Boeing awarded $1.33B R&D contract for physical, engineering, and life sciences research

Contract Overview

Contract Amount: $1,334,833,191 ($1.3B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2008-12-30

End Date: 2013-04-30

Contract Duration: 1,582 days

Daily Burn Rate: $843.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: LETTER CONTRACT TO BOEING

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35824

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $1.33 billion to THE BOEING COMPANY for work described as: LETTER CONTRACT TO BOEING Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. Research and Development focus indicates investment in future capabilities. 3. Cost Plus Award Fee structure incentivizes performance but requires careful oversight. 4. Long duration (1582 days) suggests a complex, multi-phase project. 5. Contract awarded to a single, large prime contractor, potentially limiting small business prime opportunities. 6. Significant dollar value warrants close monitoring of performance and cost efficiency.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging due to its specific nature and the Cost Plus Award Fee structure. While the total value is substantial, the 'award fee' component means the final cost could vary based on performance. Without detailed breakdowns of R&D phases and deliverables, a direct comparison to similar contracts is difficult. The pricing is likely influenced by the complexity and novelty of the research, but the lack of a fixed price makes definitive value assessment harder.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple capable vendors were allowed to bid. This process is generally expected to yield competitive pricing and innovative solutions. The presence of 5 bids suggests a reasonable level of interest and competition for this R&D effort, which is positive for price discovery.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down costs through market forces and encouraging a wider pool of contractors to propose their best solutions.

Public Impact

The primary beneficiaries are likely the Department of Defense and potentially other government agencies requiring advanced research in physical, engineering, and life sciences. The contract supports the development of new technologies and scientific understanding. The geographic impact is primarily associated with Boeing's research facilities, likely concentrated in areas with significant aerospace and R&D presence. Workforce implications include employment for highly skilled scientists, engineers, and support staff within Boeing and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can lead to cost overruns if not managed tightly.
The long duration may introduce risks related to technological obsolescence or shifting research priorities.
Reliance on a single large prime contractor might limit opportunities for smaller, specialized firms.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
The research focus suggests investment in critical future capabilities for national security.
The large contract value signifies a significant commitment to advancing scientific and technological frontiers.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for defense innovation and technological advancement. The market for such specialized R&D is often dominated by large aerospace and defense contractors like Boeing, who possess the infrastructure and expertise. Comparable spending benchmarks would involve looking at other large-scale, multi-year R&D efforts within the defense sector, often awarded through competitive processes.

Small Business Impact

While this contract was awarded under full and open competition, the prime contractor is Boeing, a large business. There is no explicit indication of a small business set-aside. The potential for small business participation would likely be through subcontracting opportunities. The extent to which Boeing engages small businesses as subcontractors will determine the impact on the small business ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The Cost Plus Award Fee structure necessitates rigorous oversight to validate performance metrics and justify award fees. Transparency is generally maintained through contract reporting mechanisms, though specific R&D details might be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Research and Development
Advanced Technology Development
Aerospace Research
Engineering Services
Life Sciences Research

Risk Flags

Cost Plus Award Fee structure requires diligent oversight.
Long contract duration may introduce risks of obsolescence or shifting priorities.
Potential for cost growth inherent in R&D contracts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.33 billion to THE BOEING COMPANY. LETTER CONTRACT TO BOEING

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $1.33 billion.

What is the period of performance?

Start: 2008-12-30. End: 2013-04-30.

What is Boeing's track record with similar Cost Plus Award Fee R&D contracts with the Department of Defense?

Boeing has a long history of working with the Department of Defense on complex R&D initiatives, often utilizing various contract types, including Cost Plus Award Fee (CPAF). CPAF contracts are common for R&D where outcomes are uncertain and performance-based incentives are desired. Boeing's experience suggests a familiarity with the requirements and oversight associated with such agreements. Analyzing past performance on similar CPAF contracts would involve reviewing metrics related to cost control, schedule adherence, technical achievement, and the award fees earned. Generally, large contractors like Boeing are expected to have established processes for managing these contract types, but specific performance can vary significantly based on the project's complexity and management execution.

How does the $1.33 billion total award value compare to typical R&D spending in the physical, engineering, and life sciences for the DoD?

A $1.33 billion contract for R&D in physical, engineering, and life sciences is a substantial investment, indicative of a major program or a portfolio of related research efforts. The Department of Defense's overall R&D budget is in the tens of billions annually, covering a wide spectrum of scientific and technological pursuits. This specific contract represents a significant portion allocated to a particular area of research, likely one deemed critical for future defense capabilities. To benchmark, one would compare this to other large-scale R&D contracts awarded within the same fiscal years or to similar research areas. The 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' NAICS code (541712) encompasses a broad range of activities, and this contract's value suggests it is a high-priority initiative.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract of this magnitude and duration?

The primary risks with a CPAF contract of this magnitude ($1.33B) and duration (approx. 4.3 years) revolve around cost control and performance measurement. For the government, the risk is that costs could escalate beyond initial projections if the award fee criteria are not sufficiently stringent or if contractor performance is inefficiently managed, leading to higher-than-expected award fees. For the contractor, the risk lies in not meeting the performance targets required to earn the maximum award fee. Additionally, the long duration introduces risks of technological obsolescence, shifting program priorities, and potential contractor performance degradation over time. Robust government oversight, clear performance metrics, and proactive risk management are crucial to mitigate these issues.

What does the 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' classification imply for the contract's objectives?

This classification (NAICS code 541712) indicates that the contract's objectives are focused on scientific discovery and the application of that knowledge to create new or significantly improved products, processes, or services. 'Physical and Engineering Sciences' typically cover areas like materials science, physics, electronics, mechanical engineering, and aerospace engineering. 'Life Sciences' (excluding biotechnology) might encompass fields like human performance, medical research (non-biotech), environmental science, and certain aspects of biological systems relevant to defense. The exclusion of biotechnology suggests the research is not primarily focused on genetic engineering, pharmaceuticals, or related biological manipulation, but rather on broader scientific and engineering challenges.

How might the number of bids (5) influence the final cost and innovation for this R&D contract?

Receiving 5 bids for a complex R&D contract generally indicates a healthy level of competition. This number suggests that multiple firms were capable and interested in undertaking the work, which typically exerts downward pressure on pricing as contractors vie for the award. From an innovation standpoint, a competitive environment encourages bidders to propose novel approaches and cutting-edge solutions to differentiate their proposals. While a higher number of bids might sometimes lead to more complex evaluation, 5 bids strike a balance, providing sufficient competition without becoming unwieldy. This level of competition is generally seen as beneficial for the government, potentially leading to better value and more innovative outcomes compared to a sole-source or very limited competition scenario.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 499 BOEING BLVD SW, HUNTSVILLE, AL, 35824

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $2,362,158,161

Exercised Options: $2,362,158,161

Current Obligation: $1,334,833,191

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline