DoD's $79M contract for nacelle improvements awarded to Bell Boeing Joint Project Office without competition

Contract Overview

Contract Amount: $79,128,339 ($79.1M)

Contractor: Bell Boeing Joint Project Office

Awarding Agency: Department of Defense

Start Date: 2018-05-23

End Date: 2024-06-27

Contract Duration: 2,227 days

Daily Burn Rate: $35.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NRE FOR NACELLE IMPROVEMENTS

Place of Performance

Location: AMARILLO, POTTER County, TEXAS, 79111

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $79.1 million to BELL BOEING JOINT PROJECT OFFICE for work described as: NRE FOR NACELLE IMPROVEMENTS Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Lack of competition raises concerns about price discovery and potential overpayment. 3. Long contract duration of 2227 days suggests a significant, ongoing need. 4. Awarded to a joint venture, which may have unique cost structures and overhead. 5. The contract is for 'NRE FOR NACELLE IMPROVEMENTS,' suggesting research and development or significant modifications. 6. Performance is managed by the Defense Contract Management Agency, a standard oversight body for DoD contracts.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes a definitive value-for-money assessment difficult without further data. Benchmarking this specific 'NRE FOR NACELLE IMPROVEMENTS' against similar R&D or modification contracts is challenging due to its specialized nature. However, the absence of competitive bidding inherently limits the government's ability to secure the best possible price, suggesting a potentially higher cost than if multiple vendors had vied for the work.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, the Bell Boeing Joint Project Office, was solicited. The justification for this approach is not provided in the data. Sole-source awards typically occur when a unique capability is required, or for follow-on work where competition is impractical. The lack of multiple bidders means there was no direct price comparison or negotiation driven by market forces.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a bidding process, the government cannot be assured it received the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units utilizing the aircraft for which nacelle improvements are being made. The services delivered involve research, development, and potentially the manufacturing or integration of improved nacelle components. The geographic impact is primarily within Texas, where the contractor is located, and wherever the affected aircraft are deployed. Workforce implications include employment for engineers, technicians, and manufacturing personnel at Bell Boeing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to costs exceeding initial estimates.
Sole-source award limits price competition and potentially increases costs for taxpayers.
Long contract duration may indicate potential for scope creep or unforeseen challenges.
NRE (Non-Recurring Engineering) can be a complex cost category to manage and verify.

Positive Signals

Award to a joint venture (Bell Boeing) suggests established capabilities and experience in aerospace manufacturing.
Contract managed by DCMA indicates standard government oversight processes are in place.
The contract addresses specific improvements to aircraft nacelles, likely enhancing performance or safety.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Contracts for aircraft components, especially those involving modifications or 'NRE,' are often awarded to established prime contractors or joint ventures with proven expertise. The market size for such specialized components is substantial, driven by defense spending and commercial aviation needs. This contract fits within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, indicating a focus on specialized, non-standard parts.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor is a joint venture (Bell Boeing), which is typically a large entity. There is no explicit information regarding subcontracting plans for small businesses within this data, but given the nature of the work and the prime contractor, it is possible that smaller specialized firms could be involved as subcontractors, though this is not guaranteed.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions, including cost, schedule, and performance. The cost-plus-fixed-fee structure necessitates close monitoring of expenditures to ensure costs are reasonable and allocable. Transparency is generally maintained through contract reporting mechanisms, but specific details of the NRE costs and justifications for the sole-source award would require deeper investigation.

Related Government Programs

Aircraft Component Manufacturing
Aerospace Research and Development
Defense Procurement
Cost-Plus Contracts
Sole-Source Acquisitions

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 $79.1 million to BELL BOEING JOINT PROJECT OFFICE. NRE FOR NACELLE IMPROVEMENTS

Who is the contractor on this award?

The obligated recipient is BELL BOEING JOINT PROJECT OFFICE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $79.1 million.

What is the period of performance?

Start: 2018-05-23. End: 2024-06-27.

What is the specific nature of the 'NRE FOR NACELLE IMPROVEMENTS' and why was it deemed necessary?

The data provided does not detail the specific improvements to the nacelles. 'NRE' typically stands for Non-Recurring Engineering, which refers to the one-time costs associated with the design, development, and testing of a new product or process. These improvements could range from aerodynamic enhancements to structural upgrades or the integration of new technologies. The necessity would likely stem from performance deficiencies, obsolescence, new mission requirements, or safety concerns related to the existing nacelles. A detailed technical proposal or justification document from the contractor and the procuring agency would be required to understand the precise nature and rationale behind these improvements.

What is the typical profit margin for Cost Plus Fixed Fee (CPFF) contracts in the aerospace defense sector?

Profit margins on Cost Plus Fixed Fee (CPFF) contracts in the aerospace and defense sector can vary significantly based on factors such as contract complexity, risk, the contractor's established overhead rates, and negotiation outcomes. Generally, the 'fixed fee' portion is negotiated upfront and represents the contractor's profit. While the government reimburses all allowable costs, the fee remains constant regardless of the final cost. Industry benchmarks suggest that fixed fees on CPFF contracts can range from 5% to 15% of the estimated cost, but this is highly dependent on the specific contract and the negotiating power of both parties. Without knowing the estimated cost and the negotiated fee for this specific contract, a precise profit margin cannot be determined.

What are the risks associated with a sole-source award for a contract of this magnitude and duration?

Sole-source awards, especially for large, long-duration contracts like this $79 million, 2227-day agreement, carry inherent risks. The primary risk is the lack of price competition, which can lead to the government paying more than it would in a competitive environment. Without competing bids, there's less incentive for the contractor to minimize costs or offer the most innovative solutions. Furthermore, sole-source awards can sometimes indicate a lack of available qualified vendors or a reliance on a single source, creating potential supply chain vulnerabilities. There's also a risk of contractor complacency or reduced efficiency over the long term due to the absence of competitive pressure. Robust oversight and stringent performance management become even more critical in sole-source situations.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code typically perform in terms of government contracting?

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) sector is a specialized segment within the broader aerospace industry. Companies operating under this code often produce unique, high-value components that require advanced engineering and manufacturing capabilities. Government contracting within this NAICS code is substantial, driven primarily by defense spending for military aircraft sustainment, upgrades, and new platforms. Performance can be characterized by long-term relationships between contractors and agencies, complex technical requirements, and significant R&D investments. Contracts are often awarded through competitive bidding, but sole-source or limited competition awards are also common for highly specialized or proprietary parts. Small businesses can play a role, but prime contracts are frequently held by larger, established aerospace firms.

What is the historical spending pattern for 'NRE FOR NACELLE IMPROVEMENTS' by the Department of Defense?

The provided data only pertains to a single contract for 'NRE FOR NACELLE IMPROVEMENTS.' To assess historical spending patterns, a broader analysis of past contracts awarded by the Department of Defense (DoD) for similar 'NRE' or nacelle-related modifications would be necessary. This would involve querying federal procurement databases (like FPDS or USASpending) for contracts with similar product/service codes, keywords, and agencies over several fiscal years. Without this broader dataset, it's impossible to establish a historical spending trend, identify patterns of sole-source awards in this category, or benchmark current spending against previous investments in nacelle improvements.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 401 TILTROTOR DR PLANT A, AMARILLO, TX, 79111

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $79,343,415

Exercised Options: $79,343,415

Current Obligation: $79,128,339

Actual Outlays: $8,786,700

Subaward Activity

Number of Subawards: 60

Total Subaward Amount: $8,330,384

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001917G0002

IDV Type: BOA

Timeline