Boeing awarded $66M for FY15 UK GYRO M&R, a sole-source engineering services contract

Contract Overview

Contract Amount: $66,038,013 ($66.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2014-10-01

End Date: 2020-03-31

Contract Duration: 2,008 days

Daily Burn Rate: $32.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: FY15 UK GYRO M&R

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $66.0 million to THE BOEING COMPANY for work described as: FY15 UK GYRO M&R Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. Long contract duration (2008-2020) suggests a stable, ongoing need for these specialized services. 3. Cost-plus contract type indicates potential for cost overruns, requiring close oversight. 4. The contract's focus on maintenance, repair, and overhaul (M&R) is critical for operational readiness. 5. Geographic focus on California for a UK-related service warrants further investigation into the rationale.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging due to its specialized nature and sole-source award. The cost-plus incentive fee structure, while common for complex engineering, can lead to higher final costs than fixed-price contracts. Without comparable sole-source contracts for similar 'UK GYRO M&R' services, it's difficult to definitively assess if the pricing represents good value for money. The significant duration of the contract (over 10 years) suggests a sustained need, but also a prolonged period without competitive pressure to drive down costs.

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. 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 price discovery through market forces was absent, potentially leading to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government did not benefit from the cost-saving pressures that typically arise when multiple companies vie for a contract.

Public Impact

The primary beneficiaries are likely the U.S. Department of Defense, ensuring the operational readiness of specific 'GYRO' systems. Services delivered include maintenance, repair, and overhaul, crucial for complex aerospace or defense equipment. The contract's geographic location in California for a UK-related service suggests a potential need for specialized facilities or personnel within the U.S. Workforce implications include the employment of highly skilled engineers and technicians at The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost-plus contract type carries inherent risk of cost overruns.
Long contract duration without re-competition may not reflect current market pricing.
Geographic location in California for a UK-related service is unusual and warrants explanation.

Positive Signals

Award to a single, highly capable contractor like Boeing suggests a critical and specialized need.
Long-term contract indicates a stable, ongoing requirement, providing predictability for the contractor.
Cost-plus incentive fee structure can incentivize performance and cost control, if managed effectively.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense-related maintenance, repair, and overhaul (M&R) for specialized equipment. The aerospace and defense industry is characterized by high barriers to entry, complex technological requirements, and often, long-term relationships between government agencies and prime contractors. Spending in this sector is driven by national security needs and the lifecycle management of sophisticated military assets. Comparable spending benchmarks are difficult to establish without more specific details on the 'GYRO' system, but M&R services for major defense platforms can represent significant annual expenditures.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor is The Boeing Company, a large aerospace firm. There is no explicit information regarding subcontracting plans for small businesses within this data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless Boeing actively engages small businesses for specialized support not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). The 'cost-plus incentive fee' (CPIF) contract type necessitates rigorous financial oversight to monitor costs, ensure compliance with the contract terms, and verify that performance incentives are met. Transparency is typically managed through contract reporting mechanisms and audits. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Maintenance and Repair Contracts
Aerospace Engineering Services
Sole-Source Defense Procurements
Cost-Plus Contract Management

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of transparency on specific system

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.0 million to THE BOEING COMPANY. FY15 UK GYRO M&R

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 $66.0 million.

What is the period of performance?

Start: 2014-10-01. End: 2020-03-31.

What specific 'GYRO' system does this contract pertain to, and why is Boeing the sole provider?

The provided data does not specify the exact 'GYRO' system. However, 'GYRO' often refers to gyroscopic stabilization systems, critical components in aircraft, naval vessels, and missile guidance systems. Boeing, as a major defense contractor with extensive experience in aerospace and complex systems integration, likely possesses unique expertise, proprietary technology, or holds essential certifications for the maintenance and repair of this specific gyroscopic system. The sole-source award suggests that either the system is highly specialized, Boeing holds the intellectual property rights, or there are significant barriers to entry for other potential providers, such as extensive testing and qualification requirements.

How does the $66 million total award value compare to similar maintenance and repair contracts for complex defense systems?

Directly comparing the $66 million award value is challenging without knowing the specific 'GYRO' system and its complexity. However, for large defense platforms like aircraft carriers, fighter jets, or strategic bombers, annual maintenance, repair, and overhaul (M&R) contracts can range from tens of millions to hundreds of millions of dollars. Given that this contract spans over a decade (from award in 2014 to completion in 2020, with a base period likely starting earlier), the annual expenditure would be in the single-digit millions. This appears to be a moderate-sized contract within the broader spectrum of defense M&R, but its significance lies in the criticality of the system it supports.

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

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs and reduced incentive for the contractor to innovate or become more efficient. The government lacks the benefit of market-driven pricing. Secondly, the cost-plus incentive fee (CPIF) structure, while designed to share risk and reward performance, carries the inherent risk of cost overruns. If not meticulously managed and overseen, the contractor may incur higher costs than anticipated, and the government may end up paying more than initially projected, especially if performance targets are not met or are poorly defined. The long duration amplifies these risks, as market conditions and technological needs can change significantly over more than a decade.

What does the contract's geographic location in California imply for a service potentially related to the UK?

The contract's performance location in California, despite potentially supporting UK-related defense assets or operations, suggests several possibilities. Boeing may have specialized maintenance facilities, engineering expertise, or testing infrastructure located in California that are essential for servicing this particular 'GYRO' system. Alternatively, it could indicate that the systems are deployed or based in the US for training or operational support, with California being a convenient hub. It might also reflect the location of the prime contractor's relevant division or key personnel. Without further context, it's difficult to pinpoint the exact reason, but it highlights a potential logistical or operational arrangement that warrants understanding.

How has Boeing's performance been on similar sole-source, long-term engineering services contracts with the DoD?

Assessing Boeing's performance on similar contracts requires access to historical performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) and detailed contract histories, which are not provided in this dataset. Generally, Boeing is a major defense contractor with a long track record, and its performance can vary significantly across different programs and contract types. For sole-source, long-term contracts, performance is often judged on meeting delivery schedules, technical specifications, and cost targets (especially under CPIF). While Boeing has faced scrutiny on some large programs, it also consistently delivers critical capabilities. A thorough review would involve examining past performance reviews and any contract disputes or modifications related to similar agreements.

Industry Classification

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

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $81,961,899

Exercised Options: $81,961,899

Current Obligation: $66,038,013

Actual Outlays: $719,115

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $6,980,202

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline