Boeing's $48.3M Navy contract for UK Fleet Technical Support Service awarded without competition

Contract Overview

Contract Amount: $48,331,438 ($48.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2021-12-31

Contract Duration: 1,187 days

Daily Burn Rate: $40.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: FY19 UK FLEET TECHNICLA SUPPORT SERVICE

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $48.3 million to THE BOEING COMPANY for work described as: FY19 UK FLEET TECHNICLA SUPPORT SERVICE Key points: 1. Contract awarded on a cost-plus-incentive-fee basis, suggesting potential for cost overruns. 2. Sole-source award raises questions about price reasonableness and market competition. 3. Long contract duration of nearly four years may indicate a need for sustained support. 4. The contract falls under engineering services, a broad category with varying cost drivers. 5. Performance is in California, but the service is for the UK Fleet. 6. No small business set-aside was applied, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: questionable

The contract's value of $48.3 million over nearly four years requires careful scrutiny, especially given the lack of competition. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-incentive-fee structure introduces risk, as the final cost could exceed initial estimates if performance targets are not met efficiently. Further analysis would be needed to determine if the awarded price represents fair value for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities or urgent needs), they generally lead to less price discovery and potentially higher costs for the government compared to full and open competition.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the best possible price for these engineering services. Without competing bids, there is less pressure on the contractor to offer cost savings.

Public Impact

The UK Fleet will receive essential technical support services, ensuring operational readiness. The contract supports specialized engineering expertise required for complex naval systems. Services are performed in California, potentially impacting the local workforce and economy. The contract contributes to the broader defense industrial base by supporting a major contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus-incentive-fee structure carries inherent risk of cost overruns.
Sole-source award limits transparency in pricing and value assessment.
Contract duration could lock in costs without opportunities for re-evaluation.

Positive Signals

Contract supports critical technical services for naval operations.
Award to a major defense contractor like Boeing suggests access to specialized expertise.
The contract aims to ensure the operational effectiveness of the UK Fleet.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a significant segment of the federal procurement landscape. The defense industry, in particular, relies heavily on specialized engineering support for complex platforms and systems. The total federal spending on engineering services is substantial, and contracts like this, even when sole-sourced, represent a portion of that investment. Benchmarking this specific contract's value is challenging without competitive data, but it aligns with the typical scale of support services required for major defense assets.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, it is unlikely to directly benefit the small business ecosystem through set-asides. However, Boeing may engage small businesses as subcontractors, though this is not explicitly detailed. The absence of a small business focus in the award mechanism means opportunities for smaller, specialized firms were likely not pursued through this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a cost-plus-incentive-fee contract, it requires diligent monitoring of costs and performance to ensure value for money and adherence to contract terms. Transparency is limited due to the sole-source nature. Inspector General oversight would be applicable for investigations into fraud, waste, or abuse.

Related Government Programs

Naval Fleet Maintenance Services
Defense Engineering Support Contracts
Foreign Military Sales Support
Aerospace Engineering Services

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus contract type introduces cost overrun risk.
Performance location differs from service recipient location.
No small business participation explicitly detailed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.3 million to THE BOEING COMPANY. FY19 UK FLEET TECHNICLA SUPPORT SERVICE

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 $48.3 million.

What is the period of performance?

Start: 2018-10-01. End: 2021-12-31.

What is The Boeing Company's track record with similar sole-source contracts within the Department of Defense?

The Boeing Company has a long history of contracting with the Department of Defense (DoD), often securing large and complex contracts. While many of these are competitively awarded, sole-source awards are not uncommon for highly specialized systems or unique support requirements where Boeing possesses proprietary technology or extensive expertise. Analyzing Boeing's past sole-source awards within the DoD would involve reviewing contract histories for similar technical services, assessing the justifications provided for non-competitive awards, and examining performance metrics and cost outcomes. This would help determine if this specific contract aligns with historical patterns of sole-source procurements for Boeing and whether those past contracts demonstrated good value or raised concerns regarding cost and competition.

How does the pricing structure (Cost Plus Incentive Fee) typically impact final costs compared to fixed-price contracts for engineering services?

Cost Plus Incentive Fee (CPIF) contracts are designed to share risks and rewards between the government and the contractor. The government agrees to pay the actual allowable costs incurred by the contractor, plus a fee that is adjusted based on performance against pre-determined targets (e.g., cost, schedule, or technical performance). This structure incentivizes the contractor to control costs and meet objectives. However, compared to fixed-price contracts, CPIF contracts inherently carry a higher risk of cost escalation if targets are missed or if the initial cost estimates are inaccurate. While they offer flexibility for complex projects where costs are uncertain, they require robust government oversight to manage performance and ensure the final price remains reasonable and represents good value.

What are the potential risks associated with a sole-source award for engineering services in a defense context?

Sole-source awards for engineering services in a defense context present several risks. Primarily, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process, as the contractor faces less pressure to offer cost efficiencies. This can result in a suboptimal use of taxpayer funds. Furthermore, sole-source awards can limit innovation by excluding potentially more capable or cost-effective solutions from other providers. There's also a risk of contractor complacency or reduced incentive to perform exceptionally when competition is absent. Finally, it can raise concerns about fairness and transparency in the procurement process, potentially leading to perceptions of favoritism or a lack of due diligence in seeking the best value.

What is the typical duration and value range for similar technical support services contracts awarded by the Department of the Navy?

The duration and value of technical support services contracts awarded by the Department of the Navy can vary significantly based on the complexity of the systems supported, the scope of services, and the specific fleet or platform involved. Contracts for specialized engineering and technical support can range from a few months to several years, with values from hundreds of thousands to hundreds of millions of dollars. A contract duration of nearly four years, like this one, is not unusual for sustained, in-depth technical support. The $48.3 million value also falls within a common range for such services, particularly when supporting major naval assets or fleets, though direct comparisons are difficult without knowing the precise services rendered and the competitive landscape at the time of award.

Are there specific performance metrics or deliverables associated with this contract that can be used to assess its effectiveness?

The provided data does not detail the specific performance metrics or deliverables associated with this UK Fleet Technical Support Service contract. However, as a Cost Plus Incentive Fee (CPIF) contract, it is designed with performance targets that influence the final fee paid to the contractor. These metrics could include factors such as response times for technical assistance, successful resolution of engineering issues, adherence to maintenance schedules, delivery of technical documentation, or achievement of specific operational readiness levels for the supported fleet. Effective oversight would involve the Department of the Navy rigorously tracking Boeing's performance against these undefined metrics to ensure the contract is delivering the intended value and achieving its objectives.

Industry Classification

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

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003019R0002

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: $55,597,134

Exercised Options: $55,597,134

Current Obligation: $48,331,438

Actual Outlays: $10,408,899

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $1,856,442

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline