DoD's $1.56B Boeing Engineering Services Contract Awarded Sole Source, Raising Value Concerns

Contract Overview

Contract Amount: $15,574,600 ($15.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2004-12-02

End Date: 2010-08-13

Contract Duration: 2,080 days

Daily Burn Rate: $7.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $15.6 million to THE BOEING COMPANY for work described as: Key points: 1. Significant contract value awarded without competition suggests potential for overpayment. 2. Sole-source award limits market forces that typically drive down costs. 3. Long contract duration (2004-2010) may obscure current market value. 4. Engineering services are critical but highly susceptible to cost overruns without oversight. 5. Contract type (Cost Plus Fixed Fee) can incentivize higher spending. 6. Lack of competition raises questions about the contractor's pricing strategy and efficiency.

Value Assessment

Rating: questionable

The $1.56 billion awarded to The Boeing Company for engineering services represents a substantial investment. However, the sole-source nature of this definitive contract, awarded in 2004 and ending in 2010, makes direct value-for-money assessment difficult without comparable sole-source awards or detailed cost breakdowns. The Cost Plus Fixed Fee (CPFF) contract type, while providing flexibility, can lead to higher costs compared to fixed-price contracts if not managed rigorously. Benchmarking against similar sole-source engineering contracts from that era would be necessary for a more precise value assessment.

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 vendors. The Department of Defense likely justified this approach due to specific requirements or a perceived lack of alternative providers at the time of award. The absence of competition means that pricing was not tested against market alternatives, potentially leading to less favorable terms for the government.

Taxpayer Impact: Sole-source awards mean taxpayers did not benefit from competitive bidding, which could have resulted in lower prices. This lack of competition limits the government's ability to ensure it received the best possible value.

Public Impact

The primary beneficiary is the Department of Defense, receiving essential engineering services. Services likely supported critical defense programs and platforms, ensuring operational readiness. Geographic impact is broad, potentially supporting defense infrastructure and operations nationwide. Workforce implications include employment for highly skilled engineers and technical staff at Boeing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs.
CPFF contract type may incentivize increased spending rather than cost efficiency.
Long contract duration without clear performance metrics could mask inefficiencies.
Lack of transparency in sole-source justifications can hide potential conflicts or poor planning.

Positive Signals

Boeing is a major defense contractor with extensive experience in engineering services.
Engineering services are crucial for maintaining and advancing defense capabilities.
The contract supported critical national security objectives.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for specialized engineering services supporting government defense programs is often characterized by high barriers to entry, requiring deep technical expertise and security clearances. While specific market size data for sole-source engineering services is difficult to isolate, the overall defense engineering market is substantial, driven by continuous technological advancement and platform sustainment needs. This contract represents a significant portion of spending within this niche.

Small Business Impact

This contract does not appear to have involved small business set-asides, as indicated by 'sb': false. Given the sole-source nature and the scale of the award, it is unlikely that significant subcontracting opportunities were mandated for small businesses. This suggests a limited direct impact on the small business defense contracting ecosystem for this specific award.

Oversight & Accountability

Oversight mechanisms for sole-source contracts are critical. While the specific oversight details are not provided, the Department of Defense typically employs contract officers and administrative contracting officers to monitor performance and costs. Inspector General jurisdiction would likely apply to investigate potential fraud, waste, or abuse. Transparency is often reduced in sole-source awards, making robust internal oversight paramount.

Related Government Programs

Defense Engineering Services
Aerospace Engineering Contracts
Sole Source Defense Procurements
Cost Plus Fixed Fee Contracts

Risk Flags

Sole Source Award
Cost Plus Fixed Fee Contract Type
Lack of Competition
Significant Contract Value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.6 million to THE BOEING COMPANY. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $15.6 million.

What is the period of performance?

Start: 2004-12-02. End: 2010-08-13.

What was 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 procurements are justified under circumstances such as unique capabilities, urgent needs, or the unavailability of other responsible sources. For a contract of this magnitude and duration, the justification would likely have been detailed and subject to review by the procuring agency, potentially citing factors like specialized knowledge of existing defense systems, proprietary technology, or critical program continuity requirements that only The Boeing Company could fulfill at that time.

How did the Cost Plus Fixed Fee (CPFF) structure impact the final cost compared to other contract types?

The Cost Plus Fixed Fee (CPFF) contract structure means the government pays the contractor's actual costs plus a fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves significant uncertainty. While the fixed fee provides some cost certainty for the contractor's profit, the government bears the risk of cost overruns. Compared to fixed-price contracts, CPFF can incentivize higher spending as the contractor is reimbursed for costs incurred. Without detailed cost data and performance metrics from the contract's execution, it's challenging to quantify the exact impact, but CPFF generally carries a higher risk of exceeding initial cost estimates than fixed-price arrangements.

What were the key performance metrics and deliverables for this engineering services contract?

The provided data does not specify the key performance metrics or deliverables for this contract. Engineering services contracts, especially those awarded on a sole-source basis for defense applications, typically involve a Statement of Work (SOW) outlining specific tasks, milestones, and technical requirements. Performance might be measured against criteria such as adherence to schedules, quality of technical documentation, successful integration of systems, or achievement of specific engineering design goals. The absence of this information limits a thorough assessment of contractor performance and the value delivered.

Were there any audits or reviews conducted on this contract during its performance period (2004-2010)?

The available data does not indicate whether specific audits or reviews were conducted on this contract during its performance period. However, for large sole-source contracts, particularly those using CPFF structures, it is standard practice for agencies like the Department of Defense to conduct periodic reviews and potentially audits of contractor costs and performance. The Defense Contract Audit Agency (DCAA) often plays a role in auditing costs. Without specific audit reports or review summaries, it's impossible to confirm the extent or findings of any such oversight activities.

How does this contract's value compare to other sole-source engineering services contracts awarded by the DoD around the same period?

Comparing this $1.56 billion sole-source contract to other similar awards from the 2004-2010 period requires access to historical procurement databases and specific contract details. However, $1.56 billion is a substantial sum, suggesting a contract of significant scope and importance. Sole-source awards of this magnitude often relate to major defense platforms or highly specialized technological development where competition is genuinely limited. Benchmarking would involve identifying other sole-source engineering contracts for comparable defense systems or services and analyzing their value, duration, and contract types to assess if this award was within a typical range or an outlier.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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 FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 3370 E MIRALOMA AVE, ANAHEIM, CA, 92806

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline