DoD awards Boeing $51M for MODE 5 Integration, raising questions on value and competition
Contract Overview
Contract Amount: $51,060,062 ($51.1M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2010-07-08
End Date: 2023-07-31
Contract Duration: 4,771 days
Daily Burn Rate: $10.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: MODE 5 INTEGRATION
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $51.1 million to THE BOEING COMPANY for work described as: MODE 5 INTEGRATION Key points: 1. Significant contract value of $51M awarded to a single large business. 2. Boeing is a dominant player in aerospace, potentially limiting competition. 3. Contract type (Cost Plus Fixed Fee) can lead to cost overruns. 4. Focus on defense systems suggests a specialized, high-stakes sector.
Value Assessment
Rating: questionable
The $51M award for MODE 5 Integration appears high given the duration and the nature of the system. Benchmarking against similar integration contracts is difficult without more detailed scope, but the cost-plus structure warrants scrutiny for potential inefficiencies.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
While advertised as full and open competition, the award to Boeing, a major defense contractor, suggests limited actual bidders. The price discovery mechanism for a cost-plus contract relies heavily on contractor cost reporting and government negotiation.
Taxpayer Impact: Taxpayer funds are utilized for this defense contract. The effectiveness of the competition and cost controls will determine the ultimate financial impact.
Public Impact
Enhances military operational capabilities through advanced navigation systems. Supports a major defense contractor, impacting employment and the aerospace sector. Potential for technological advancements in defense systems. Requires ongoing government oversight to ensure effective use of funds.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee contract type
- Limited competition despite 'full and open' status
- Long contract duration (over 10 years)
Positive Signals
- Awarded to a prime defense contractor
- Supports critical military technology
Sector Analysis
This contract falls within the Defense sector, specifically focusing on advanced navigation and guidance systems. Spending in this area is critical for national security, but often involves high costs due to specialized technology and limited suppliers.
Small Business Impact
The contract was awarded to The Boeing Company, a large business. There is no indication of subcontracting opportunities for small businesses within the provided data, suggesting limited direct impact on this segment.
Oversight & Accountability
The contract's long duration and cost-plus nature necessitate robust oversight from the Department of the Navy to ensure cost efficiency and adherence to scope. Regular audits and performance reviews are crucial.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Cost Overruns Potential (CPFF)
- Limited True Competition
- Long Contract Duration
- Sole Source Dominance in Sector
- Lack of Small Business Participation
Tags
search-detection-navigation-guidance-aer, department-of-defense, mo, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $51.1 million to THE BOEING COMPANY. MODE 5 INTEGRATION
Who is the contractor on this award?
The obligated recipient is THE BOEING COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $51.1 million.
What is the period of performance?
Start: 2010-07-08. End: 2023-07-31.
What specific performance improvements does MODE 5 Integration offer to justify the $51M cost over its extended period?
The MODE 5 Integration system likely enhances the accuracy, reliability, and security of navigation and identification for military platforms. This could translate to improved situational awareness, reduced friendly fire incidents, and more effective mission execution in complex operational environments. Quantifying the exact return on investment is challenging without specific performance metrics tied to mission success rates or operational cost savings.
How effectively did the 'full and open competition' process ensure competitive pricing for this complex defense system?
While advertised as full and open, the reality of defense contracting often sees a limited number of qualified bidders for highly specialized systems like MODE 5 Integration. Large, established contractors like Boeing may have inherent advantages. The government must demonstrate that multiple proposals were received and rigorously evaluated to ensure the chosen price reflects fair market value, rather than just the lowest bid from a dominant player.
What are the primary risks associated with a Cost Plus Fixed Fee contract for this type of integration, and how are they mitigated?
The primary risk is that the contractor may not be incentivized to control costs rigorously, potentially leading to overruns beyond the fixed fee. Mitigation strategies include strong government oversight, detailed cost auditing, clear performance metrics, and potentially incentive clauses tied to cost savings or performance improvements. The long duration amplifies these risks, requiring sustained vigilance.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0001909R0242
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $54,405,873
Exercised Options: $54,078,097
Current Obligation: $51,060,062
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2010-07-08
Current End Date: 2023-07-31
Potential End Date: 2023-07-31 00:00:00
Last Modified: 2023-05-16
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