Boeing awarded $27.9M sole-source order for aircraft environmental control system software upgrades

Contract Overview

Contract Amount: $27,879,912 ($27.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2017-07-03

End Date: 2019-07-31

Contract Duration: 758 days

Daily Burn Rate: $36.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS ORDER IS TO PROCURE RETROFIT NON-RECURRING EFFORTS INCLUDED HEREIN, IN ACCORDANCE WITH ECP 6481 "ENVIRONMENTAL CONTROL SYSTEM CONTROLLER SOFTWARE IMPROVEMENT".

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $27.9 million to THE BOEING COMPANY for work described as: THIS ORDER IS TO PROCURE RETROFIT NON-RECURRING EFFORTS INCLUDED HEREIN, IN ACCORDANCE WITH ECP 6481 "ENVIRONMENTAL CONTROL SYSTEM CONTROLLER SOFTWARE IMPROVEMENT". Key points: 1. The contract focuses on non-recurring engineering efforts for software improvements, indicating a one-time investment rather than ongoing operational costs. 2. The sole-source nature of this award warrants scrutiny regarding the justification for not pursuing a competitive bidding process. 3. The duration of 758 days suggests a complex technical undertaking requiring significant development and integration time. 4. The firm-fixed-price contract type shifts cost risk to the contractor, which can be beneficial for the government if well-defined. 5. The contract falls under the Aircraft Manufacturing NAICS code, aligning with specialized aerospace engineering services. 6. The award was issued as a Delivery Order under an existing contract, suggesting a potential for follow-on work or broader program integration.

Value Assessment

Rating: questionable

Benchmarking the value of this specific retrofit is challenging without comparable sole-source awards for similar software upgrades. The firm-fixed-price structure is generally favorable, but the lack of competition makes it difficult to assess if the $27.9 million represents a fair market price. Further analysis would require understanding the specific technical requirements and the proprietary nature of the software being modified.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not solicit bids from multiple contractors. The justification for this approach is not provided but typically involves unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. The lack of competition limits price discovery and potentially increases the cost to the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding, potentially leading to higher overall expenditure for this upgrade.

Public Impact

The primary beneficiaries are the Department of Defense and its aviation assets requiring updated environmental control systems. The services delivered involve specialized software engineering and development for aircraft systems. The geographic impact is primarily tied to the operational locations of the affected aircraft and the contractor's facilities in Missouri. Workforce implications include specialized roles for software engineers, systems analysts, and aerospace technicians involved in the retrofit.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced incentive for cost efficiency.
Sole-source justification needs thorough review to ensure no viable alternatives were overlooked.
The complexity of software retrofits can introduce unforeseen technical challenges and cost overruns, even with fixed-price contracts.

Positive Signals

Firm-fixed-price contract type provides cost certainty to the government, assuming the scope is well-defined.
The award is for a specific, non-recurring effort, suggesting a defined project with a clear endpoint.
The contractor, Boeing, has extensive experience in aerospace manufacturing and aircraft systems.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and associated systems. The market for aircraft software and systems upgrades is highly specialized, often dominated by original equipment manufacturers or firms with deep domain expertise. Spending in this area is driven by the need for modernization, enhanced performance, and compliance with evolving regulations. Comparable spending benchmarks would likely involve other major aircraft modification programs or sustainment contracts for complex defense platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor is The Boeing Company, a large aerospace firm. There is no explicit information regarding subcontracting plans for small businesses within this specific delivery order. The impact on the small business ecosystem is likely minimal unless Boeing actively engages small businesses for specialized support services not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. As a delivery order under a larger contract, existing oversight mechanisms are likely leveraged. Transparency regarding the sole-source justification and the specific technical details of the retrofit would be key areas for public accountability.

Related Government Programs

Aircraft Sustainment Programs
Aerospace Systems Modernization
Defense Aviation Software Development
Environmental Control Systems Maintenance

Risk Flags

Sole-source award justification requires verification.
Potential for cost overruns despite firm-fixed-price.
Complexity of software integration poses technical risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.9 million to THE BOEING COMPANY. THIS ORDER IS TO PROCURE RETROFIT NON-RECURRING EFFORTS INCLUDED HEREIN, IN ACCORDANCE WITH ECP 6481 "ENVIRONMENTAL CONTROL SYSTEM CONTROLLER SOFTWARE IMPROVEMENT".

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $27.9 million.

What is the period of performance?

Start: 2017-07-03. End: 2019-07-31.

What is the specific justification for awarding this contract on a sole-source basis to The Boeing Company?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available to meet the government's needs. This could be due to proprietary technology, unique capabilities, or the need to maintain commonality with existing systems. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to definitively state why competition was precluded. However, for complex aircraft systems, especially software upgrades tied to specific platforms, the original equipment manufacturer often possesses unique knowledge and access required for such modifications.

How does the $27.9 million cost compare to similar aircraft software retrofit contracts, particularly those awarded competitively?

Directly comparing this $27.9 million sole-source award to similar contracts is difficult without more specific details on the scope of work and the aircraft platform involved. Competitive contracts for software retrofits can vary widely in price based on complexity, number of aircraft affected, and the specific systems being upgraded. Generally, sole-source awards are expected to be higher than competitively bid contracts due to the absence of price pressure from multiple bidders. To benchmark this value, one would need to identify comparable sole-source awards for similar types of software upgrades (e.g., avionics, mission systems, or environmental controls) on similar aircraft types and analyze the cost per unit or per development hour.

What are the primary risks associated with this sole-source contract, and how are they being mitigated?

The primary risk associated with this sole-source contract is the potential for overpricing due to the lack of competition. Without competing bids, there is less incentive for the contractor to offer the lowest possible price. Another risk is scope creep or unforeseen technical challenges during the retrofit, which could lead to cost increases, although the firm-fixed-price structure aims to mitigate this by placing cost risk on the contractor. Mitigation strategies would typically involve rigorous government oversight, detailed contract terms, clear performance metrics, and potentially independent cost estimates. The government's contracting officers would need to ensure the scope is well-defined and that Boeing's proposed costs are reasonable based on available data and expertise.

What is the expected impact of these software improvements on the operational effectiveness or maintainability of the affected aircraft?

The contract specifies the order is to procure 'retrofit non-recurring efforts' related to 'Environmental Control System Controller Software Improvement.' Improved software for the Environmental Control System (ECS) is expected to enhance the reliability, efficiency, and potentially the performance of the aircraft's cabin environment management. This could translate to better crew and passenger comfort, more precise temperature regulation, reduced power consumption, and potentially lower maintenance requirements or fewer system failures related to the ECS. Enhanced maintainability might stem from improved diagnostics within the software or more robust code that is less prone to errors, leading to reduced downtime and operational costs over the aircraft's lifecycle.

What has been Boeing's historical performance on similar sole-source contracts with the Department of Defense, particularly regarding cost and schedule adherence?

Assessing Boeing's historical performance on similar sole-source contracts requires access to detailed contract performance databases and award-fee evaluations, which are not provided in the current data. Boeing is a major defense contractor with a long history of delivering complex systems to the DoD. While generally considered a capable supplier, like any large contractor, they may have experienced instances of cost overruns or schedule delays on specific programs. For sole-source awards, performance history is crucial for the government to ensure the contractor can deliver the required capabilities within a reasonable timeframe and budget, even without competitive pressure. A review of past performance metrics, past performance questionnaires, and any contractor performance assessment reporting system (CPARS) data would be necessary for a comprehensive evaluation.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $28,255,370

Exercised Options: $27,879,912

Current Obligation: $27,879,912

Actual Outlays: $970,530

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $8,096,466

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001916G0001

IDV Type: BOA

Timeline