DoD's $594M MV Block C System Changes contract awarded to Bell Boeing Joint Project Office

Contract Overview

Contract Amount: $59,452,146 ($59.5M)

Contractor: Bell Boeing Joint Project Office

Awarding Agency: Department of Defense

Start Date: 2020-09-30

End Date: 2025-05-31

Contract Duration: 1,704 days

Daily Burn Rate: $34.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MV BLOCK C SYSTEM CHANGES

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76101

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $59.5 million to BELL BOEING JOINT PROJECT OFFICE for work described as: MV BLOCK C SYSTEM CHANGES Key points: 1. Value for money is difficult to assess due to the cost-plus-fixed-fee structure and lack of competition. 2. Competition dynamics are limited, with a sole-source award indicating potential for higher costs. 3. Risk indicators include the cost-plus contract type, which can incentivize spending, and a long performance period. 4. Performance context is tied to ongoing aircraft sustainment and modification needs for the Department of the Navy. 5. Sector positioning is within the defense aerospace manufacturing and support industry.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee (CPFF) structure, combined with a sole-source award, raises concerns about achieving optimal value for money. Without competitive bidding, it's challenging to benchmark pricing against market rates or similar contracts. The total award value of $594.5 million over a 1704-day period suggests significant investment, but the lack of transparency in cost drivers makes a definitive value assessment difficult. Further analysis would be needed to understand the fixed fee component and its relation to the overall costs incurred.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or is the sole provider of a required item or service. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement. It also suggests a reliance on a specific contractor for critical systems.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government's negotiating position is weakened without alternative sources.

Public Impact

The primary beneficiaries are the Department of the Navy and its aviation units, ensuring continued operational readiness of specific aircraft. Services delivered include modifications and changes to the MV Block C System, crucial for maintaining and upgrading aircraft capabilities. Geographic impact is primarily within the defense industrial base, supporting specialized manufacturing and engineering roles. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in aircraft system development and production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not managed diligently.
Sole-source award limits competitive pressure, potentially increasing overall expenditure.
Long contract duration (over 4 years) increases exposure to market fluctuations and potential cost increases.
Lack of detailed cost breakdowns makes it difficult to verify the reasonableness of expenses.
Reliance on a single contractor for critical system modifications poses a supply chain risk.

Positive Signals

Award to a joint project office suggests established expertise and a strong working relationship for this specific system.
Contract addresses necessary system changes, implying efforts to maintain or enhance operational effectiveness.
Clear end date provides a defined period for the scope of work.
The fixed fee component provides some level of cost predictability for contractor profit.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for such specialized components and modification services is often characterized by high barriers to entry, proprietary technology, and long-standing relationships between manufacturers and government agencies. Comparable spending benchmarks are difficult to establish without more specific details on the system being modified, but large-scale aircraft sustainment and upgrade contracts can run into hundreds of millions or billions of dollars.

Small Business Impact

The data indicates that small business participation was not a stated requirement or focus for this contract (ss: false, sb: false). As a sole-source award to a large entity like Bell Boeing, there are limited direct opportunities for small businesses to participate as prime contractors. Subcontracting opportunities may exist, but their extent and nature are not detailed in the provided information. The impact on the small business ecosystem is likely minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, specifically within the Department of the Navy. Accountability measures would be embedded in the contract terms, including performance metrics, reporting requirements, and payment schedules tied to milestones. Transparency is limited due to the sole-source nature and CPFF structure. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Aircraft Modification and Repair Services
Defense Aviation Sustainment Programs
Naval Air Systems Command Contracts
Aerospace Component Manufacturing
Cost-Plus Contract Management

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Potential for cost overruns
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.5 million to BELL BOEING JOINT PROJECT OFFICE. MV BLOCK C SYSTEM CHANGES

Who is the contractor on this award?

The obligated recipient is BELL BOEING JOINT PROJECT OFFICE.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $59.5 million.

What is the period of performance?

Start: 2020-09-30. End: 2025-05-31.

What is the specific nature of the 'MV Block C System Changes' and why was this procurement sole-sourced?

The 'MV Block C System Changes' likely refers to modifications, upgrades, or sustainment efforts for a specific military aircraft system designated as 'MV Block C'. The exact nature of these changes could range from avionics upgrades, structural enhancements, software modifications, to integration of new technologies. The sole-source award suggests that either Bell Boeing possesses unique intellectual property, proprietary technology, or is the only entity with the established expertise, infrastructure, and historical knowledge to perform these specific modifications effectively and efficiently. This could be due to the complexity of the system, the need for continuity with existing platforms, or specific government requirements that limit the pool of potential contractors.

How does the Cost Plus Fixed Fee (CPFF) contract structure impact cost control and value for money in this $594M award?

The Cost Plus Fixed Fee (CPFF) structure means the contractor (Bell Boeing) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. While the fixed fee provides some cost certainty regarding profit, the overall cost is variable and dependent on the actual expenses. This structure can incentivize contractors to incur costs, as their profit is fixed regardless of the total expenditure. For value for money, this presents a challenge. Without robust oversight, detailed cost analysis, and strong negotiation, the government risks paying inflated prices if costs are not managed efficiently by the contractor. Competitive bidding is crucial for CPFF contracts to establish a baseline for cost reasonableness.

What are the potential risks associated with a sole-source award of this magnitude and duration?

A sole-source award of this magnitude ($594.5 million) and duration (over 4 years) carries several risks. Firstly, the lack of competition means the government cannot leverage market forces to secure the best possible price, potentially leading to higher costs for taxpayers. Secondly, it creates a dependency on a single contractor, which can be problematic if the contractor experiences financial difficulties, production issues, or fails to meet performance expectations. This dependency also reduces the government's leverage in future negotiations. Thirdly, the long duration increases exposure to economic fluctuations, potential changes in technology, and the risk of contractor performance degradation over time without the pressure of competing for follow-on work.

What performance metrics or oversight mechanisms are likely in place for this contract to ensure successful delivery?

Given the nature of defense contracts, it is highly probable that performance metrics and oversight mechanisms are integrated into the contract. These would likely include requirements for timely delivery of modifications, adherence to technical specifications, quality control standards, and potentially key performance indicators (KPIs) related to system reliability or functionality post-modification. Oversight would involve government program managers, contracting officers, and potentially quality assurance representatives monitoring progress, reviewing cost submittals, and ensuring compliance with contract terms. Regular progress reviews and audits are standard practices to manage risk and ensure accountability.

How does this contract fit into the broader context of Department of the Navy aviation sustainment and modernization efforts?

This contract is likely a critical component of the Department of the Navy's broader strategy for maintaining and modernizing its aviation fleet. The 'MV Block C System Changes' suggest an effort to extend the service life of existing aircraft, enhance their capabilities to meet evolving threats, or integrate new operational requirements. Such contracts are essential for ensuring the readiness and effectiveness of naval aviation assets, which are vital for national security. The investment reflects a commitment to supporting specific platforms through their lifecycle, balancing the costs of new acquisitions against the benefits of upgrading and sustaining current inventory.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 401 TILTROTOR DR PLANT A, AMARILLO, TX, 79111

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $59,452,146

Exercised Options: $59,452,146

Current Obligation: $59,452,146

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $2,024,315

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001917G0002

IDV Type: BOA

Timeline