Boeing awarded $39.8M for design agent support, raising questions about competition and value

Contract Overview

Contract Amount: $39,840,886 ($39.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2015-03-23

End Date: 2018-05-22

Contract Duration: 1,156 days

Daily Burn Rate: $34.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: DESIGN AGENT SUPPORT - BASE PERIOD - LABOR (SCN)IGF::OT::IGF

Place of Performance

Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $39.8 million to THE BOEING COMPANY for work described as: DESIGN AGENT SUPPORT - BASE PERIOD - LABOR (SCN)IGF::OT::IGF Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The cost-plus-incentive-fee structure may incentivize higher spending if not carefully managed. 3. Long contract duration of over three years suggests a need for ongoing support. 4. The absence of small business set-asides warrants further investigation into subcontracting opportunities. 5. Engineering services are critical for defense projects, but the specific value proposition here is unclear without more detail. 6. The contract's performance period overlaps with significant geopolitical events, potentially impacting resource allocation and cost.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bidding and specific performance metrics. The cost-plus-incentive-fee (CPIF) pricing structure, while common for complex engineering, can lead to cost overruns if not rigorously overseen. Without comparable sole-source awards for similar design agent support, it's difficult to definitively assess if the $39.8 million represents a fair price. The contractor's historical performance and the specific technical requirements would be key to a more thorough value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple potential contractors. This approach is typically used when only one source is capable of meeting the requirement, or in urgent situations. The lack of competition means there was no opportunity for price discovery through a bidding process, which can often lead to higher prices for the government compared to competitively awarded contracts. The rationale for this sole-source award should be clearly documented and justified.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price, potentially resulting in taxpayer funds being used less efficiently. It also bypasses the opportunity to foster a broader base of capable contractors.

Public Impact

The primary beneficiary is the Department of the Navy, receiving essential design agent support for its programs. Services delivered include engineering and design support, crucial for the development and maintenance of naval assets. The geographic impact is centered in California, where the contractor is located, suggesting potential local economic benefits. Workforce implications include the employment of engineers and technical specialists by The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-incentive-fee structure requires diligent oversight to control costs.
Lack of transparency in the justification for sole-source award.
Contract duration may indicate potential for scope creep or evolving requirements.
Absence of small business participation noted.

Positive Signals

Awarded to a major defense contractor with established capabilities.
Engineering services are critical for national defense infrastructure.
Contract duration provides stability for program execution.
Incentive fee structure can align contractor and government goals if well-defined.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for specialized design and engineering support for naval platforms is dominated by a few large, experienced contractors. Benchmarking this specific award is difficult without knowing the exact nature of the design support, but overall federal spending on engineering services is substantial, reflecting the complexity and ongoing needs of government programs. The Boeing Company is a major player in this sector.

Small Business Impact

The contract details indicate that small business participation was not a primary consideration, as the 'sb' (small business) flag is false and the contract type is 'NOT COMPETED'. This suggests that small businesses were likely not solicited as prime contractors. Further analysis would be needed to determine if subcontracting opportunities were made available to small businesses by the prime contractor, The Boeing Company. Without specific set-aside goals or reporting, the impact on the small business ecosystem remains unclear.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Given the sole-source nature and CPIF structure, robust oversight is crucial to ensure the contractor is performing effectively and that costs are reasonable and allocable. Transparency regarding the justification for the sole-source award and the performance metrics tied to the incentive fee would enhance accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Engineering Support Contracts
Aerospace Engineering Services
Defense Design and Development
Sole-Source Defense Procurements
Cost-Plus-Incentive-Fee Contracts

Risk Flags

Sole-source award lacks competitive transparency.
Cost-plus-incentive-fee requires rigorous oversight.
Potential for cost overruns without strong controls.
Limited public information on specific performance outcomes.
Absence of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.8 million to THE BOEING COMPANY. DESIGN AGENT SUPPORT - BASE PERIOD - LABOR (SCN)IGF::OT::IGF

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 $39.8 million.

What is the period of performance?

Start: 2015-03-23. End: 2018-05-22.

What specific engineering services does "DESIGN AGENT SUPPORT" entail for the Department of the Navy, and how critical are these services to current naval operations or future platform development?

The term "DESIGN AGENT SUPPORT" typically refers to services where a contractor acts on behalf of the government (the "agent") to provide design, engineering, and technical expertise for specific projects or platforms. For the Department of the Navy, this could range from conceptual design and feasibility studies to detailed engineering, system integration, and lifecycle support for naval vessels, aircraft, or weapon systems. The criticality of these services depends heavily on the specific platform or program they support. If this contract is for a new major platform development (e.g., a new class of ship or aircraft), the services are extremely critical, impacting program timelines, cost, and ultimate capability. If it's for sustainment or modernization of existing assets, the criticality relates to maintaining operational readiness and extending service life. Without more specific program details, it's difficult to quantify the exact criticality, but engineering support is fundamental to naval modernization and readiness.

Given this was a sole-source award, what was the official justification provided by the Department of the Navy for not competing this requirement?

The official justification for a sole-source award typically falls under specific exceptions to full and open competition, as outlined in federal acquisition regulations (e.g., FAR Part 6). Common justifications include that only one responsible source is available or capable of providing the required services, or that the agency must procure the supplies or services from sources other than full and open competition for reasons of economy or efficiency. For a contractor like The Boeing Company, justifications might include unique technical expertise, proprietary data or technology, existing system integration knowledge, or urgent and compelling needs where competition would cause unacceptable delays. The specific justification for this contract would be documented in a Justification and Approval (J&A) document, which is often publicly available through contract databases or agency portals, though sometimes redacted for proprietary information.

How does the Cost Plus Incentive Fee (CPIF) structure work in this contract, and what are the potential risks and benefits for the government in terms of cost control and performance?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs and also receives a fee that is adjusted based on performance relative to specified targets. In this contract, the fee would likely be adjusted based on achieving certain cost, schedule, or performance objectives. The benefit for the government is that it incentivizes the contractor to control costs and meet performance goals, as their ultimate profit is tied to these outcomes. However, the risk lies in the government potentially paying a higher total price than anticipated if the targets are not met or if the base cost of performance is higher than estimated. Effective CPIF contracts require clearly defined, measurable, and achievable targets, as well as robust government oversight to ensure costs are reasonable and performance is accurately assessed. Without strong oversight, the incentive might not yield the desired cost savings.

What is The Boeing Company's track record with similar sole-source engineering support contracts, particularly with the Department of the Navy?

The Boeing Company is a major defense contractor with extensive experience in providing engineering, design, and support services across numerous platforms for the Department of the Navy and other military branches. They have a long history of managing complex, high-value contracts, including those awarded on a sole-source basis due to their specialized capabilities and established relationships. Analyzing their track record would involve reviewing past contract performance evaluations (e.g., CPARS reports), any past performance issues or disputes, and the success of previous sole-source awards in delivering required capabilities within budget and schedule. Given their size and scope, Boeing likely has numerous contracts, both competitive and sole-source, that could serve as benchmarks. Specific performance data for this particular "DESIGN AGENT SUPPORT" role would be crucial for a comprehensive assessment.

Are there any publicly available performance metrics or outcomes associated with this contract that allow for an assessment of its effectiveness?

Assessing the effectiveness of this contract without specific performance metrics is challenging. Federal contracts, especially sole-source ones for complex engineering services, often have performance work statements (PWS) or statements of work (SOW) that outline deliverables and standards. However, detailed outcomes and metrics are not always readily available in public contract award data. Information might be found in contractor performance assessment reports (CPARS), but these are not always fully public. The effectiveness would ideally be measured against the criticality of the services provided (as discussed previously), adherence to schedule, quality of engineering designs, and cost control relative to the CPIF targets. The fact that the contract ran for over three years suggests a level of sustained need and, presumably, satisfactory performance to justify its continuation, but concrete effectiveness data is likely held within agency program files.

How does the $39.8 million award compare to historical spending on similar engineering support services by the Department of the Navy or other defense agencies?

Comparing this $39.8 million award requires context regarding the scope, duration, and specific services rendered. The contract duration was approximately 3 years (March 2015 - May 2018). If this represents the total value over that period, the annual spend was roughly $13.3 million. This figure needs to be benchmarked against similar sole-source or competitively awarded engineering support contracts for naval platforms or related defense systems. The Department of the Navy procures billions of dollars in engineering and technical services annually. Without knowing the specific platform or system this support relates to, a direct comparison is difficult. However, for specialized design agent support on major defense programs, an annual spend in the low tens of millions is plausible, especially if it involves highly technical or proprietary aspects. A more precise comparison would involve identifying comparable contracts based on service type (e.g., naval architecture, systems engineering) and contractor size.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0017814R2016

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: $39,991,521

Exercised Options: $39,991,521

Current Obligation: $39,840,886

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline