Boeing awarded $44.7M for navigation engineering and fleet support, a sole-source contract

Contract Overview

Contract Amount: $44,701,170 ($44.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2004-11-29

End Date: 2008-02-28

Contract Duration: 1,186 days

Daily Burn Rate: $37.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: NAVIGATION ENGINEERING AND FLEET SUPPORT

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $44.7 million to THE BOEING COMPANY for work described as: NAVIGATION ENGINEERING AND FLEET SUPPORT Key points: 1. Contract awarded to a single, established provider suggests potential for higher pricing. 2. Long contract duration (over 3 years) may indicate a need for specialized, ongoing support. 3. Cost-plus incentive fee structure can incentivize performance but also carries cost overrun risks. 4. Lack of competition limits opportunities for market-driven price discovery and innovation. 5. Contracting agency is the Defense Contract Management Agency, indicating a defense-related need. 6. The contract's value is moderate, not representing a massive expenditure but significant for the specific service.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific performance metrics or comparable sole-source awards. The $44.7 million over approximately three years averages to roughly $15 million annually. Given the specialized nature of navigation engineering and fleet support for defense, this figure might be within a reasonable range, but the absence of competition prevents a definitive value-for-money assessment. The cost-plus incentive fee structure allows for adjustments based on performance, which could mitigate some cost concerns if managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from multiple bids to drive down prices or explore alternative solutions. This approach can be justified for highly specialized or critical systems where only one entity has the necessary expertise or access.

Taxpayer Impact: Sole-source awards mean taxpayers may not be receiving the best possible price, as competitive pressures that normally lead to cost savings are absent. This can result in higher overall spending for the government.

Public Impact

The primary beneficiaries are the Department of Defense, specifically naval fleets requiring advanced navigation and fleet support systems. Services delivered likely include engineering, maintenance, upgrades, and technical support for critical navigation and guidance systems. Geographic impact is likely global, supporting naval operations wherever deployed. Workforce implications include specialized engineering and technical roles within The Boeing Company and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus incentive fee contracts can lead to cost overruns if not managed rigorously.
Long-term nature of the contract may indicate a lack of readily available alternative solutions.
Dependence on a single contractor for critical navigation systems poses a strategic risk.

Positive Signals

Award to a major defense contractor like Boeing suggests access to high-level expertise and established capabilities.
The incentive fee structure, if properly structured, can align contractor performance with government objectives.
The contract addresses critical defense needs for navigation and fleet support, ensuring operational readiness.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Navigation engineering and fleet support fall within the specialized systems manufacturing and services segment. This contract with Boeing, a major player, aligns with typical government procurement strategies for complex defense systems. Comparable spending benchmarks are difficult to establish without detailed service breakdowns, but large-scale defense contracts for specialized systems often run into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false. This suggests that small businesses are unlikely to be directly involved as prime contractors or through mandated subcontracting opportunities on this specific award. The primary focus is on the capabilities of the large prime contractor, The Boeing Company.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. The cost-plus incentive fee structure implies a need for rigorous financial oversight to track costs and verify performance against incentive targets. Transparency may be limited due to the sole-source nature and defense classification, but internal government audits and program reviews would be standard accountability measures.

Related Government Programs

Naval Fleet Modernization Programs
Defense Navigation Systems Procurement
Aerospace Engineering Services
Military Aircraft Fleet Support
Guidance and Control Systems Development

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus contracts carry inherent risk of cost escalation.
Potential for contractor lock-in due to specialized nature of services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.7 million to THE BOEING COMPANY. NAVIGATION ENGINEERING AND FLEET 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $44.7 million.

What is the period of performance?

Start: 2004-11-29. End: 2008-02-28.

What is The Boeing Company's track record with similar sole-source navigation engineering contracts?

The Boeing Company has a long and extensive history of contracting with the Department of Defense for complex systems, including navigation, guidance, and fleet support. While specific data on sole-source navigation engineering contracts of this exact nature is not publicly detailed, Boeing is a primary contractor for numerous large-scale defense programs. Their track record generally involves delivering sophisticated technological solutions, though like any major defense contractor, they have faced scrutiny over cost, schedule, and performance on various programs. For sole-source awards, the government's decision is typically based on Boeing's unique qualifications, existing platform integration, or proprietary technology that makes them the only viable option for a specific requirement.

How does the $44.7 million contract value compare to other navigation system procurements?

The $44.7 million contract value for navigation engineering and fleet support is a moderate sum within the context of large defense procurements. Major platform acquisitions (like aircraft or ships) can run into billions, while individual component or specialized service contracts vary widely. For navigation systems specifically, costs can range from millions for software and integration to hundreds of millions for entirely new hardware suites or advanced sensor packages. This contract's value suggests it covers significant engineering effort and ongoing support for existing or newly developed navigation capabilities, rather than the procurement of a large fleet of new systems.

What are the primary risks associated with this sole-source, cost-plus incentive fee contract?

The primary risks associated with this contract are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher costs than if the contract were competed. Taxpayers may not be getting the best possible price. Secondly, the cost-plus incentive fee (CPIF) structure, while designed to motivate performance, carries inherent risks of cost overruns. If the cost targets are not well-defined or if unforeseen technical challenges arise, costs can escalate beyond initial estimates. Effective government oversight is crucial to manage these risks, ensuring that incentive targets are achievable and that costs are reasonable and allocable.

How effective is the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code in capturing the scope of this contract?

The NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' is highly relevant and effectively captures the core technical domain of this contract. It directly relates to the production and development of systems used for navigation and guidance, which are central to the contract's description ('NAVIGATION ENGINEERING AND FLEET SUPPORT'). While the contract also includes 'fleet support,' which implies services, the manufacturing NAICS code is appropriate given the likely engineering and development aspects involved in creating or maintaining such sophisticated systems. It accurately categorizes the product-oriented nature of the underlying technology.

What are the historical spending patterns for navigation engineering and fleet support within the Department of Defense?

Historical spending patterns for navigation engineering and fleet support within the Department of Defense are substantial and ongoing, reflecting the critical nature of these capabilities for military operations. The DoD consistently invests billions annually across various branches (Navy, Air Force, Army) in systems related to search, detection, navigation, and guidance. This includes research and development, procurement of new systems, and long-term sustainment and upgrades for existing platforms. Spending can fluctuate based on modernization cycles, new technological advancements (e.g., GPS modernization, AI integration), and specific fleet readiness requirements. Contracts like this one, even if sole-source, represent a portion of this continuous investment in maintaining and advancing critical operational technologies.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 5301 BOLSA AVE, HUNTINGTON BEACH, CA, 92647

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

Financial Breakdown

Contract Ceiling: $594,954,995

Exercised Options: $501,703,831

Current Obligation: $44,701,170

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline