Boeing awarded $39.2M for P-8A MUOS SATCOM incorporation, a sole-source contract

Contract Overview

Contract Amount: $39,239,086 ($39.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-09-28

End Date: 2027-03-31

Contract Duration: 1,280 days

Daily Burn Rate: $30.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: P-8A MUOS SATCOM INCORPORATION.

Place of Performance

Location: SEATTLE, KING County, WASHINGTON, 98108

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $39.2 million to THE BOEING COMPANY for work described as: P-8A MUOS SATCOM INCORPORATION. Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. The contract type (Cost Plus Fixed Fee) allows for cost overruns, increasing financial risk. 3. Performance period extends over 5 years, indicating a long-term commitment and potential for sustained spending. 4. This contract supports the P-8A Poseidon aircraft, a critical asset for naval aviation. 5. The specific nature of the SATCOM incorporation suggests a specialized requirement with limited market alternatives.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The Cost Plus Fixed Fee structure inherently carries higher risk for the government, as costs can escalate beyond initial estimates. While the total award is $39.2 million, the lack of competition makes it difficult to assess if this represents a fair market price for the specialized SATCOM incorporation. Further analysis would require understanding the specific technical requirements and comparing them to similar integration efforts, if any exist.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple vendors. This approach is typically used when only one vendor possesses the unique capabilities or technology required for the procurement. The lack of competition means there was no price discovery through a bidding process, potentially leading to higher costs for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Navy, enhancing the communication capabilities of its P-8A aircraft fleet. This contract delivers critical satellite communication (SATCOM) integration services for advanced maritime patrol aircraft. The geographic impact is primarily within the United States, where the contractor operates and the aircraft are based. Workforce implications include specialized engineering and technical roles within The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contract type introduces risk of cost overruns.
Long performance period (over 5 years) could lead to sustained, potentially inflated, spending if not closely managed.
Lack of transparency in pricing due to no competitive bidding process.

Positive Signals

Contract awarded to a major defense contractor with a proven track record on the P-8A program.
Addresses a critical capability gap for the P-8A aircraft, enhancing its operational effectiveness.
Specific technical integration likely requires specialized expertise only available from the incumbent contractor.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft modification and integration of advanced communication systems. The market for such specialized SATCOM integration for military platforms is often concentrated among a few large defense contractors like Boeing. Spending benchmarks for similar complex integration projects on high-value military assets can vary significantly based on the technology involved and the platform's complexity. The P-8A program itself represents a substantial investment in naval aviation capabilities.

Small Business Impact

This contract was awarded directly to The Boeing Company and does not appear to include specific small business set-aside provisions. As a sole-source award to a large prime contractor, there is a potential for limited subcontracting opportunities for small businesses unless explicitly mandated or pursued by Boeing. The impact on the small business ecosystem would depend on Boeing's subcontracting strategy for this specific project.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the contract terms, including performance milestones and reporting requirements. Transparency may be limited due to the sole-source nature of the award. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

P-8A Poseidon Program
Naval Aviation Systems
Military Satellite Communications (SATCOM)
Aircraft Modification Contracts
Department of Defense Procurement

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.2 million to THE BOEING COMPANY. P-8A MUOS SATCOM INCORPORATION.

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 $39.2 million.

What is the period of performance?

Start: 2023-09-28. End: 2027-03-31.

What is The Boeing Company's track record with the P-8A program?

The Boeing Company is the prime contractor for the P-8A Poseidon multi-mission maritime aircraft. They have a long-standing and extensive history with the program, responsible for its design, development, production, and sustainment. Boeing has delivered numerous P-8A aircraft to the U.S. Navy and international customers, demonstrating a deep understanding of the platform's systems and operational requirements. Their involvement includes various modifications and upgrades throughout the aircraft's lifecycle, making them the incumbent and most knowledgeable entity for integrating new systems like the MUOS SATCOM.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for this type of work?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used for research and development or complex integration efforts where the scope or final costs are uncertain. Compared to Fixed Price contracts, CPFF shifts more cost risk to the government, as the contractor is incentivized to control costs but is guaranteed their fee regardless of final cost. Firm-Fixed-Price (FFP) contracts, conversely, offer the government the most price certainty but require a well-defined scope, placing cost risk on the contractor. For specialized integration like SATCOM, CPFF can be appropriate if the technical challenges are significant and unpredictable, but it necessitates robust government oversight to manage costs effectively.

What are the primary risks associated with a sole-source award for specialized military hardware integration?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or optimize efficiency. Without competing bids, the government has less leverage to negotiate favorable terms and pricing. There's also a risk that the sole provider may not have the most advanced or cost-effective solution available, as alternatives are not explored. Furthermore, sole-source awards can create vendor lock-in, making future procurements or modifications more expensive and less flexible. Robust justification and oversight are crucial to mitigate these risks.

What is the significance of incorporating MUOS SATCOM into the P-8A aircraft?

The Mobile User Objective System (MUOS) is a next-generation secure satellite communications system designed to provide global, high-bandwidth, and secure voice and data communications for mobile warfighters. Incorporating MUOS SATCOM into the P-8A aircraft significantly enhances its command and control, intelligence, surveillance, and reconnaissance (ISR) capabilities. It allows the P-8A to maintain persistent, reliable communication links with ground forces, other aircraft, and naval assets, even in remote or contested environments. This upgrade is crucial for improving situational awareness, enabling real-time data sharing, and enhancing the overall mission effectiveness of the P-8A fleet.

Are there historical spending patterns for similar SATCOM integration on naval aircraft?

Historical spending on SATCOM integration for naval aircraft can vary widely depending on the specific system, platform, and complexity. Early integrations might have been less expensive due to lower bandwidth requirements and less sophisticated technology. However, as military communication needs have evolved towards higher bandwidth, greater security, and global reach, the cost of integrating advanced SATCOM systems like MUOS has increased substantially. Contracts for integrating similar advanced communication suites on large platforms like the P-8A, F-35, or other ISR assets often run into tens of millions of dollars, reflecting the specialized engineering, hardware, testing, and certification required. Without specific data on comparable MUOS integrations, direct historical comparisons are difficult, but the trend is towards more complex and costly integration efforts.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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 JAMES S 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: $39,239,086

Exercised Options: $39,239,086

Current Obligation: $39,239,086

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $51,466

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001921G0006

IDV Type: BOA

Timeline