Boeing awarded $65.8M contract for commercial machinery manufacturing, with a significant portion allocated to Missouri
Contract Overview
Contract Amount: $65,779,439 ($65.8M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2023-04-19
End Date: 2027-10-31
Contract Duration: 1,656 days
Daily Burn Rate: $39.7K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: H18 SCS/OFP
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $65.8 million to THE BOEING COMPANY for work described as: H18 SCS/OFP Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competition. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 3. A substantial portion of the contract value is tied to a specific geographic location. 4. The contract duration extends over four years, indicating a long-term need. 5. The specific machinery manufactured is not detailed, limiting performance assessment. 6. The absence of a small business set-aside suggests limited opportunities for smaller firms.
Value Assessment
Rating: fair
The contract value of $65.8 million for commercial machinery manufacturing is substantial. However, without specific details on the machinery or comparable contracts, a precise value-for-money assessment is difficult. The Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost escalation compared to fixed-price contracts. Benchmarking this against similar sole-source procurements for specialized machinery would be necessary for a more robust evaluation.
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 or when urgency dictates. The lack of competition means that pricing and terms were negotiated directly with The Boeing Company, potentially limiting opportunities for more competitive pricing.
Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from competitive bidding to drive down prices.
Public Impact
The Department of the Navy is the primary beneficiary, receiving the manufactured machinery. The contract supports the manufacturing sector, specifically commercial and service industry machinery. The state of Missouri is a significant beneficiary due to the contract's geographic allocation. The contract likely supports a specialized workforce within The Boeing Company and its supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
- Cost Plus Fixed Fee contract type introduces risk of cost overruns.
- Lack of detailed product specifications makes performance and value assessment challenging.
- No small business set-aside indicates limited direct opportunities for small businesses in this specific award.
Positive Signals
- Award to a major defense contractor like Boeing suggests access to specialized manufacturing capabilities.
- Long contract duration (over 4 years) indicates a sustained need and potential for stable production.
- Significant allocation to Missouri may stimulate regional economic activity and employment.
Sector Analysis
This contract falls within the broader 'Other Commercial and Service Industry Machinery Manufacturing' sector. This sector is diverse, encompassing the production of various types of machinery not elsewhere classified. The market size for such specialized machinery can vary significantly depending on the specific product. This contract represents a significant procurement within this niche, likely for specialized equipment required by the Department of the Navy.
Small Business Impact
The contract was not competed and did not include a small business set-aside. This means that opportunities for small businesses to directly participate in this specific award are limited. While The Boeing Company may engage small businesses as subcontractors, the primary award mechanism does not prioritize small business participation, potentially limiting their direct access to this federal spending.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing would be expected to monitor costs and ensure compliance with the fixed fee. Transparency may be limited due to the sole-source nature of the award, but contract performance and financial reporting should be subject to standard government oversight mechanisms.
Related Government Programs
- Department of Defense Manufacturing Contracts
- Naval Equipment Procurement
- Commercial Machinery Manufacturing
- Cost-Plus Contracts
- Sole-Source Procurements
Risk Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of detailed product specification
- Potential for cost overruns
Tags
defense, department-of-defense, department-of-the-navy, sole-source, cost-plus-fixed-fee, machinery-manufacturing, missouri, commercial-service-industry-machinery, delivery-order, large-contractor
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $65.8 million to THE BOEING COMPANY. H18 SCS/OFP
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 $65.8 million.
What is the period of performance?
Start: 2023-04-19. End: 2027-10-31.
What specific type of commercial machinery is being manufactured under this contract, and what is its intended use by the Department of the Navy?
The provided data indicates the contract is for 'Other Commercial and Service Industry Machinery Manufacturing' (NAICS code 333318). However, the specific type of machinery is not detailed. This machinery is likely specialized equipment required for naval operations, maintenance, or support functions. Without further information, its precise application remains unclear. Understanding the specific machinery would allow for a better assessment of its criticality, technological sophistication, and potential alternatives, which are crucial for evaluating the necessity and value of the procurement.
How does the $65.8 million contract value compare to similar sole-source procurements for specialized machinery by the Department of the Navy?
Benchmarking the $65.8 million contract value against similar sole-source procurements for specialized machinery by the Department of the Navy is challenging without access to detailed contract databases and specific product comparisons. Sole-source awards are inherently difficult to compare due to unique requirements and lack of competitive pricing. However, for a comprehensive analysis, one would typically look for contracts with similar NAICS codes (333318) or functional descriptions awarded on a sole-source basis. The Cost Plus Fixed Fee (CPFF) structure also adds complexity, as actual costs can vary. A preliminary assessment suggests this is a significant investment, but its relative value is contingent on the specific nature and criticality of the machinery.
What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this procurement?
The Cost Plus Fixed Fee (CPFF) contract type, used in this $65.8 million award to The Boeing Company, carries inherent risks for the government. Under CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. The primary risk is that the contractor may have less incentive to control costs compared to fixed-price contracts, as cost overruns are generally covered. While the fixed fee provides some predictability, the total cost to the government can escalate if actual costs exceed initial estimates. Robust oversight and auditing are crucial to ensure that all costs claimed are allowable, reasonable, and allocable to the contract.
Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent contractor overreach?
For sole-source procurements like this $65.8 million contract, ensuring fair pricing relies heavily on robust negotiation and oversight by the contracting agency, in this case, the Department of the Navy. Mechanisms typically include requiring the contractor to submit detailed cost and pricing data, conducting thorough audits of that data, and performing independent government cost estimates. The agency's contracting officers must negotiate diligently, leveraging available market research and historical pricing data where possible. Furthermore, the contract terms themselves, including limitations on costs and profit, serve as controls. However, the absence of competition inherently reduces the leverage available to the government in price negotiations.
What is the historical spending pattern for 'Other Commercial and Service Industry Machinery Manufacturing' by the Department of the Navy, and how does this contract fit within it?
Analyzing the historical spending patterns for 'Other Commercial and Service Industry Machinery Manufacturing' (NAICS 333318) by the Department of the Navy requires access to comprehensive federal procurement data. Without that specific historical context, it's difficult to definitively state how this $65.8 million contract fits in. However, procurements in this category often relate to specialized equipment for shipyards, maintenance facilities, or unique operational needs. If the Navy has a recurring need for such machinery, this contract could represent a continuation or expansion of previous efforts. Conversely, if this is a novel procurement, it might indicate a new requirement or a shift in technological needs. The sole-source nature suggests a specific, perhaps unique, requirement.
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: $65,779,439
Exercised Options: $65,779,439
Current Obligation: $65,779,439
Subaward Activity
Number of Subawards: 4
Total Subaward Amount: $24,611,232
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
Start Date: 2023-04-19
Current End Date: 2027-10-31
Potential End Date: 2027-10-31 00:00:00
Last Modified: 2025-03-28
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