Boeing awarded $25.7M contract for Other Commercial and Service Industry Machinery Manufacturing by Department of the Navy

Contract Overview

Contract Amount: $25,761,084 ($25.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-05-29

End Date: 2025-01-31

Contract Duration: 1,708 days

Daily Burn Rate: $15.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: NSF-2

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $25.8 million to THE BOEING COMPANY for work described as: NSF-2 Key points: 1. Contract value represents a significant investment in specialized machinery. 2. Sole-source award suggests limited market alternatives or specific contractor capabilities. 3. Long performance period indicates a sustained need for the machinery. 4. Cost-plus-fixed-fee structure may incentivize cost management by the contractor. 5. Geographic concentration in Missouri warrants attention for regional economic impact. 6. Absence of small business set-aside may limit opportunities for smaller firms.

Value Assessment

Rating: fair

The contract value of $25.7 million for machinery manufacturing appears substantial. Without specific benchmarks for this type of specialized equipment, a direct value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex projects, can sometimes lead to higher overall costs if not carefully managed. Comparing this to similar sole-source procurements for highly specialized industrial machinery would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that the Department of the Navy identified The Boeing Company as the only responsible source capable of meeting the requirement. This could be due to proprietary technology, unique manufacturing capabilities, or specific integration needs. The lack of competition means that price discovery through a bidding process was not utilized, potentially leading to a higher price than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, as the government did not have multiple offers to choose from. This underscores the importance of rigorous justification for sole-source awards to ensure fair and reasonable pricing.

Public Impact

The Department of the Navy benefits from the acquisition of specialized machinery critical for its operations. The contract supports manufacturing activities, potentially within the aerospace or defense industrial base. The geographic impact is concentrated in Missouri, where Boeing's facility is located, potentially supporting local jobs and the regional economy. The workforce implications include employment for skilled labor involved in the manufacturing and support of this machinery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing benefits for taxpayers.
Cost-plus-fixed-fee contract requires diligent oversight to control costs.
Long contract duration (over 5 years) necessitates ongoing performance monitoring.
Lack of small business participation may reduce opportunities for smaller enterprises in the supply chain.

Positive Signals

Award to a major defense contractor like Boeing suggests access to advanced manufacturing capabilities.
The contract addresses a specific, likely critical, need for the Department of the Navy.
The fixed fee component of the CPFF contract provides some cost certainty for the government.

Sector Analysis

This contract falls within the 'Other Commercial and Service Industry Machinery Manufacturing' sector, a broad category encompassing the production of various types of machinery not elsewhere classified. The defense industry often requires highly specialized and custom-built machinery for its complex operations, including aircraft production, shipbuilding, and weapons systems manufacturing. Spending in this sector for defense is driven by modernization efforts, sustainment of existing platforms, and the development of new capabilities. Comparable spending benchmarks would typically involve analyzing procurements for similar custom industrial equipment within the defense sector.

Small Business Impact

This contract does not appear to include a small business set-aside. The award to The Boeing Company, a large prime contractor, suggests that subcontracting opportunities may arise for small businesses within Boeing's supply chain. However, the absence of a direct set-aside means that small businesses did not have a primary opportunity to bid on the entire contract. The impact on the small business ecosystem will depend on Boeing's subcontracting strategy and the availability of qualified small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of cost, performance, and schedule is crucial. Transparency may be limited due to the non-competitive award, but contract modifications, performance reports, and payment milestones should be subject to review. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

Department of Defense Machinery Procurement
Naval Aviation Manufacturing Support
Industrial Equipment Acquisition
Sole-Source Defense Contracts
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award requires strong justification and oversight.
Cost-plus-fixed-fee structure necessitates diligent cost monitoring.
Long performance period requires sustained program management.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.8 million to THE BOEING COMPANY. NSF-2

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 $25.8 million.

What is the period of performance?

Start: 2020-05-29. End: 2025-01-31.

What is the specific type of machinery being procured under this contract, and what is its intended use by the Department of the Navy?

The data provided indicates the contract is for 'Other Commercial and Service Industry Machinery Manufacturing' (NAICS code 333318). However, the specific type of machinery is not detailed. Given the awardee is The Boeing Company and the agency is the Department of the Navy, it is highly probable that this machinery is specialized and intended for use in manufacturing, assembly, or maintenance operations related to naval platforms, such as aircraft, ships, or associated systems. This could include complex fabrication equipment, testing machinery, or automated production lines. Further details would require access to the contract's statement of work or technical specifications.

How does the $25.7 million contract value compare to historical spending on similar machinery by the Department of the Navy or other defense agencies?

A direct comparison of the $25.7 million contract value to historical spending on similar machinery is difficult without more specific details on the type of machinery. However, for specialized industrial equipment, especially when procured on a sole-source basis from a major contractor like Boeing, this value can be considered significant. Historical data for large-scale manufacturing equipment procurements within the defense sector often runs into tens or hundreds of millions of dollars, depending on the complexity and scale. The 'not competed' status suggests this might be a unique or highly specialized requirement, making direct cost comparisons challenging without access to proprietary data or detailed market research reports from the agency.

What are the key risks associated with a sole-source, cost-plus-fixed-fee contract for specialized machinery, and how are they being mitigated?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract are potential cost overruns and a lack of price competition. Since the contractor is reimbursed for allowable costs plus a fixed fee, there's less incentive to control costs compared to fixed-price contracts. The sole-source nature means the government didn't benefit from competitive bidding. Mitigation strategies typically involve robust government oversight of costs, detailed audits, strict adherence to the contract's scope, and clear performance metrics. The fixed fee provides some level of cost certainty for the contractor's profit, but the total cost can still escalate if the base cost of performance increases. The Department of the Navy would need strong program management and financial oversight to manage these risks effectively.

What is The Boeing Company's track record with the Department of the Navy, particularly concerning contracts of similar size and complexity?

The Boeing Company has an extensive and long-standing track record as a major defense contractor for the Department of the Navy, involved in numerous large-scale programs including aircraft (e.g., F/A-18, P-8 Poseidon), helicopters, and various support services. Contracts of this magnitude ($25.7 million) are common for Boeing, especially for specialized equipment or modifications. While Boeing is a reputable contractor, like any large entity, it has faced scrutiny over cost, schedule, and performance on various programs. Assessing their specific track record for this type of machinery procurement would require delving into past performance evaluations and contract history related to industrial equipment manufacturing, which is not publicly detailed in the provided data.

How does the contract's performance period (ending January 31, 2025) align with the typical lifecycle or obsolescence rate for the type of machinery being procured?

The contract has a performance period from May 29, 2020, to January 31, 2025, spanning approximately 4 years and 8 months. For highly specialized industrial machinery, particularly within the defense sector, such a duration can be reasonable for manufacturing, delivery, and initial integration or setup. The lifecycle and obsolescence rate depend heavily on the technology involved. If the machinery is for cutting-edge manufacturing processes, it might become outdated faster than more standard industrial equipment. However, if it's for robust, long-term production needs, the duration is appropriate. The Navy's planning likely considered the expected service life and technological relevance when defining this period.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Other Commercial and Service Industry Machinery Manufacturing

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6134018R0002

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JAMES S 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: $25,761,084

Exercised Options: $25,761,084

Current Obligation: $25,761,084

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $15,646,415

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6134019D0906

IDV Type: IDC

Timeline