Boeing awarded $52.3M for AESA radar module redesign, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $52,362,819 ($52.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2017-06-28

End Date: 2024-06-30

Contract Duration: 2,559 days

Daily Burn Rate: $20.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: ECP 6460C1 AESA MULTI-MODULE REDESIGN

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $52.4 million to THE BOEING COMPANY for work described as: ECP 6460C1 AESA MULTI-MODULE REDESIGN Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and lack of competitive pressure. 2. The contract's duration of over 7 years suggests a long-term need for the AESA radar module redesign. 3. Cost-plus incentive fee contract type indicates that contractor performance on cost and schedule will influence final payment. 4. The specific NAICS code (336411) points to aircraft manufacturing, aligning with the nature of advanced radar systems. 5. The contract is a delivery order under a larger contract, implying a phased approach to acquisition. 6. The absence of small business set-aside suggests the prime contractor is expected to handle the majority of the work.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source AESA radar module redesigns. The cost-plus incentive fee structure allows for flexibility but also carries inherent risk if cost controls are not robust. The total value of $52.3 million over nearly seven years needs careful scrutiny to ensure it reflects fair market value, especially given the lack of competitive bidding which typically drives down prices.

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. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means there were no other bidders to compare against, potentially limiting price discovery and negotiation leverage for the government.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding.

Public Impact

The primary beneficiaries are the Department of the Navy, which will receive updated AESA radar modules for its aircraft. The services delivered include the redesign and potential manufacturing of critical components for advanced radar systems. The geographic impact is primarily centered around the contractor's facilities in Missouri, where the work will likely be performed. Workforce implications include skilled engineers and technicians involved in aerospace and defense manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost-plus incentive fee structure requires diligent oversight to manage costs effectively.
Long contract duration increases exposure to potential cost escalations and scope creep.
Lack of transparency in sole-source justification requires careful review.
Potential for contractor to leverage unique position for favorable terms.

Positive Signals

Contract addresses a critical defense capability (advanced radar systems).
Incentive fee structure can motivate contractor performance on cost and schedule.
Delivery order structure allows for phased funding and management.
Contractor (Boeing) has significant experience in aerospace and defense.
Long performance period suggests a sustained need and commitment to the technology.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and long product lifecycles. Advanced radar systems, such as AESA (Active Electronically Scanned Array) technology, are crucial for modern military platforms. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would involve other major defense contractors undertaking similar complex system redesigns, often in the multi-million dollar range.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of the work (complex radar module redesign) and the prime contractor being a large aerospace company, it is likely that any subcontracting opportunities for small businesses would be at the discretion of The Boeing Company. The impact on the small business ecosystem depends on Boeing's subcontracting plan and whether they actively seek out and engage small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the Cost Plus Incentive Fee (CPIF) structure, which links contractor profit to performance against cost and schedule targets. Transparency may be limited due to the sole-source nature of the award, but contract modifications, performance reports, and payment data should be accessible through federal procurement databases. The Inspector General for the Department of Defense would have jurisdiction for audits and investigations.

Related Government Programs

Advanced Radar Systems Procurement
Aircraft Component Modernization
Defense Research and Development
Naval Aviation Support Contracts
Aerospace Manufacturing Services

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.4 million to THE BOEING COMPANY. ECP 6460C1 AESA MULTI-MODULE REDESIGN

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 $52.4 million.

What is the period of performance?

Start: 2017-06-28. End: 2024-06-30.

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

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 can provide the required supplies or services, often due to unique capabilities, proprietary technology, or urgent needs where competition is not feasible. For this AESA radar module redesign, the justification might stem from Boeing's unique expertise, existing intellectual property related to the system, or the need for seamless integration with existing platforms where only Boeing possesses the necessary knowledge and access. A thorough review of the official justification documentation would be required to confirm the precise reasons.

How does the Cost Plus Incentive Fee (CPIF) structure typically work, and what are the risks and benefits for the government in this contract?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and receives a fee that is adjusted based on performance against pre-determined targets, such as cost, schedule, or technical performance. For the government, the benefit is that the CPIF structure incentivizes the contractor to control costs and meet performance objectives, as their profit is directly tied to it. The risk for the government lies in the potential for cost overruns if the targets are not set appropriately or if the contractor's performance is suboptimal, leading to a higher final price than initially anticipated. Diligent government oversight is crucial to ensure targets are realistic and performance is monitored effectively.

What is the historical spending trend for similar AESA radar module redesigns by the Department of the Navy?

Analyzing historical spending trends for similar AESA radar module redesigns by the Department of the Navy is complex without access to specific contract databases and detailed project information. However, it is known that advanced radar systems represent a significant investment for naval aviation. Redesigns and upgrades to such critical components are typically multi-million dollar endeavors, often awarded to prime defense contractors with specialized expertise. The duration and cost of such projects can vary widely based on the complexity of the technology, the scope of the redesign, and the specific platform integration requirements. Without specific comparable contract data, it's difficult to establish a precise historical spending benchmark for this particular type of redesign.

What are the potential implications of the long contract duration (2559 days) on the technology's obsolescence and future upgradeability?

A contract duration of 2559 days (approximately 7 years) for an advanced technology like AESA radar modules presents a dual-edged sword regarding obsolescence and upgradeability. On one hand, it provides a stable, long-term commitment for the contractor to develop and deliver the redesigned modules, potentially allowing for thorough testing and integration. On the other hand, technology in the aerospace and defense sector evolves rapidly. By the end of this contract period, the 'redesigned' modules might already be approaching obsolescence, or newer, more advanced technologies may have emerged. This necessitates careful planning for future upgrades or replacements, and the contract's terms should ideally include provisions for incorporating technological advancements or managing obsolescence.

What is the significance of the contract being a 'Delivery Order' (aw) under a larger contract?

The designation of this award as a 'Delivery Order' (aw) indicates that it is a specific task or order placed against a previously established indefinite-delivery/indefinite-quantity (IDIQ) contract or a basic ordering agreement. This approach allows the government to procure goods or services incrementally over time, as needed, rather than awarding a single, large fixed-price contract upfront. For the Department of the Navy, this offers flexibility in managing budgets and adapting to changing requirements. It also means that the $52.3 million represents the value of this specific order, and the overall value of the parent contract could be significantly higher. The 'Delivery Order' structure is common for long-term sustainment, modernization, or research and development efforts.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $52,362,819

Exercised Options: $52,362,819

Current Obligation: $52,362,819

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $6,157,932

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