Boeing awarded $315.7M for Missile Defense Agency's Element System Engineering, focusing on R&D

Contract Overview

Contract Amount: $315,725,972 ($315.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-09-01

End Date: 2027-08-31

Contract Duration: 1,825 days

Daily Burn Rate: $173.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: ELEMENT SYSTEM ENGINEERING

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $315.7 million to THE BOEING COMPANY for work described as: ELEMENT SYSTEM ENGINEERING Key points: 1. Contract value represents significant investment in advanced defense R&D. 2. Sole contractor, Boeing, suggests specialized capabilities or established relationship. 3. Long-term contract duration (5 years) indicates ongoing program needs. 4. Cost-plus award fee structure incentivizes performance but requires careful oversight. 5. Focus on R&D in physical sciences highlights innovation in defense technology. 6. Geographic concentration in Alabama for contract performance.

Value Assessment

Rating: good

The contract value of over $315 million for five years suggests a substantial investment in system engineering for missile defense. Benchmarking this against similar large-scale R&D contracts within the defense sector would be necessary for a precise value-for-money assessment. However, the cost-plus award fee structure, while common for complex R&D, necessitates robust oversight to ensure costs remain reasonable and that award fees are tied to demonstrable performance improvements. Without specific comparable contract data, it's difficult to definitively state if the pricing is optimal, but the scale indicates a significant, long-term commitment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The specific number of bidders is not provided, but the 'full and open' designation suggests a competitive process was initiated. This approach is generally favored to ensure the government receives the best value by leveraging market competition. The presence of competition, even if the award went to a single entity, should theoretically drive more favorable pricing and innovative solutions.

Taxpayer Impact: Full and open competition aims to ensure taxpayer dollars are used efficiently by fostering a competitive environment that can lead to better pricing and service quality.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Missile Defense Agency, which will receive advanced system engineering support. Services delivered include critical research and development in physical, engineering, and life sciences related to missile defense systems. Geographic impact is concentrated in Alabama, where the contract performance is scheduled. Workforce implications may include specialized engineering and research roles within Boeing and potentially its subcontractors in Alabama.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus award fee contracts can lead to cost overruns if not managed diligently.
Reliance on a single contractor, even if awarded competitively, can limit future options and potentially increase long-term costs.
The long duration of the contract might not adapt quickly to rapidly evolving technological landscapes in missile defense.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The contract's focus on R&D aligns with the need for continuous innovation in national security.
The significant investment indicates a high priority placed on missile defense capabilities by the government.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The Missile Defense Agency's work is critical to national security, involving complex systems engineering for advanced defense technologies. The market for such specialized R&D is typically dominated by large, established aerospace and defense contractors like Boeing, due to the high barriers to entry, including technical expertise, security clearances, and existing infrastructure. Comparable spending benchmarks would likely involve other large-scale, multi-year R&D contracts for defense systems.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. While Boeing is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on Boeing's procurement practices and the specific needs of the system engineering work. Without explicit subcontracting plans or goals, the direct impact on the small business ecosystem is uncertain, though large prime contracts often do flow down to smaller firms.

Oversight & Accountability

Oversight for this contract will likely be managed by the Missile Defense Agency, with potential involvement from the Department of Defense's Inspector General. The cost-plus award fee structure necessitates rigorous monitoring of expenditures and performance metrics to ensure that award fees are justified and that costs are controlled. Transparency will depend on the agency's reporting practices regarding contract performance and expenditures. Accountability measures are inherent in the award fee structure, linking contractor bonuses to performance.

Related Government Programs

Missile Defense Systems
Advanced Research and Development Programs
Aerospace Engineering Services
Department of Defense Research Contracts

Risk Flags

Cost-plus contract type requires diligent oversight to manage potential cost overruns.
Long contract duration may pose risks in rapidly evolving technological fields.
Sole prime contractor status could limit future competitive options.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $315.7 million to THE BOEING COMPANY. ELEMENT SYSTEM ENGINEERING

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $315.7 million.

What is the period of performance?

Start: 2022-09-01. End: 2027-08-31.

What is the historical spending pattern for Element System Engineering contracts with the Missile Defense Agency?

Analyzing historical spending for 'Element System Engineering' with the Missile Defense Agency (MDA) requires accessing contract databases like FPDS or USASpending.gov. Typically, R&D contracts of this nature are awarded over multiple years, with significant annual outlays. For instance, if similar contracts have been awarded in the past, one might expect annual spending in the tens of millions to over a hundred million dollars, depending on the scope and duration. The current $315.7 million award over five years averages to approximately $63 million per year. Historical data would reveal if this represents an increase, decrease, or consistent level of investment in this specific area of system engineering for missile defense, and whether spending has been concentrated with specific contractors or spread across multiple entities.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types for R&D in this sector?

Cost Plus Award Fee (CPAF) contracts are common for research and development (R&D) where the final scope and costs are difficult to define precisely at the outset. In this structure, the contractor is reimbursed for allowable costs plus a fixed fee, with the potential for an additional award fee based on meeting or exceeding performance objectives. This differs from Fixed-Price contracts, which offer more cost certainty to the government but can stifle innovation or lead to contractor disputes if unforeseen technical challenges arise. Cost Plus Incentive Fee (CPIF) contracts also exist, sharing cost savings or overruns between the government and contractor. CPAF is often preferred for complex R&D like missile defense system engineering because it incentivizes high performance while acknowledging the inherent uncertainties in cutting-edge research, though it requires robust government oversight to manage costs effectively.

What is Boeing's track record with the Missile Defense Agency on similar R&D contracts?

Boeing has a long-standing and significant relationship with the Missile Defense Agency (MDA) and the Department of Defense (DoD) overall, frequently securing large contracts for complex defense systems. Their track record includes work on various missile defense components, integration efforts, and related research and development. Analyzing specific past performance on similar R&D contracts would involve reviewing contract awards, performance evaluations (if publicly available), and any past issues or successes. Given Boeing's status as a major defense contractor, it is expected they possess the technical expertise and infrastructure required for such projects. However, like any large contractor, they may have faced challenges or disputes on previous contracts, which would be detailed in contract performance reports or historical award data.

What are the key performance indicators (KPIs) likely used to determine award fees in this contract?

For a Cost Plus Award Fee (CPAF) contract focused on 'Element System Engineering' for missile defense R&D, key performance indicators (KPIs) would likely revolve around technical achievement, schedule adherence, cost management, and innovation. Specific KPIs could include the successful development and testing of system components, meeting defined technical specifications and performance thresholds, timely completion of research milestones, effective integration of different system elements, and efficient use of resources. The 'award fee' component suggests that exceeding baseline expectations in these areas would trigger higher fee payouts. The Missile Defense Agency would establish these specific metrics and evaluation criteria, likely detailed in the contract's Performance Work Statement (PWS).

What is the potential impact of this contract on the broader missile defense technology landscape?

This contract represents a significant investment in the foundational system engineering required for advanced missile defense capabilities. The R&D funded by this $315.7 million award has the potential to drive innovation in areas such as sensor technology, interceptor guidance, battle management systems, and overall system integration. By focusing on 'Element System Engineering,' the contract aims to ensure that the various components of future missile defense architectures work together seamlessly and effectively. The outcomes of this research could lead to enhanced threat detection, improved interception probabilities, and the development of more resilient defense systems, thereby shaping the future trajectory of missile defense technology globally and influencing the strategic balance.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ085622R0001

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $539,086,654

Exercised Options: $539,086,654

Current Obligation: $315,725,972

Actual Outlays: $35,739,781

Subaward Activity

Number of Subawards: 177

Total Subaward Amount: $73,288,224

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ085622D0002

IDV Type: IDC

Timeline