Boeing's $16.5M Navy contract for ISS support shows a lack of competition and potential value concerns

Contract Overview

Contract Amount: $16,457,069 ($16.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-01-30

End Date: 2024-07-15

Contract Duration: 1,993 days

Daily Burn Rate: $8.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CY19-23 ISS SUPPORT

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $16.5 million to THE BOEING COMPANY for work described as: CY19-23 ISS SUPPORT Key points: 1. The contract was awarded on a non-competitive basis, raising questions about price discovery and potential overspending. 2. With a duration of 1993 days, the contract spans over five years, indicating a long-term need for these services. 3. The 'Aircraft Manufacturing' NAICS code suggests a focus on production or maintenance related to aircraft systems. 4. The contract type is Cost Plus Fixed Fee (CPFF), which can incentivize cost overruns if not closely monitored. 5. The award value of $16.5 million is a significant investment, warranting scrutiny of its cost-effectiveness. 6. The absence of small business set-asides suggests this contract is not designed to promote small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its non-competitive nature and specific service scope. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex or uncertain work, carries inherent risks of cost escalation. Without competitive bids, it's difficult to ascertain if the fixed fee adequately compensates the contractor for the effort or if the government is receiving optimal value for the costs incurred. The provided data does not offer direct comparisons to similar contracts, making a precise value assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, proprietary technology, or when urgency dictates a direct award. The lack of competition means that market forces were not leveraged to drive down prices or encourage innovative solutions, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive bidding. Without competing offers, there is less assurance that the negotiated price reflects the lowest possible cost for the required support.

Public Impact

The primary beneficiary is the Department of the Navy, which receives crucial Integrated Support Services (ISS). These services likely support the operational readiness and maintenance of naval aircraft or related systems. The contract's duration suggests a sustained impact on naval aviation capabilities. The workforce implications are likely centered around specialized technical and engineering roles within The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition increases the risk of paying above-market rates.
Cost Plus Fixed Fee structure requires robust oversight to prevent cost overruns.
Long contract duration (1993 days) could lead to complacency or reduced urgency in performance.
Absence of small business participation limits opportunities for smaller firms in this sector.

Positive Signals

The Boeing Company is a major defense contractor with extensive experience, suggesting a high likelihood of technical capability.
The contract addresses a long-term need, indicating strategic importance for naval operations.
The fixed fee component provides some level of cost predictability compared to pure cost-reimbursement contracts.

Sector Analysis

The defense sector, particularly aircraft manufacturing and support, represents a significant portion of federal spending. Contracts like this are essential for maintaining the operational readiness of military assets. The market for specialized aircraft support services is often dominated by a few large, established prime contractors due to the high technical barriers to entry and security requirements. Benchmarking spending in this area requires comparing similar long-term support contracts for complex defense systems.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, as indicated by 'sb': false. Consequently, there are no direct subcontracting requirements mandated for small businesses within this award. This means that opportunities for small businesses to participate in supporting these specific Navy requirements are limited unless they are directly contracted by The Boeing Company as a supplier or subcontractor outside of formal set-aside programs.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor incurred costs against the fixed fee and ensure compliance with contract terms. Transparency is dependent on the agency's reporting practices and the availability of contract data. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Aviation Maintenance Programs
Aircraft Systems Support Contracts
Defense Contractor Support Services
Integrated Logistics Support
Aerospace Manufacturing Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.5 million to THE BOEING COMPANY. CY19-23 ISS SUPPORT

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 $16.5 million.

What is the period of performance?

Start: 2019-01-30. End: 2024-07-15.

What is the historical spending trend for Integrated Support Services (ISS) for the Navy's aircraft programs?

Analyzing historical spending trends for ISS within the Navy's aircraft programs requires access to detailed contract databases and budget allocations over multiple fiscal years. Generally, spending in this area tends to be substantial and can fluctuate based on fleet readiness requirements, modernization programs, and the introduction of new aircraft platforms. Long-term support contracts, like the one awarded to Boeing, indicate a consistent and significant investment. Without specific historical data for this particular contract or closely related ones, it's difficult to pinpoint precise trends. However, the defense sector typically sees sustained, high-value spending on sustainment and support services to ensure operational capabilities.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of cost efficiency for long-term support?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is well-defined but the exact costs are uncertain, such as in research and development or complex system integration. The government agrees to pay the contractor's actual costs plus a fixed fee, which represents the contractor's profit. While the fixed fee provides some cost ceiling for profit, the government bears the risk of cost overruns. In terms of cost efficiency for long-term support, CPFF can be less efficient than fixed-price contracts if costs are not meticulously managed and controlled. Fixed-price contracts offer greater cost certainty for the government but may require more detailed upfront scope definition and can lead to contractor risk if estimates are inaccurate. For mature, predictable support services, fixed-price or incentive-fee contracts might offer better value.

What are the potential risks associated with awarding a sole-source contract for aircraft manufacturing support?

The primary risk of a sole-source award for aircraft manufacturing support is the lack of competitive pressure, which can lead to inflated prices and reduced innovation. Without competing bids, the government may not achieve the best possible value for its money. There's also a risk that the sole-source provider may become complacent, leading to a decline in service quality or responsiveness over time, especially given the long duration of this contract. Furthermore, sole-source awards can create a perception of favoritism or limit opportunities for other capable companies to enter or expand their presence in the defense industrial base, potentially impacting long-term market dynamics and resilience.

What performance metrics are typically used to evaluate contractors on long-term aircraft support contracts?

Performance metrics for long-term aircraft support contracts are crucial for ensuring mission readiness and value for money. Common metrics include: On-Time Delivery (OTD) for parts and services, Mean Time Between Failures (MTBF) for components, Mean Time To Repair (MTTR), aircraft availability rates, technical accuracy of maintenance performed, and compliance with safety and quality standards. For CPFF contracts, performance is also tied to cost control and adherence to the established budget. Agencies often use Contractor Performance Assessment Reporting System (CPARS) to document contractor performance, which can influence future award decisions.

How does the 'Aircraft Manufacturing' NAICS code relate to the 'Integrated Support Services' contract description?

The North American Industry Classification System (NAICS) code 336411, 'Aircraft Manufacturing,' typically covers establishments primarily engaged in manufacturing aircraft, aircraft engines, and parts. When applied to a contract described as 'Integrated Support Services' (ISS), it suggests that the services provided are directly related to the manufacturing lifecycle or sustainment of aircraft. This could encompass a range of activities such as post-production support, depot-level maintenance, repair and overhaul (MRO), logistics support, technical data management, and engineering services necessary to keep the aircraft operational throughout its service life. The ISS contract likely leverages the manufacturer's intimate knowledge of the aircraft design and production process to ensure effective and efficient support.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

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: 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: $28,025,728

Exercised Options: $27,480,216

Current Obligation: $16,457,069

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline