DoD's $22.5B Boeing contract, awarded in 1992, highlights long-term defense spending and sole-source procurement

Contract Overview

Contract Amount: $22,511,512 ($22.5M)

Contractor: THE Boeing Company (0674)

Awarding Agency: Department of Defense

Start Date: 1992-05-15

End Date: 2011-01-20

Contract Duration: 6,824 days

Daily Burn Rate: $3.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $22.5 million to THE BOEING COMPANY (0674) for work described as: Key points: 1. This contract represents a significant, long-term commitment by the Department of Defense, underscoring the sustained need for the procured goods or services. 2. The sole-source nature of this award suggests potential limitations in competitive pressure, which could impact overall value for money. 3. A long contract duration (over 18 years) indicates a stable, ongoing requirement but also a prolonged period without re-evaluation of market alternatives. 4. The firm fixed-price contract type offers cost certainty for the government, shifting performance risk to the contractor. 5. Awarded by the Defense Contract Management Agency, this contract falls under the broad umbrella of defense procurement, a major sector of federal spending. 6. The absence of small business set-aside flags indicates this contract was not specifically structured to benefit smaller enterprises.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its age and sole-source nature. Without competitive bids or updated market data from the period, it's difficult to definitively assess if the pricing was optimal. The long duration suggests a consistent need, but the lack of competition over nearly two decades raises questions about whether the government secured the best possible terms compared to what might have been achieved through a more open bidding process. The firm fixed-price structure provides budget predictability, but the absence of competitive pressure over such an extended period warrants scrutiny regarding cost-effectiveness.

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 among multiple potential vendors. This typically occurs when only one vendor can provide the required goods or services, or for reasons of national security or urgency. The lack of competition means there was no direct price comparison against other market offerings, potentially leading to higher costs than if multiple bids had been solicited. The government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without alternative offers, the government lacked leverage to negotiate the lowest possible price, potentially resulting in a less efficient use of public funds over the contract's long lifespan.

Public Impact

The primary beneficiaries are the Department of Defense and its operational readiness, ensuring the availability of critical defense capabilities. This contract likely supported the production and sustainment of specific defense platforms or systems essential for national security. The geographic impact is primarily within the United States, supporting defense manufacturing and related supply chains, with potential global implications for military operations. The contract supported a significant workforce within THE BOEING COMPANY and its subcontractors, contributing to skilled employment in the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Long contract duration (1992-2011) may indicate a lack of periodic market re-evaluation.
Lack of small business participation noted, potentially missing opportunities for smaller firms.

Positive Signals

Firm fixed-price contract provides cost certainty to the government.
Long-term award suggests a stable and critical requirement for defense capabilities.
Awarded by a specialized agency (DCMA) implies adherence to defense procurement standards.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a critical component of the U.S. industrial base. The sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Federal spending in this area is substantial, driven by national security requirements. Comparable spending benchmarks would typically involve other large-scale defense platform procurements, often involving sole-source or limited competition due to specialized technology and existing infrastructure.

Small Business Impact

The data indicates this contract was not subject to small business set-aside provisions (ss: false, sb: false). This means that opportunities for small businesses to directly participate as prime contractors were not explicitly mandated. While large prime contractors like Boeing often engage small businesses as subcontractors, the absence of a set-aside suggests that the primary award was not structured to prioritize or guarantee a portion of the work for small enterprises. This could limit the direct economic impact on the small business ecosystem for this specific contract.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), given its role in contract administration. Mechanisms would include performance monitoring, quality assurance, and financial audits, particularly given the firm fixed-price nature. Transparency is generally maintained through contract databases, though specific performance details might be sensitive. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Defense Procurement
Aerospace Manufacturing Contracts
Long-Term Government Contracts
Sole-Source Defense Awards
Fixed-Price Contracts

Risk Flags

Sole-source award
Long contract duration
Potential for cost inefficiencies due to lack of competition
Lack of specific performance metrics in summary data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.5 million to THE BOEING COMPANY (0674). See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY (0674).

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $22.5 million.

What is the period of performance?

Start: 1992-05-15. End: 2011-01-20.

What specific defense systems or platforms did this $22.5 billion contract procure for the Department of Defense?

The provided data does not specify the exact defense systems or platforms procured under this contract. However, given the contractor (THE BOEING COMPANY) and the substantial value, it likely pertains to major aerospace platforms such as aircraft (e.g., fighters, bombers, transport), missile systems, or related support and sustainment services. Boeing is a primary contractor for numerous critical defense assets. Further investigation into contract details beyond the summary data would be required to identify the specific end items or services.

How does the $22.5 billion total award value compare to other major defense contracts awarded around the same period (1992)?

In 1992, $22.5 billion was an exceptionally large sum for a single contract, reflecting the scale of defense spending during that era, potentially influenced by ongoing military needs and technological advancements. Major defense contracts often ran into billions, especially for aircraft programs like the B-2 bomber or advanced fighter jets. While specific comparable figures require detailed historical analysis of defense budgets and contract awards, this contract's value places it among the most significant procurements of its time, indicative of a major strategic investment by the DoD.

What were the primary justifications for awarding this contract on a sole-source basis instead of through full and open competition?

Sole-source justifications typically fall into categories such as unique capabilities, proprietary technology, urgent and compelling needs, or lack of market availability. For a large defense contractor like Boeing, reasons could include the need for specific, highly specialized technology developed or controlled by Boeing, the requirement for integration with existing platforms where Boeing is the sole provider, or national security considerations that preclude broader competition. The specific justification would have been documented by the DoD at the time of award, often involving a Justification and Approval (J&A) document.

Given the contract's duration from 1992 to 2011, what risks might have been associated with such a long-term, sole-source commitment?

A long-term, sole-source commitment carries several risks. Firstly, the risk of cost escalation over time, even with a fixed-price contract, due to unforeseen economic factors or scope creep, although the fixed price aims to mitigate this. Secondly, the risk of technological obsolescence, where the procured item or service becomes outdated before the contract ends. Thirdly, the risk of contractor performance degradation or complacency due to the lack of competitive pressure. Finally, there's the risk that the government missed opportunities to leverage market advancements or secure better pricing through periodic re-competition.

What does the 'MO' (MISSOURI) state code signify in relation to this contract award?

The 'MO' state code, along with 'MISSOURI', likely indicates the primary place of performance or the location of the contractor's facility where the work under this contract was predominantly carried out. For a large aerospace company like Boeing, Missouri is a significant state for its operations, particularly in St. Louis, which houses major defense and aerospace manufacturing facilities. This designation helps in tracking economic impact and workforce distribution related to federal contracts.

How did the 'FIRM FIXED PRICE' (FFP) contract type influence the government's financial exposure and the contractor's risk over the contract's lifespan?

A Firm Fixed Price (FFP) contract type establishes a ceiling price that is not subject to adjustment based on the contractor's cost experience. This significantly benefits the government by providing maximum cost certainty and predictability. The contractor assumes almost all the financial risk; if their costs exceed the agreed-upon price, they absorb the loss. Conversely, if their costs are lower, they retain the profit. This structure incentivizes the contractor to control costs efficiently and manage performance effectively to maximize their profit margin within the fixed price.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: LAMBERT BLDG, SAINT LOUIS

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline