DoD's $75.8M Environmental Control System Upgrade Contract Awarded Sole-Source to Bell Boeing

Contract Overview

Contract Amount: $75,787,909 ($75.8M)

Contractor: Bell Boeing Joint Project Office

Awarding Agency: Department of Defense

Start Date: 2007-07-20

End Date: 2013-12-31

Contract Duration: 2,356 days

Daily Burn Rate: $32.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: ENVIRONMENTAL CONTROL SYSTEM UPGRADE

Place of Performance

Location: AMARILLO, POTTER County, TEXAS, 79111

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $75.8 million to BELL BOEING JOINT PROJECT OFFICE for work described as: ENVIRONMENTAL CONTROL SYSTEM UPGRADE Key points: 1. The contract's sole-source nature raises questions about potential overpayment and lack of competitive pressure. 2. Significant duration of over 6 years suggests a complex and potentially evolving project. 3. The cost-plus award fee structure can incentivize cost overruns if not tightly managed. 4. Lack of small business participation noted, potentially missing opportunities for smaller innovative firms. 5. The contract's focus on aircraft manufacturing components indicates a specialized and critical need. 6. Performance context is limited without specific delivery milestones and quality metrics. 7. Geographic concentration in Texas for contract administration warrants attention for potential regional economic impacts.

Value Assessment

Rating: questionable

Benchmarking the value of this $75.8 million contract is challenging due to its sole-source nature and specialized application within aircraft manufacturing. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The cost-plus award fee (CPAF) structure, while allowing for flexibility, can lead to higher costs if performance incentives are not meticulously structured and monitored. A comparison to similar environmental control system upgrades in other defense platforms or commercial aviation would be necessary for a more robust value assessment, but such data is not readily available for sole-source awards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple firms had vied for the contract.

Taxpayer Impact: The sole-source award limits the government's ability to leverage competition to drive down prices, potentially resulting in a less cost-effective outcome for taxpayers.

Public Impact

The primary beneficiaries are likely the Department of Defense and its operational readiness, ensuring critical aircraft systems function optimally. The services delivered involve the upgrade and maintenance of environmental control systems essential for aircraft performance and crew/equipment protection. The geographic impact is concentrated in Texas, where the contract was administered, potentially benefiting local economies through employment and subcontracting. Workforce implications may include specialized engineers and technicians involved in the design, manufacturing, and integration of these complex systems.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost-plus award fee structure requires rigorous oversight to prevent cost overruns.
Lack of transparency in pricing due to non-competitive nature.
Extended contract duration (over 6 years) increases risk of scope creep and cost escalation.
No indication of small business participation or subcontracting goals.

Positive Signals

Addresses a critical need for environmental control systems in aircraft manufacturing.
Awarded to a known entity (Bell Boeing) with established expertise in aerospace.
Contract duration suggests a comprehensive and potentially high-quality solution.
Specific focus on aircraft manufacturing implies alignment with defense priorities.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government procurement. Contracts for aircraft manufacturing components, such as environmental control systems, are critical for maintaining fleet readiness and technological superiority. Spending in this area is substantial, with major players like Bell Boeing dominating large-scale programs. This contract fits within the broader category of aircraft component manufacturing and sustainment, a vital segment of the defense industrial base.

Small Business Impact

This contract does not appear to have included small business set-asides, nor is there an indication of subcontracting plans specifically targeting small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate. This approach may overlook potential innovations and cost efficiencies that smaller, specialized firms could offer, and it does not contribute to the broader goal of fostering a robust small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The cost-plus award fee structure necessitates close monitoring of costs and performance against established award criteria. Transparency is limited due to the sole-source nature, but contract modifications, progress reports, and final award fee determinations would be key oversight mechanisms. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Component Manufacturing
Defense Logistics Agency (DLA) Procurement
Naval Air Systems Command (NAVAIR) Contracts
Air Force Materiel Command (AFMC) Contracts
Aerospace Systems Development

Risk Flags

Sole-source award
Cost-plus award fee structure
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.8 million to BELL BOEING JOINT PROJECT OFFICE. ENVIRONMENTAL CONTROL SYSTEM UPGRADE

Who is the contractor on this award?

The obligated recipient is BELL BOEING JOINT PROJECT OFFICE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $75.8 million.

What is the period of performance?

Start: 2007-07-20. End: 2013-12-31.

What specific environmental control system capabilities are being upgraded, and what is the expected improvement in performance or efficiency?

The provided data does not specify the exact nature of the environmental control system upgrade or the expected performance improvements. However, environmental control systems in aircraft are critical for maintaining cabin pressure, temperature, and air quality, essential for crew safety, equipment functionality, and mission success. Upgrades typically aim to enhance reliability, reduce weight, improve energy efficiency, or adapt systems for new operational requirements or aircraft platforms. Without further details, the precise benefits remain unquantified, though the substantial investment suggests a significant enhancement or modernization is intended.

How does the $75.8 million cost compare to similar environmental control system upgrades for comparable aircraft platforms?

Direct comparison is difficult due to the sole-source nature of this contract and the lack of specific details on the system being upgraded. Competitive contracts for similar systems on other platforms might offer a benchmark, but such data is not publicly available. The cost-plus award fee (CPAF) structure, combined with a sole-source award, inherently limits the ability to perform a precise value-for-money assessment against market rates. Generally, sole-source contracts awarded under CPAF can be more expensive than competitively bid fixed-price contracts due to reduced price pressure and potential for cost growth, necessitating robust government oversight.

What are the key performance metrics and award fee criteria used to evaluate Bell Boeing's performance under this contract?

The provided data does not detail the specific key performance metrics (KPIs) or award fee criteria for this contract. For a Cost Plus Award Fee (CPAF) contract, these criteria are crucial for determining the contractor's fee. They typically relate to factors such as meeting delivery schedules, achieving specified technical performance levels, managing costs effectively, quality of work, and overall program management. The effectiveness of the award fee structure hinges on clearly defined, measurable, and achievable criteria that incentivize the contractor to meet or exceed program objectives while controlling costs.

What is the historical spending pattern for environmental control systems by the Department of Defense, and how does this contract fit within that trend?

Historical spending on environmental control systems (ECS) by the Department of Defense (DoD) is part of broader aircraft procurement and sustainment budgets. While specific aggregate data for ECS is not readily available, the DoD consistently invests billions annually in maintaining and modernizing its vast aircraft fleet. This $75.8 million contract represents a significant, albeit specific, investment within that larger context. Its sole-source nature and long duration suggest it addresses a critical, potentially unique, requirement rather than a routine or widely competed procurement, fitting into a pattern of specialized, high-value system upgrades for key platforms.

What are the potential risks associated with a sole-source, cost-plus award fee contract of this magnitude and duration?

The primary risks associated with this contract type include potential cost overruns, lack of competitive innovation, and reduced government leverage. In a sole-source scenario, the contractor faces less pressure to minimize costs, and the government cannot benefit from competitive pricing. The Cost Plus Award Fee (CPAF) structure, while offering flexibility, can incentivize cost accumulation if award criteria are not stringent or if oversight is insufficient. The long duration (over 6 years) increases the risk of scope creep, changing requirements, and potential contractor inefficiencies going undetected over time. Robust government oversight, clear performance metrics, and stringent cost controls are essential to mitigate these risks.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001906R0012

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 401 TILTROTOR DR, AMARILLO, TX, 79111

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $79,038,245

Exercised Options: $79,038,245

Current Obligation: $75,787,909

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline