DoD's $17.8M Boeing contract for electrical components lacked competition, raising value concerns

Contract Overview

Contract Amount: $17,802,960 ($17.8M)

Contractor: THE Boeing Company (0674)

Awarding Agency: Department of Defense

Start Date: 2006-12-15

End Date: 2010-10-31

Contract Duration: 1,416 days

Daily Burn Rate: $12.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: LABOR

Place of Performance

Location: HAZELWOOD, ST. LOUIS County, MISSOURI, 63042

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $17.8 million to THE BOEING COMPANY (0674) for work described as: LABOR Key points: 1. Contract awarded without competition, potentially limiting price discovery and value for money. 2. Significant duration of over 3 years suggests a long-term need for these components. 3. Awarded to a single, large defense contractor, potentially excluding smaller, specialized suppliers. 4. The contract type (Time and Materials) can sometimes lead to cost overruns if not closely managed. 5. Focus on 'All Other Miscellaneous Electrical Equipment' indicates a need for specialized or niche components. 6. The contract's value, while substantial, needs benchmarking against similar procurements for a full value assessment.

Value Assessment

Rating: questionable

Benchmarking the value of this $17.8 million contract is challenging without specific details on the electrical components procured. However, the lack of competition suggests that the government may not have secured the most favorable pricing. Time and Materials contracts, while flexible, carry inherent risks of cost escalation if not meticulously monitored. Comparing this to other sole-source procurements for similar electrical equipment would be necessary to determine if the pricing was competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple potential suppliers. This approach is typically used when only one source is capable of meeting the requirement, or in urgent situations. The lack of competition means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to ensure it is receiving the best possible value for its investment.

Public Impact

The Department of Defense benefits through the acquisition of necessary electrical components for its operations. Services delivered include the provision of specialized electrical equipment, crucial for maintaining military readiness. The geographic impact is primarily within the Department of the Navy's supply chain and operational areas. Workforce implications are likely concentrated within The Boeing Company and its direct suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer funds.
Sole-source awards can create dependency on a single contractor, limiting future flexibility.
Time and Materials contract type poses a risk of cost overruns without stringent oversight.
Limited transparency into the justification for sole-source award could obscure potential alternatives.
The broad 'Miscellaneous Electrical Equipment' category might mask specific component needs that could be competitively sourced.

Positive Signals

Awarded to a major defense contractor with established capabilities.
Contract duration suggests a stable, long-term supply of critical components.
The contract addresses a specific need within the Department of the Navy's operational requirements.

Sector Analysis

The market for electrical components is vast and diverse, ranging from standardized parts to highly specialized, custom-manufactured items. This contract falls within the broader 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' sector. Given the sole-source nature and the contractor, it likely pertains to complex or proprietary systems integral to defense platforms. Comparable spending benchmarks would depend heavily on the specific type and quantity of electrical components procured, but the defense sector often sees higher unit costs due to stringent quality and performance requirements.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the award to a large prime contractor like The Boeing Company suggests that subcontracting opportunities for small businesses may be limited or dependent on Boeing's internal subcontracting plans. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, but typically large sole-source awards offer fewer direct opportunities compared to competitively bid contracts with set-asides.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms of the Time and Materials contract, requiring detailed reporting of labor hours and material costs. Transparency is limited due to the sole-source nature, with the justification for this award being a key document for understanding oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Procurement
Naval Supply Systems Command
Defense Contract Management Agency
Sole-Source Procurements
Electrical Equipment Manufacturing

Risk Flags

Lack of Competition
Sole-Source Award
Time and Materials Contract Type
Potential for Cost Overruns
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.8 million to THE BOEING COMPANY (0674). LABOR

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY (0674).

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $17.8 million.

What is the period of performance?

Start: 2006-12-15. End: 2010-10-31.

What specific types of electrical components were procured under this contract, and why was a sole-source award necessary?

The provided data indicates the contract was for 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' (NAICS 335999). The specific types of components are not detailed. A sole-source award is typically justified when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. Without the specific justification documentation, it's impossible to definitively state why this award was sole-source. However, common reasons include proprietary technology, unique manufacturing capabilities, or critical system integration requirements where only The Boeing Company could fulfill the need for specific defense applications.

How does the $17.8 million contract value compare to similar sole-source procurements for electrical components within the Department of Defense?

Direct comparison of this $17.8 million contract value to similar sole-source procurements is difficult without knowing the exact nature and quantity of the electrical components. The 'Miscellaneous Electrical Equipment' category is very broad. However, for large defense contractors like Boeing, contracts in the multi-million dollar range for specialized components are not uncommon, especially for complex systems. To assess value, one would need to compare the unit prices and overall cost against other sole-source awards for comparable complexity, performance specifications, and quantities, ideally within the same or adjacent fiscal years. The lack of competition inherently makes direct price benchmarking challenging.

What are the potential risks associated with a Time and Materials (T&M) contract of this magnitude and duration?

Time and Materials (T&M) contracts, like this one, carry inherent risks, particularly for large, long-duration awards. The primary risk is cost escalation, as the government pays for direct labor hours at specified rates and actual material costs. Without robust oversight, contractors may have less incentive to control costs or improve efficiency compared to fixed-price contracts. For a $17.8 million contract spanning over three years, the potential for cost overruns is significant if labor hours are not closely monitored, material costs are not validated, and the scope of work is not tightly managed. This necessitates strong government oversight and clear task orders to mitigate these risks.

What is The Boeing Company's track record with sole-source Time and Materials contracts for the Department of Defense?

The Boeing Company is a major defense contractor with extensive experience across various contract types, including sole-source Time and Materials (T&M) awards. While specific data on their track record with sole-source T&M contracts for the DoD is not provided here, such awards are generally granted when Boeing possesses unique capabilities or proprietary technology essential for a specific defense requirement. Their history suggests they are capable of executing complex projects. However, the performance and cost-effectiveness of any T&M contract, especially sole-source, are heavily dependent on the specific program management, oversight applied by the contracting agency, and the clarity of the statement of work.

How has historical spending on 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' (NAICS 335999) by the Department of the Navy trended?

Analyzing historical spending trends for NAICS 335999 by the Department of the Navy requires access to comprehensive federal procurement databases. Generally, spending in this category can fluctuate based on modernization programs, sustainment needs for existing platforms, and new technology insertion. For the Navy, which operates complex systems like aircraft carriers, submarines, and aircraft, the demand for specialized electrical components is consistent. However, the proportion of this spending that is competitively sourced versus sole-source can vary significantly year over year and is influenced by strategic sourcing decisions and the availability of qualified suppliers for specific advanced components.

Industry Classification

NAICS: Manufacturing › Other Electrical Equipment and Component Manufacturing › All Other Miscellaneous Electrical Equipment and Component Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001906R0025

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 5775 CAMPUS PKWY, HAZELWOOD, MO, 01

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,212,218

Exercised Options: $17,820,743

Current Obligation: $17,802,960

Contract Characteristics

Cost or Pricing Data: NO

Timeline