Boeing's $21.9M Navy contract for aviation support services awarded without competition

Contract Overview

Contract Amount: $21,935,286 ($21.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-12-02

End Date: 2022-12-10

Contract Duration: 1,104 days

Daily Burn Rate: $19.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PMA 265 ENG.&TECH. SUPT. SERV. (APN)

Place of Performance

Location: PATUXENT RIVER, SAINT MARYS County, MARYLAND, 20670

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $21.9 million to THE BOEING COMPANY for work described as: PMA 265 ENG.&TECH. SUPT. SERV. (APN) Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not managed closely. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. A significant duration of 1104 days suggests a long-term need for these specialized services. 4. The contract's value is substantial, indicating a critical role in supporting naval aviation operations. 5. The absence of competition may limit opportunities for other capable contractors to enter the market. 6. Performance metrics and oversight will be crucial to ensure effective service delivery and cost control.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable competitive bids. The cost-plus-fixed-fee structure necessitates rigorous oversight to ensure costs remain reasonable and do not escalate beyond the fixed fee. Given the lack of competition, it's difficult to definitively assess if the pricing reflects fair market value. However, the duration and nature of the services suggest a potentially high level of specialized expertise required, which could justify a higher cost if truly unique.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This typically occurs when only one contractor is deemed capable of performing the required work, often due to proprietary technology, unique expertise, or urgent needs. The lack of competition means that the Navy did not benefit from a bidding process that could have driven down prices through market forces.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure, as the contractor faces less incentive to offer the lowest possible price.

Public Impact

Naval aviation operations benefit from continuous technical support and engineering services. The contract supports specialized aviation maintenance and readiness for critical naval assets. Services are likely concentrated in areas where the Navy operates its aviation fleets. The contract supports a workforce of skilled engineers and technical specialists employed by The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts require diligent oversight to prevent cost overruns.
Sole-source awards can limit market entry for other qualified small and large businesses.
Contract duration is long, increasing the risk of scope creep or evolving requirements not being optimally addressed.

Positive Signals

The Boeing Company is a well-established aerospace contractor with extensive experience.
The contract addresses a critical need for specialized aviation support services.
The fixed fee component provides some level of cost certainty compared to pure cost-plus contracts.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aviation support services. The market for such specialized technical and engineering support is dominated by a few large, established players like Boeing, given the high barriers to entry, including technical expertise, security clearances, and existing relationships with government agencies. Spending in this category is often driven by the need to maintain complex military aircraft fleets, ensuring operational readiness and technological superiority.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting plans. As a sole-source award to a large prime contractor, it does not directly create opportunities for small businesses through competitive bidding. However, Boeing may engage small businesses as subcontractors, but this is not explicitly detailed in the provided data. The lack of a competitive process limits the direct impact on the broader small business ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous financial oversight and performance monitoring are essential to ensure the contractor is delivering services efficiently and within agreed-upon cost parameters. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits are standard accountability measures.

Related Government Programs

Naval Aviation Maintenance Programs
Aerospace Engineering Services Contracts
Defense Contractor Support Services
Aircraft Fleet Readiness Programs

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of transparency in competition justification
Potential for cost overruns without stringent oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.9 million to THE BOEING COMPANY. PMA 265 ENG.&TECH. SUPT. SERV. (APN)

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 $21.9 million.

What is the period of performance?

Start: 2019-12-02. End: 2022-12-10.

What specific technical and engineering support services does The Boeing Company provide under this contract?

While the specific details of the 'PMA 265 ENG.&TECH. SUPT. SERV. (APN)' are not fully elaborated in the provided data, it generally refers to Program Management, Engineering, and Technical Support Services for the Naval Air Systems Command (NAVAIR) PMA 265 portfolio. This likely includes a range of activities such as systems engineering, software development support, logistics support, test and evaluation, and program management assistance for specific naval aircraft programs. The 'APN' designation might refer to a specific project or aircraft type within PMA 265. The contract's duration and value suggest a comprehensive and ongoing support role critical to the operational readiness and sustainment of naval aviation assets.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the agency's needs. For a large, complex contract like this supporting naval aviation, potential justifications could include unique proprietary technology or expertise held exclusively by The Boeing Company, critical interdependencies with existing Boeing-provided systems, or an urgent and compelling need where competition would cause unacceptable delays. Without the specific justification document, the exact reason remains unknown, but it implies a determination by the Department of the Navy that Boeing was the only viable option at the time of award.

How does the cost-plus-fixed-fee (CPFF) contract type influence the risk and potential cost for the government?

A Cost-Plus-Fixed-Fee (CPFF) contract type means the government agrees to pay the contractor's actual costs incurred, plus a predetermined fixed fee representing profit. This structure shifts some of the cost risk to the government, as the final cost is not fixed upfront. However, the fixed fee provides a degree of cost certainty regarding the contractor's profit. Effective management and oversight are crucial to control the 'cost' portion, ensuring that only reasonable and allocable costs are reimbursed. The government bears the risk of cost overruns beyond the negotiated costs, while the contractor is incentivized to complete the work within the estimated cost to protect their fixed fee.

What is the historical spending trend for similar aviation support services by the Department of the Navy?

Historical spending by the Department of the Navy on aviation support services, particularly for engineering and technical support, has been substantial and consistently high, reflecting the complexity and critical nature of maintaining advanced naval aviation platforms. Major defense contractors like Boeing, Lockheed Martin, and Northrop Grumman are frequent recipients of such contracts. Spending often fluctuates based on new platform development, sustainment needs for existing fleets, and evolving technological requirements. Analyzing past contract awards for similar services, especially those awarded competitively versus sole-source, can provide benchmarks for pricing and performance, though direct comparisons are difficult without detailed scope alignment.

What are the potential implications of this contract's long duration (1104 days) on its overall value and flexibility?

A contract duration of 1104 days (approximately three years) indicates a long-term requirement for the services provided. This extended period can offer stability and predictability for both the government and the contractor, allowing for deeper integration and specialized knowledge development. However, it also presents risks. Requirements may evolve significantly over three years, potentially leading to inefficiencies if the contract isn't flexible enough to adapt. For the government, a long duration without regular re-competition or review might reduce opportunities to benefit from market changes or technological advancements that could offer better value or performance.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0042115R0070

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134

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: $22,845,772

Exercised Options: $22,845,772

Current Obligation: $21,935,286

Actual Outlays: $428,724

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042118D0013

IDV Type: IDC

Timeline