Boeing awarded $120M for airborne electronic attack integration, raising value-for-money questions due to sole-source nature

Contract Overview

Contract Amount: $120,033,854 ($120.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-04-15

End Date: 2024-01-31

Contract Duration: 1,386 days

Daily Burn Rate: $86.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: AIRBORNE ELECTRONIC ATTACK INTEGRATION

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $120.0 million to THE BOEING COMPANY for work described as: AIRBORNE ELECTRONIC ATTACK INTEGRATION Key points: 1. The contract's value-for-money is difficult to assess without competitive bidding. 2. Sole-source procurement limits price discovery and potentially increases costs. 3. The duration of the contract (over 3 years) suggests a significant, ongoing need. 4. The 'Aircraft Manufacturing' sector context indicates a focus on complex, high-value defense systems. 5. Performance risk is likely managed through the Cost Plus Fixed Fee (CPFF) structure. 6. The absence of small business set-aside flags potential missed opportunities for smaller firms.

Value Assessment

Rating: questionable

Benchmarking the value of this $120 million contract is challenging due to its sole-source nature, which inherently limits transparent price comparison. While CPFF contracts aim to control costs by fixing a portion of the fee, the overall pricing cannot be definitively assessed against market rates without competitive bids. The scale of the award suggests a critical capability, but the lack of competition prevents a robust value-for-money determination.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple potential contractors. This approach is typically used when only one source is capable of meeting the requirement, often due to proprietary technology or unique expertise. The lack of competition means there was no direct price negotiation against alternatives, potentially impacting the final cost to the government.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the military requiring advanced airborne electronic attack capabilities. The contract delivers integration services for critical defense systems, enhancing operational effectiveness. The geographic impact is primarily within the United States, supporting defense manufacturing and operations. Workforce implications include skilled labor in aerospace engineering, manufacturing, and defense systems integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award limits opportunities for innovative solutions from other vendors.
Long contract duration could mask inefficiencies if not closely monitored.
Reliance on a single contractor can create supply chain vulnerabilities.

Positive Signals

Boeing is a major defense contractor with extensive experience in aerospace.
The CPFF contract type provides some cost control mechanisms.
The contract addresses a critical national defense capability.

Sector Analysis

The airborne electronic attack integration falls within the broader aerospace and defense manufacturing sector, a significant segment of the US economy. This sector is characterized by high barriers to entry, extensive R&D, and substantial government procurement. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of electronic warfare systems, but large-scale integration contracts for advanced military aircraft components often run into hundreds of millions of dollars.

Small Business Impact

This contract was not competed and did not include a small business set-aside. Consequently, there are no direct subcontracting opportunities mandated for small businesses through this specific award. The absence of a set-aside means that the prime contractor, Boeing, has discretion over subcontracting, and it is unclear if small businesses will be significantly involved in fulfilling this requirement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the Cost Plus Fixed Fee structure, which includes performance metrics and fee adjustments. Transparency is limited due to the sole-source nature, but contract modifications and performance reports are typically available through federal procurement databases, subject to classification.

Related Government Programs

Airborne Electronic Warfare Systems
Naval Aviation Procurement
Defense Contractor Services
Aircraft Systems Integration

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $120.0 million to THE BOEING COMPANY. AIRBORNE ELECTRONIC ATTACK INTEGRATION

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 $120.0 million.

What is the period of performance?

Start: 2020-04-15. End: 2024-01-31.

What is Boeing's track record with similar sole-source defense integration contracts?

Boeing, as a major defense contractor, has a long history of performing large-scale, complex integration contracts, many of which have been sole-source or limited competition due to the specialized nature of the platforms and systems involved. Analyzing their past performance on similar contracts, particularly within the naval aviation and electronic warfare domains, would involve reviewing contract histories for on-time delivery, cost overruns, and quality of performance. Publicly available data often shows a pattern of significant contract awards, but detailed performance metrics for sole-source awards are less transparent than for competed ones. However, their established position in the defense industry suggests a capacity to handle such complex integration tasks, albeit at a premium often associated with non-competitive awards.

How does the Cost Plus Fixed Fee (CPFF) structure typically impact cost efficiency compared to other contract types for R&D-heavy projects?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex integration efforts where the scope of work is not fully defined at the outset, making fixed-price contracts impractical. In a CPFF arrangement, the government pays the contractor's actual costs plus a predetermined fixed fee, which represents the contractor's profit. This structure incentivizes the contractor to control costs, as the fee remains constant regardless of the final cost incurred. However, it can be less cost-efficient for the government compared to firm-fixed-price contracts if costs escalate significantly, as the government bears the risk of cost overruns. While it provides flexibility and encourages innovation by reducing the contractor's risk, it requires robust government oversight to ensure costs are reasonable and necessary.

What are the primary risks associated with sole-source procurement in the defense sector?

Sole-source procurement in the defense sector carries several significant risks. Foremost among these is the potential for inflated pricing, as the absence of competition removes the downward pressure on costs that multiple bidders would typically exert. This can lead to reduced value for taxpayer money. Another risk is the lack of innovation; without competitive pressure, contractors may have less incentive to develop novel or more cost-effective solutions. Furthermore, sole-source awards can foster vendor lock-in, making it difficult and expensive to switch providers or integrate systems from other manufacturers in the future. Finally, it can limit opportunities for smaller, innovative companies to enter the defense market and contribute their capabilities.

What is the typical duration and value range for contracts involving airborne electronic attack system integration?

Contracts for the integration of airborne electronic attack systems are typically long-term and high-value due to the complexity, technological sophistication, and critical nature of these defense capabilities. Durations often span several years, encompassing design, development, integration, testing, and initial deployment phases. Values can range widely, from tens of millions to hundreds of millions, or even billions, of dollars, depending on the specific platform, the scope of integration (e.g., new system vs. upgrade), and the number of units involved. The $120 million award to Boeing for a duration of approximately three and a half years falls within the expected range for such specialized defense integration efforts, reflecting the significant investment required for advanced electronic warfare capabilities.

What are the implications of the 'Aircraft Manufacturing' NAICS code for this contract?

The North American Industry Classification System (NAICS) code 336411, 'Aircraft Manufacturing,' indicates that the primary activity under this contract is related to the production or assembly of aircraft and aircraft parts. For this specific contract focused on 'AIRBORNE ELECTRONIC ATTACK INTEGRATION,' it suggests that the work involves integrating sophisticated electronic warfare systems into existing or new aircraft platforms manufactured by Boeing. This code signifies a high level of technical expertise, complex manufacturing processes, and adherence to stringent aerospace industry standards and regulations. It also implies that the contractor possesses the necessary facilities and capabilities for large-scale aerospace production and integration.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6893615R0072

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: $258,554,057

Exercised Options: $258,554,057

Current Obligation: $120,033,854

Actual Outlays: $48,562,569

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $119,991,562

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N6893618D0026

IDV Type: IDC

Timeline