Boeing awarded $17.2M for P-8A Poseidon stores management system test equipment, with limited competition

Contract Overview

Contract Amount: $17,207,228 ($17.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-09-16

End Date: 2024-09-23

Contract Duration: 1,468 days

Daily Burn Rate: $11.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: P-8A POSEIDON STORES MANAGEMENT SYSTEM (SMS) FACTORY TEST EQUIPMENT (FTE) INTERMEDIATE LEVEL MAINTENANCE CAPABILITY ESTABLISHMENT

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $17.2 million to THE BOEING COMPANY for work described as: P-8A POSEIDON STORES MANAGEMENT SYSTEM (SMS) FACTORY TEST EQUIPMENT (FTE) INTERMEDIATE LEVEL MAINTENANCE CAPABILITY ESTABLISHMENT Key points: 1. Contract focuses on establishing intermediate-level maintenance capability for P-8A Poseidon aircraft. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Awarded to The Boeing Company, the original equipment manufacturer, raising questions about competitive pricing. 4. The duration of the contract is substantial at 1468 days, indicating a long-term need. 5. The contract is not competitively procured, suggesting potential for higher costs compared to an open market. 6. The specific NAICS code (334519) points to a specialized manufacturing sector.

Value Assessment

Rating: questionable

The contract value of $17.2 million for test equipment is difficult to benchmark without specific details on the scope of work and the complexity of the system. However, awarding a Cost Plus Fixed Fee contract to the original equipment manufacturer, The Boeing Company, for a non-competed requirement raises concerns about potential overpricing. Without competitive bids, it's challenging to ascertain if the government is receiving the best value for its investment. Further analysis of the fixed fee and cost elements would be necessary for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to The Boeing Company. There is no indication of a competitive process being undertaken. Sole-source awards typically occur when only one responsible source is available or when urgency or national security dictates. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Taxpayer Impact: The absence of competition for this $17.2 million contract means taxpayers may have paid a premium, as there was no market pressure to drive down costs. This could represent a less efficient use of public funds compared to a competitively awarded contract.

Public Impact

The primary beneficiaries are the U.S. Navy's P-8A Poseidon fleet, ensuring operational readiness through effective maintenance. The contract delivers essential intermediate-level maintenance capabilities for the aircraft's stores management system. The geographic impact is primarily within Missouri, where the contractor is located, and potentially at Navy bases where the P-8A operates. Workforce implications include specialized technical roles for maintenance and testing of the P-8A system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contract type carries inherent risks of cost overruns if not closely monitored.
Lack of transparency in the justification for sole-source procurement.
Long contract duration (1468 days) requires sustained oversight to ensure performance and value.
The specific nature of 'factory test equipment' may be highly specialized, limiting potential bidders.

Positive Signals

Addresses a critical maintenance need for a key naval aviation asset (P-8A Poseidon).
Awarded to the original equipment manufacturer, potentially ensuring deep technical expertise and product knowledge.
The contract aims to establish a specific maintenance capability, contributing to long-term fleet readiness.
The fixed fee component provides some level of cost predictability for the contractor's effort.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically related to aircraft components and support equipment. The NAICS code 334519, 'Other Measuring and Controlling Device Manufacturing,' indicates a focus on specialized equipment. The P-8A Poseidon is a critical maritime patrol and reconnaissance aircraft for the U.S. Navy. Spending on specialized maintenance equipment and support systems for such platforms is common within the defense industry, often involving original equipment manufacturers due to proprietary knowledge and design.

Small Business Impact

The contract was not awarded to a small business, nor does it appear to have a specific small business set-aside component. Given the sole-source nature and the prime contractor being The Boeing Company, the potential for small business subcontracting opportunities would depend on Boeing's internal procurement practices and supply chain decisions. Without explicit subcontracting goals or a competitive bidding process, the direct impact on the small business ecosystem is likely minimal.

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 is crucial to monitor incurred costs against the estimated cost base and ensure the fixed fee is justified. Transparency regarding the justification for the sole-source award and the detailed breakdown of costs would be key indicators of effective oversight. Inspector General involvement would be triggered by any allegations of fraud, waste, or abuse.

Related Government Programs

P-8A Poseidon Aircraft Procurement
Naval Aviation Maintenance Programs
Aerospace Test and Measurement Equipment
Defense Contractor Support Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.2 million to THE BOEING COMPANY. P-8A POSEIDON STORES MANAGEMENT SYSTEM (SMS) FACTORY TEST EQUIPMENT (FTE) INTERMEDIATE LEVEL MAINTENANCE CAPABILITY ESTABLISHMENT

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 $17.2 million.

What is the period of performance?

Start: 2020-09-16. End: 2024-09-23.

What is the specific justification for awarding this contract on a sole-source basis to The Boeing Company?

The provided data does not explicitly state the justification for the sole-source award. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available, or in cases of urgent and compelling need where competition is not feasible. For a specialized system like the P-8A Poseidon's stores management system, Boeing, as the original equipment manufacturer, might argue that they possess unique technical knowledge, proprietary data, or existing infrastructure essential for developing and supplying the required factory test equipment. However, without the official justification document, this remains an assumption. A thorough review would require access to the Justification and Approval (J&A) document.

How does the Cost Plus Fixed Fee (CPFF) contract structure compare to other contract types for similar defense equipment procurements?

Cost Plus Fixed Fee (CPFF) contracts are common in defense procurement, especially for research, development, or complex systems where the scope of work may not be fully defined at the outset, or where innovation is required. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure shares risks between the government and the contractor. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility but less cost certainty for the government. FFP contracts provide greater cost predictability but are typically used when the scope is well-defined and risks are manageable. For specialized test equipment, if the design and requirements are stable, an FFP contract might have been more cost-effective. However, if the development involves significant unknowns, CPFF can incentivize the contractor to control costs to protect their fixed fee.

What are the potential risks associated with a long-duration contract (1468 days) for specialized test equipment?

Long-duration contracts for specialized equipment like factory test equipment present several risks. Firstly, technological obsolescence is a significant concern; over the contract's ~4-year duration, the underlying technology or the P-8A system itself might evolve, potentially rendering the test equipment outdated or less effective. Secondly, cost escalation is a risk, particularly with CPFF contracts, as unforeseen issues or changes in material costs can increase the final price. Thirdly, maintaining contractor performance and quality over an extended period requires continuous oversight and management effort. Finally, the government's needs might change, leading to contract modifications or the need for entirely new solutions, which can be more complex and costly to manage on a long-standing contract.

Can the value of this contract be benchmarked against similar procurements for other aircraft platforms?

Benchmarking this $17.2 million contract for P-8A Poseidon test equipment against similar procurements for other aircraft platforms is challenging without more granular data. Key factors influencing such costs include the complexity of the aircraft's systems, the specific maintenance requirements, the level of technology involved in the test equipment, and the number of aircraft in the fleet requiring support. For instance, test equipment for a more complex fighter jet or a larger transport aircraft might inherently cost more. Furthermore, the sole-source nature of this award complicates direct comparisons, as competitively procured items often achieve lower prices. A meaningful benchmark would require identifying contracts for comparable test equipment on similarly complex platforms, ideally awarded competitively, and analyzing the scope of work and technical specifications.

What are the implications of awarding this contract to the original equipment manufacturer (OEM) in terms of future support and upgrades?

Awarding this contract to the OEM, The Boeing Company, has several implications for future support and upgrades. Positively, it ensures that the test equipment is developed with intimate knowledge of the P-8A Poseidon's systems, potentially leading to better integration, performance, and reliability. Boeing is also best positioned to provide ongoing maintenance, calibration, and repair services for the equipment. However, relying solely on the OEM can create vendor lock-in, potentially limiting future upgrade options or making them more expensive. It may also stifle competition for future enhancements or modifications, as Boeing likely holds the intellectual property and design authority. The government might face higher costs for upgrades or sustainment if alternative providers are not viable.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Other Measuring and Controlling Device Manufacturing

Product/Service Code: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6833519R0059

Offers Received: 1

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: $41,437,959

Exercised Options: $41,437,959

Current Obligation: $17,207,228

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $11,783,320

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline