Boeing awarded $24.8M contract for multi-material hardware by the Department of the Navy

Contract Overview

Contract Amount: $24,847,284 ($24.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-09-27

End Date: 2030-06-30

Contract Duration: 2,102 days

Daily Burn Rate: $11.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: BASE YEAR - MULTI-MATERIAL HARDWARE

Place of Performance

Location: RIDLEY PARK, DELAWARE County, PENNSYLVANIA, 19078

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $24.8 million to THE BOEING COMPANY for work described as: BASE YEAR - MULTI-MATERIAL HARDWARE Key points: 1. Contract awarded for multi-material hardware, indicating a need for diverse material solutions. 2. The contract is a Cost Plus Incentive Fee type, suggesting performance-based incentives for the contractor. 3. A long duration of 2102 days points to a significant, ongoing requirement for these hardware components. 4. The contract is not competed, raising questions about potential cost efficiencies and market alternatives. 5. The Department of the Navy is the procuring agency, highlighting defense-related procurement needs. 6. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repairing, suggesting the hardware is for naval vessels.

Value Assessment

Rating: questionable

The base year value of $24.8 million for multi-material hardware is difficult to benchmark without more specific details on the materials and quantities. As a Cost Plus Incentive Fee (CPIF) contract, the final cost will depend on performance against established targets. The lack of competition makes it challenging to assess if this represents a fair market price. Further analysis would require understanding the specific hardware components and comparing them to similar procurements for naval shipbuilding or repair.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or proprietary information required for the procurement. While it ensures a specific solution, it limits the potential for price discovery through competitive bidding and may result in higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not benefit from the cost savings that could arise from a competitive bidding process. This could lead to a higher overall expenditure for the required multi-material hardware.

Public Impact

The primary beneficiaries are likely the Department of the Navy, which will receive essential multi-material hardware for its operations. The services delivered include the provision of specialized hardware components crucial for shipbuilding and repair activities. The geographic impact is centered around naval facilities and shipyards where the hardware will be utilized, potentially in Pennsylvania where the contractor is located. Workforce implications may include employment opportunities at The Boeing Company and its subcontractors involved in the manufacturing and delivery of the hardware.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
CPIF contract structure requires careful monitoring to ensure cost control.
Long contract duration increases exposure to potential cost overruns or scope creep.

Positive Signals

Award to a large, established defense contractor like Boeing suggests a high likelihood of technical capability.
CPIF contract structure can incentivize contractor efficiency and cost savings if targets are well-defined.
The specific nature of 'multi-material hardware' for shipbuilding implies a critical and potentially specialized requirement.

Sector Analysis

The procurement falls within the shipbuilding and repairing sector (NAICS 336611), a critical component of the defense industrial base. This sector is characterized by high capital investment, complex supply chains, and significant government oversight. Spending in this area is often driven by national security requirements and long-term fleet modernization programs. Comparable spending benchmarks would involve analyzing other contracts for naval vessel components, maintenance, and new construction, which can run into billions of dollars annually.

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, The Boeing Company, is a large aerospace and defense firm. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without this information, it's difficult to assess the direct benefits or implications for small businesses in this specific procurement.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. As a Cost Plus Incentive Fee (CPIF) contract, there will be specific performance metrics and cost targets that require diligent monitoring to ensure value for money. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Shipbuilding Programs
Defense Hardware Procurement
Ship Repair and Maintenance Contracts
Aerospace and Defense Manufacturing

Risk Flags

Sole-source award
Cost-reimbursement contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.8 million to THE BOEING COMPANY. BASE YEAR - MULTI-MATERIAL HARDWARE

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 $24.8 million.

What is the period of performance?

Start: 2024-09-27. End: 2030-06-30.

What specific types of multi-material hardware are being procured under this contract, and what are their intended applications within naval vessels?

The provided data identifies the contract as being for 'MULTI-MATERIAL HARDWARE' under NAICS code 336611 (Ship Building and Repairing). While the specific types of hardware are not detailed, the context suggests these are components essential for the construction, maintenance, or modernization of naval vessels. Multi-material hardware implies items constructed from a combination of different materials (e.g., metals, composites, plastics) to achieve specific performance characteristics such as strength, weight reduction, corrosion resistance, or thermal insulation. Applications could range from structural components, piping systems, electronic enclosures, or specialized equipment mounts. A deeper dive into the contract's statement of work or technical specifications would be necessary to ascertain the precise nature and intended use of these materials.

How does the Cost Plus Incentive Fee (CPIF) structure work for this contract, and what are the key performance indicators (KPIs) that will trigger incentive payments?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and also receives a fee that is adjusted based on performance against pre-determined targets. In this case, the 'fee' is the profit margin. The government and the contractor agree on a target cost and a target fee. If the final cost is below the target cost, both the government and the contractor share in the savings according to a pre-negotiated formula. Conversely, if the final cost exceeds the target cost, the fee is reduced. Incentive payments are typically tied to specific performance objectives, such as meeting delivery schedules, achieving certain quality standards, or demonstrating technical performance milestones. Without access to the contract's detailed terms and conditions, the specific KPIs and the sharing formula for this Boeing contract remain undisclosed. However, the objective is to incentivize the contractor to control costs while meeting or exceeding performance expectations.

What is the rationale behind awarding this contract on a sole-source basis, and were any market research efforts conducted to identify potential alternative sources?

The data indicates this contract was awarded as 'NOT COMPETED,' which typically implies a sole-source justification. The rationale for sole-source awards usually stems from situations where only one responsible source is available or capable of meeting the government's needs. This could be due to unique technical capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or specific national security requirements. For a large, complex item like multi-material hardware for naval applications, it's possible that The Boeing Company holds specific patents, unique manufacturing processes, or has existing integration expertise with naval systems that make them the only viable option. Standard government procurement regulations require agencies to conduct market research to determine if competitive sources exist before justifying a sole-source award. The extent and findings of such research for this specific contract are not detailed in the provided summary.

What is the historical spending pattern for similar multi-material hardware procurements by the Department of the Navy, and how does this $24.8 million award compare?

Historical spending data for 'multi-material hardware' specifically is difficult to isolate without more granular contract details. However, the Department of the Navy's overall spending on shipbuilding, repair, and associated components is substantial, often running into billions of dollars annually. Contracts for major ship systems, specialized materials, and complex hardware can vary significantly in value. A $24.8 million award for a base year, especially for a long-duration contract (over 2000 days), suggests a significant requirement, but it is likely a component of a larger shipbuilding or modernization effort rather than a standalone, massive procurement. To provide a meaningful comparison, one would need to analyze past contracts for similar hardware categories (e.g., advanced composites, specialized alloys, integrated systems) awarded to prime contractors involved in naval construction and identify trends in pricing, contract types, and durations. Without such a detailed historical analysis, this award's relative scale is context-dependent.

What are the potential risks associated with a sole-source, Cost Plus Incentive Fee contract for critical naval hardware, and what mitigation strategies are in place?

Sole-source contracts carry inherent risks, primarily the potential for inflated pricing due to the absence of competitive pressure and a lack of price discovery. The government may end up paying more than if the contract were competed. Furthermore, a Cost Plus Incentive Fee (CPIF) structure, while designed to control costs, can still lead to cost overruns if the target cost is set too high or if the incentive metrics are not well-defined or rigorously monitored. Risks include the contractor prioritizing fee maximization over genuine cost efficiency, potential for scope creep, and challenges in verifying the necessity and reasonableness of incurred costs. Mitigation strategies typically involve robust government oversight, including detailed cost audits, thorough review of contractor performance against KPIs, strong negotiation of the target cost and fee structure, and clear definition of contract scope. The Department of the Navy's program management and contracting officers are responsible for implementing these oversight mechanisms to ensure the government receives fair value and that the hardware meets required specifications.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0016724R0021

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 100 S STEWART AVE, RIDLEY PARK, PA, 19078

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: $63,075,213

Exercised Options: $24,847,284

Current Obligation: $24,847,284

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $1,093,891

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline