special Operations Command may necessitate specialized expertise. 6. Performance is tied to delivery orders, allowing for phased execution and payment.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the lack of detailed cost breakdowns and the specialized nature of the engineering support. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex or uncertain work, can lead to higher overall costs compared to fixed-price contracts if not managed carefully. Without comparable sole-source contracts for similar specialized engineering support, it's difficult to definitively assess if the pricing is competitive. The contract's value will largely depend on the effective management of costs and the successful delivery of critical support services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or when urgent needs preclude a lengthy competition. The lack of competition means that price discovery through market forces was limited, potentially leading to less favorable pricing for the government compared to a fully competed scenario. The justification for sole-source procurement would need to demonstrate why no other responsible source could satisfy the requirement.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the competitive pressure that typically drives down prices.

Public Impact

U.S. Special Operations Command personnel benefit from specialized engineering support, enhancing operational capabilities. The services provided are critical for the maintenance, modification, and sustainment of specialized equipment used by SOCOM. The geographic impact is likely global, supporting SOCOM operations worldwide. The contract supports highly skilled engineering and technical roles within The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may lead to cost escalation without stringent oversight.
Sole-source award limits competitive pressure, potentially increasing overall cost.
Lack of transparency in sole-source justification requires careful review.
Long contract duration increases exposure to potential performance issues over time.

Positive Signals

Award to a major defense contractor with established expertise in aerospace and defense.
Contract supports critical national security missions for U.S. Special Operations Command.
Delivery orders allow for phased funding and management of work.
Fixed fee component provides some cost certainty for the contractor's profit.

Sector Analysis

The aerospace and defense sector is characterized by high R&D investment, complex supply chains, and significant government procurement. Contracts for engineering support services are crucial for maintaining the technological edge and operational readiness of military assets. This contract falls within the broader category of defense manufacturing and support services, where specialized expertise is often concentrated among a few large, established firms. Comparable spending benchmarks are difficult to establish without more specific details on the services rendered, but large-scale engineering support contracts for major defense platforms can run into hundreds of millions or even billions of dollars over their lifecycle.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the prime contractor being The Boeing Company, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or easily accessible unless proactively pursued by the prime. The absence of small business considerations in the award mechanism could limit the participation of smaller, innovative firms in supporting these critical defense needs.

Oversight & Accountability

Oversight for this contract will likely be managed by the U.S. Special Operations Command contracting and program management offices. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency may be limited due to the sole-source nature, but contract performance reviews, milestone tracking, and audits by the Defense Contract Audit Agency (DCAA) would be standard accountability measures. The Inspector General of the Department of Defense would have jurisdiction for investigating fraud, waste, or abuse.

Related Government Programs

Special Operations Forces Support Contracts
Aerospace Engineering Services
Defense Contractor Support
Aircraft Parts and Auxiliary Equipment Manufacturing
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $99.7 million to THE BOEING COMPANY. ENGINEERING SUPPORT SERVICES UK FMS.

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $99.7 million.

What is the period of performance?

Start: 2021-09-30. End: 2026-03-31.

What is the specific nature of the engineering support required by U.S. Special Operations Command under this contract?

The provided data indicates the contract is for 'ENGINEERING SUPPORT SERVICES UK FMS' awarded to The Boeing Company. While the specific tasks are not detailed, 'FMS' often refers to Foreign Military Sales, suggesting the engineering support might be related to equipment or platforms being provided to allied nations under the FMS program. This could encompass technical assistance, design modifications, system integration, testing, documentation, and training related to defense articles. Given the client is U.S. Special Operations Command (SOCOM), the support likely pertains to specialized platforms or systems critical for SOCOM's unique operational requirements, potentially involving aircraft, vehicles, or communication systems.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar services?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not well-defined or involves significant uncertainty, making it difficult to establish a firm fixed price. In CPFF contracts, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This contrasts with Firm-Fixed-Price (FFP) contracts, where the price is set regardless of actual costs, incentivizing contractor efficiency. For engineering support, FFP can be suitable for well-defined tasks, while CPFF is preferred for research, development, or complex integration efforts where costs are less predictable. However, CPFF places a greater burden on the government for cost oversight to prevent overruns, as the contractor has less incentive to control costs once the fee is fixed.

What are the potential risks associated with a sole-source award for this type of service?

Sole-source awards carry inherent risks, primarily related to price and competition. Without competition, the government loses the benefit of market forces driving down costs, potentially leading to inflated pricing. There's also a risk that the chosen contractor may not be the most innovative or efficient provider available. Furthermore, the justification for a sole-source award needs to be robust; if it's based on convenience rather than genuine necessity (e.g., unique capabilities), it can be seen as a missed opportunity for better value. For taxpayers, the risk is paying more than necessary for essential services, diverting funds that could be used elsewhere.

What is The Boeing Company's track record with similar Department of Defense contracts?

The Boeing Company is a major defense contractor with an extensive history of performing large, complex contracts for the Department of Defense across various platforms, including aircraft, rotorcraft, and space systems. They have a well-established track record in providing engineering, manufacturing, and support services. While specific performance metrics for individual contracts are often proprietary or detailed in government performance evaluations (like CPARS), Boeing's longevity and continued awards suggest a generally satisfactory performance history. However, like any large contractor, they have faced scrutiny and challenges on specific programs regarding cost, schedule, and technical performance over the years.

How does the contract's duration and value compare to historical spending on similar engineering support services?

The contract has a duration of approximately 5.5 years (September 30, 2021, to March 31, 2026) with a total value of $99.7 million. This averages to roughly $18 million per year. Comparing this to historical spending requires access to detailed databases of past contracts for similar engineering support services, particularly those for U.S. Special Operations Command or related platforms. However, for major defense platforms requiring specialized engineering, annual spending can range from a few million to tens or hundreds of millions of dollars, depending on the system's complexity and the phase of its lifecycle (e.g., development vs. sustainment). This contract appears to be of moderate size within the context of large defense engineering support.

What are the implications of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code for this contract?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' suggests that the primary focus of the contract might involve the manufacturing or modification of specific aircraft components or related auxiliary equipment, in addition to engineering support. This implies that the engineering services could be directly tied to the design, production, or integration of physical parts. This code is relevant as it places the contract within a specific segment of the aerospace manufacturing industry, potentially involving specialized materials, processes, and certifications required for aircraft components.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: H9224117R0006

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: ROUTE 291 & STEWART AVE, RIDLEY PARK, PA, 19078

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: $99,713,659

Exercised Options: $99,713,659

Current Obligation: $99,713,659

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9224118D0002

IDV Type: IDC

Timeline