Boeing awarded $63M for MQ-25 Concept Refinement, a sole-source R&D effort
Contract Overview
Contract Amount: $62,972,189 ($63.0M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2016-09-23
End Date: 2018-09-13
Contract Duration: 720 days
Daily Burn Rate: $87.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF MQ-25 CONCEPT REFINEMENT EFFORT
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $63.0 million to THE BOEING COMPANY for work described as: IGF::OT::IGF MQ-25 CONCEPT REFINEMENT EFFORT Key points: 1. Contract awarded to a single, established prime contractor, raising questions about competitive pricing. 2. Significant investment in early-stage concept refinement for a critical unmanned aerial refueling system. 3. Sole-source award suggests limited market alternatives or strategic partnerships. 4. Performance period spans two years, indicating a focused development phase. 5. Contract type (Cost Plus Fixed Fee) allows for cost reimbursement with a negotiated profit. 6. Focus on R&D in physical and engineering sciences, aligning with advanced defense capabilities.
Value Assessment
Rating: questionable
The contract's value of $63 million for concept refinement is substantial, but without competitive bidding, it's difficult to benchmark against market rates or similar R&D efforts. The Cost Plus Fixed Fee structure, while common in R&D, can lead to cost overruns if not closely managed. The lack of competition means taxpayers may not be receiving the best possible price for the services rendered.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was solicited. This approach is typically justified when only one responsible source can provide the required services or when there's a compelling urgency. However, it bypasses the opportunity for price discovery and innovation that typically arises from a competitive bidding process.
Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the lowest possible price, potentially leading to higher costs for taxpayers compared to a competed contract.
Public Impact
The primary beneficiary is the Department of the Navy, which gains advanced capabilities for its carrier air wings. Services delivered include concept refinement, design, and analysis for the MQ-25 unmanned aerial refueling system. Geographic impact is national, supporting the development of a key defense asset. Workforce implications include specialized engineering and research roles within The Boeing Company.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may result in higher costs for taxpayers.
- Sole-source award limits opportunities for small business innovation and participation.
- Cost Plus Fixed Fee contracts can incentivize higher spending if not rigorously overseen.
Positive Signals
- Award to a prime contractor with extensive aerospace and defense experience.
- Focus on a critical capability (unmanned aerial refueling) for future naval operations.
- Investment in research and development for advanced defense technology.
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on advanced aerospace technologies. The market for large, unmanned aerial systems, particularly for carrier-based operations, is highly specialized and dominated by a few major defense contractors. The $63 million award is significant for a concept refinement phase, reflecting the complexity and strategic importance of the MQ-25 program.
Small Business Impact
This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. As a sole-source award to a large prime contractor, it offers limited direct opportunities for small businesses to participate in the primary contract. Any involvement would likely be through subcontracting tiers, the extent of which is not detailed here.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Given the R&D nature and Cost Plus Fixed Fee structure, rigorous financial and performance monitoring would be expected. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations into potential fraud, waste, or abuse.
Related Government Programs
- MQ-25 Stingray Program
- Unmanned Aerial Systems (UAS) Development
- Naval Aviation Modernization
- Defense Research and Development Contracts
Risk Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of competitive bidding
Tags
defense, department-of-defense, department-of-the-navy, unmanned-aerial-vehicle, research-and-development, cost-plus-fixed-fee, sole-source, missouri, large-business, concept-refinement
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $63.0 million to THE BOEING COMPANY. IGF::OT::IGF MQ-25 CONCEPT REFINEMENT EFFORT
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 $63.0 million.
What is the period of performance?
Start: 2016-09-23. End: 2018-09-13.
What is the track record of The Boeing Company with similar sole-source R&D contracts for the Department of Defense?
The Boeing Company has a long history of contracting with the Department of Defense, often securing sole-source or limited-competition awards for complex defense systems due to its established expertise and capabilities. While specific data on sole-source R&D contracts for concept refinement isn't provided here, Boeing has been a primary contractor for numerous large-scale defense programs. Analysis of past performance would involve reviewing contract databases for similar awards, examining performance reviews, and assessing any past issues related to cost, schedule, or quality on sole-source engagements. Their extensive experience suggests a capacity to execute such projects, but the lack of competition inherently limits external validation of value for money on any given award.
How does the $63 million cost compare to other concept refinement efforts for major defense platforms?
Benchmarking the $63 million cost for the MQ-25 concept refinement against similar efforts is challenging without access to detailed cost data for comparable programs. Concept refinement phases for major defense platforms are inherently expensive due to the complexity, specialized engineering talent required, and the need for advanced analysis and simulation. However, this figure represents a significant investment for an early-stage development effort. Typically, concept refinement aims to mature designs and reduce risk before proceeding to full-scale development. If other programs of similar scope and technological ambition show substantially lower costs, it could indicate potential inefficiencies or higher-than-market pricing in this specific contract. Conversely, if comparable efforts also incurred tens of millions for initial concept work, this award might be within an expected range, albeit still lacking competitive validation.
What are the primary risks associated with a sole-source award for a critical defense system like the MQ-25?
The primary risks associated with a sole-source award for a critical defense system like the MQ-25 include potential for inflated costs due to lack of competitive pressure, reduced incentive for innovation from the contractor, and a lack of transparency in pricing. Taxpayers may end up paying more than necessary. Furthermore, it can create a dependency on a single supplier, which can be problematic if that supplier faces financial difficulties or strategic shifts. For the government, there's also the risk that without competitive input, alternative technological solutions or more cost-effective approaches might be overlooked. Ensuring rigorous oversight, detailed performance metrics, and fair profit margins becomes even more critical in sole-source situations to mitigate these inherent risks.
What is the expected program effectiveness and timeline for the MQ-25 based on this concept refinement contract?
This contract specifically covers the 'Concept Refinement Effort' for the MQ-25, indicating it's an early phase focused on solidifying the design, capabilities, and technical approach before moving into full-scale development and production. The contract duration of 720 days (approximately two years) suggests that this phase is intended to mature the concept significantly. While this contract itself doesn't guarantee program effectiveness, successful completion of concept refinement is a prerequisite for the overall MQ-25 program's success. The effectiveness of the final MQ-25 system will depend on subsequent development, testing, and integration phases. This contract aims to lay a solid foundation, reducing technical risks and defining requirements to ensure the eventual system meets the Navy's operational needs for carrier-based unmanned aerial refueling.
How has federal spending on unmanned aerial systems (UAS) evolved, and where does the MQ-25 fit in?
Federal spending on unmanned aerial systems (UAS) has seen a dramatic increase over the past two decades, driven by evolving military requirements, technological advancements, and decreasing costs for certain UAS platforms. Initially focused on intelligence, surveillance, and reconnaissance (ISR), spending has expanded to include combat drones, logistics, and now, specialized roles like aerial refueling. The MQ-25 program represents a significant step in this evolution, addressing a long-standing need for organic carrier-based unmanned capabilities. It signifies a shift towards integrating autonomous systems into traditional manned platforms' operational envelopes. The $63 million for concept refinement is a relatively small portion of the total anticipated program cost but is crucial for defining this new operational paradigm within the broader context of increasing federal investment in advanced autonomous systems.
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: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001916R0036
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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $62,972,189
Exercised Options: $62,972,189
Current Obligation: $62,972,189
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-09-23
Current End Date: 2018-09-13
Potential End Date: 2018-09-13 00:00:00
Last Modified: 2017-12-15
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