DoD Awards Boeing $63.4M for Aeronautical Systems, Raising Concerns Over Competition
Contract Overview
Contract Amount: $63,453,190 ($63.5M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2023-05-14
End Date: 2028-05-14
Contract Duration: 1,827 days
Daily Burn Rate: $34.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: GEDMS DESIGN AGENT ENGINEERING
Place of Performance
Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647
Plain-Language Summary
Department of Defense obligated $63.5 million to THE BOEING COMPANY for work described as: GEDMS DESIGN AGENT ENGINEERING Key points: 1. Significant award to a major defense contractor, Boeing. 2. Limited competition raises questions about price discovery. 3. Potential for cost overruns with Cost Plus Fixed Fee contract type. 4. Focus on critical navigation and guidance systems for the Navy.
Value Assessment
Rating: questionable
The $63.4M award to Boeing for specialized aeronautical systems appears high given the lack of competitive bidding. Benchmarking against similar sole-source contracts for complex systems is difficult but warrants scrutiny.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to The Boeing Company. The absence of competition limits price discovery and may lead to less favorable terms for the government.
Taxpayer Impact: The lack of competition on this $63.4M contract could result in higher costs for taxpayers compared to a fully competed procurement.
Public Impact
Taxpayers may be overpaying due to the sole-source nature of the contract. Reliance on a single large contractor for critical systems could pose a long-term risk. The Department of the Navy's procurement strategy for these systems warrants further examination.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of transparency in pricing
Positive Signals
- Award to established, experienced contractor
- Focus on critical defense technology
Sector Analysis
This contract falls within the IT and Defense sectors, specifically manufacturing navigation and guidance systems. Spending benchmarks for sole-source, cost-plus contracts of this nature are highly variable and depend heavily on system complexity and R&D investment.
Small Business Impact
This contract was awarded directly to The Boeing Company, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within the provided data.
Oversight & Accountability
The sole-source nature of this award necessitates robust oversight from the Department of the Navy to ensure cost reasonableness and performance. Accountability for cost overruns under the Cost Plus Fixed Fee structure will be critical.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Cost Plus Fixed Fee contract type
- Potential for cost overruns
- Limited transparency on pricing justification
- Long-term reliance on a single vendor
Tags
search-detection-navigation-guidance-aer, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $63.5 million to THE BOEING COMPANY. GEDMS DESIGN AGENT ENGINEERING
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 $63.5 million.
What is the period of performance?
Start: 2023-05-14. End: 2028-05-14.
What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. The government should have conducted a price analysis, potentially using historical data, cost realism assessments, or market research, to determine fair and reasonable pricing. Without this information, it's difficult to assess the value.
What are the potential risks associated with a Cost Plus Fixed Fee contract for these complex systems, especially under a sole-source arrangement?
Cost Plus Fixed Fee contracts can incentivize contractors to increase costs, as the government bears the risk of cost overruns while the contractor receives a fixed profit. In a sole-source scenario, this risk is amplified as there's no competitive pressure to control costs. This could lead to significant budget overruns and reduced value for taxpayer money if not managed with stringent oversight.
How effective is the Department of the Navy in managing sole-source, cost-plus contracts to ensure optimal value and performance for critical defense systems?
The effectiveness of the Department of the Navy in managing such contracts varies. While they possess expertise, sole-source, cost-plus awards inherently present higher risks of inefficiency and inflated costs. Success hinges on rigorous oversight, detailed performance metrics, and proactive risk management to mitigate potential downsides and ensure the systems meet operational requirements within budget.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002422R4103
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 14441 ASTRONAUTICS LN, HUNTINGTON BEACH, CA, 92647
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: $101,975,238
Exercised Options: $63,468,832
Current Obligation: $63,453,190
Subaward Activity
Number of Subawards: 4
Total Subaward Amount: $421,570
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2023-05-14
Current End Date: 2028-05-14
Potential End Date: 2028-05-14 00:00:00
Last Modified: 2026-01-12
More Contracts from THE Boeing Company
- KC-X Modernization Program — $32.0B (Department of Defense)
- International Space Station — $22.4B (National Aeronautics and Space Administration)
- 200112!000108!9700!ZD60 !ballistic Missile Defense ORG. !HQ000601C0001 !A!N!*!N! !20001222!20080930!848025649!848025649!009256819!n!the Boeing Company !3370 E Miraloma AVE !anaheim !ca!92806!37000!089!01!huntsville !madison !alabama !+000383571022!n!n!000000000000!ad93!rdte/Other Defense-Adv Tech DEV !S1 !services !1caa!ballistic Missile Defense SYS !541710!*!*!3! ! ! !*!*!*!B!*!*!A! !A !U!R!2!001!B! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! — $18.8B (Department of Defense)
- USN P-8A FRP II Long Lead Material — $18.1B (Department of Defense)
- 200512!010860!2100!w56hzv!tacom - Warren !w56hzv05c0724 !A!N! !Y! ! !20050923!20141231!016544780!016544780!009256819!n!the Boeing Company !J S Mcdonnell Blvd !saint Louis !mo!63166!65000!510!29!st. Louis !ST. Louis (city) !missouri !+000219245691!n!n!000000000000!az15!rdte/Other Research&development-Eng/Manuf Devel !S1 !services !301 !FCS !541330!E! !1! ! ! ! ! !20200930!B! ! !A! !d!u!u!1!001!n!1a!z!y!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! TAS::21 2040::TAS — $12.7B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)