DoD's $81M IRST LRIP II Systems Contract with Boeing Faces Scrutiny for Lack of Competition
Contract Overview
Contract Amount: $81,084,107 ($81.1M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2016-12-15
End Date: 2020-03-31
Contract Duration: 1,202 days
Daily Burn Rate: $67.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: IRST LRIP II SYSTEMS
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $81.1 million to THE BOEING COMPANY for work described as: IRST LRIP II SYSTEMS Key points: 1. The contract awarded to The Boeing Company for IRST LRIP II Systems represents a significant investment in advanced defense technology. 2. Competition was limited, raising questions about potential price inflation and the best value achieved for taxpayers. 3. The fixed-price incentive contract structure aims to balance cost control with performance incentives. 4. The sector is critical for naval operations, impacting situational awareness and mission effectiveness.
Value Assessment
Rating: questionable
The contract's value of $81 million for LRIP II systems needs further benchmarking against similar sole-source or limited-competition procurements in the defense sector. Without competitive bids, it's difficult to definitively assess if the pricing reflects fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source or limited-source award. This approach can streamline acquisition for unique or specialized systems but often leads to higher prices due to the absence of competitive pressure to reduce costs.
Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these systems, as the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.
Public Impact
Enhanced naval surveillance capabilities through the IRST system. Potential for increased defense spending without guaranteed best value. Impact on the defense industrial base and supplier diversity. National security implications of advanced sensor technology.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Sole-source award
- Potential for overpricing
Positive Signals
- Critical defense technology acquisition
- Fixed-price incentive structure
Sector Analysis
This procurement falls within the defense sector, specifically in advanced sensor and navigation systems manufacturing. Spending benchmarks in this niche area are often characterized by high R&D costs and limited supplier pools, making competitive analysis challenging.
Small Business Impact
The contract was awarded to The Boeing Company, a large prime contractor. There is no indication of specific provisions or subcontracts designed to benefit small businesses in this particular award, which is common for large, specialized defense systems.
Oversight & Accountability
Oversight is crucial for sole-source contracts to ensure fair pricing and performance. The Department of the Navy's contracting officers are responsible for validating costs and ensuring the contractor meets all contractual obligations.
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
- Lack of competitive bidding
- Potential for price escalation
- Limited transparency in cost determination
- Reliance on a single supplier for critical technology
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 $81.1 million to THE BOEING COMPANY. IRST LRIP II SYSTEMS
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 $81.1 million.
What is the period of performance?
Start: 2016-12-15. End: 2020-03-31.
What is the estimated cost savings if this contract had been competed?
Quantifying exact savings from a hypothetical competition is challenging without detailed market research and cost analysis. However, industry studies suggest that competitive procurements can yield savings ranging from 10% to 30% or more compared to sole-source awards, depending on the complexity and uniqueness of the item.
What are the primary risks associated with a sole-source award for advanced defense systems?
The primary risks include inflated pricing due to lack of competition, potential for contractor complacency regarding cost efficiency and innovation, and limited visibility into the true market value of the system. There's also a risk of vendor lock-in, making future procurements more expensive.
How does the fixed-price incentive (FPI) structure mitigate risks for this specific contract?
The FPI structure aims to mitigate risk by establishing a target cost, target profit, and a price ceiling. If the final cost is below the target, both the government and contractor share in the savings. If it exceeds the target, the contractor assumes a larger share of the overruns up to the ceiling, incentivizing cost control.
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: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001917R0026
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
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: $82,084,777
Exercised Options: $82,084,777
Current Obligation: $81,084,107
Subaward Activity
Number of Subawards: 10
Total Subaward Amount: $51,183,495
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-12-15
Current End Date: 2020-03-31
Potential End Date: 2020-03-31 00:00:00
Last Modified: 2023-03-03
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