Boeing awarded $33.6M for H18 System Configuration Sets, with contract type 'Cost Plus Fixed Fee'

Contract Overview

Contract Amount: $33,636,310 ($33.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-03-13

End Date: 2025-04-30

Contract Duration: 779 days

Daily Burn Rate: $43.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: H18 SYSTEM CONFIGURATION SETS

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $33.6 million to THE BOEING COMPANY for work described as: H18 SYSTEM CONFIGURATION SETS Key points: 1. The contract's Cost Plus Fixed Fee (CPFF) structure carries inherent risk of cost overruns, requiring robust oversight. 2. As a sole-source award, the lack of competition may limit price discovery and potentially increase costs for taxpayers. 3. The duration of 779 days suggests a significant undertaking, necessitating careful performance monitoring. 4. The contract is for Engineering Services, aligning with the '541330' NAICS code. 5. The award is a Delivery Order under a larger contract, indicating a phased approach to procurement. 6. The contractor, The Boeing Company, has a substantial presence in the aerospace and defense sector.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility in complex projects, often leads to higher costs compared to fixed-price contracts. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The total award amount of $33.6 million for engineering services over approximately two years requires further analysis to determine if it represents value for money, especially given the lack of transparency in pricing structure due to the CPFF nature and sole-source award.

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 a direct award. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from a wider range of suppliers. The absence of multiple bids limits the government's ability to assess the most cost-effective solution.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. This also reduces the opportunity for small businesses to compete for significant government contracts.

Public Impact

The primary beneficiaries are likely the Department of the Navy and potentially other branches of the Department of Defense requiring H18 System Configuration Sets. The services delivered are critical for the functioning and maintenance of specific defense systems. The geographic impact is centered around the contractor's location in Missouri and the operational areas of the Navy. The contract supports specialized engineering roles within The Boeing Company, contributing to the aerospace and defense workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee structure increases risk of cost overruns.
Sole-source award limits price discovery and potential savings.
Lack of competition may not incentivize optimal performance or innovation.
Contract duration requires sustained oversight to ensure timely delivery and quality.

Positive Signals

Award to a major defense contractor (The Boeing Company) suggests established capabilities.
Engineering Services are crucial for complex defense systems.
Delivery Order structure implies it's part of a larger, potentially strategic, program.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government spending. Contracts for engineering services, particularly those related to system configuration, are vital for maintaining and upgrading sophisticated military hardware. The '541330' NAICS code for Engineering Services encompasses a broad range of activities, and this contract likely falls within specialized defense engineering. Benchmarking this specific contract is challenging without more detail on the 'H18 System Configuration Sets', but overall defense engineering services represent a substantial portion of federal procurement.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss: false' and 'sb: false'. The award to a large prime contractor like The Boeing Company suggests that subcontracting opportunities for small businesses may exist, but this is not guaranteed or mandated by the contract terms provided. The lack of a set-aside means that small businesses did not have a direct opportunity to compete for this specific award, potentially limiting their access to this particular segment of defense 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 is crucial to monitor expenditures and ensure the fixed fee is earned appropriately. Transparency is limited due to the sole-source nature and CPFF structure. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but specific proactive oversight mechanisms are not detailed in the provided data.

Related Government Programs

Department of Defense Engineering Services
Naval Systems Procurement
Aerospace System Development
Cost Plus Fixed Fee Contracts
Sole Source Defense Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.6 million to THE BOEING COMPANY. H18 SYSTEM CONFIGURATION SETS

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 $33.6 million.

What is the period of performance?

Start: 2023-03-13. End: 2025-04-30.

What is the historical spending pattern for H18 System Configuration Sets with The Boeing Company?

Detailed historical spending data specifically for 'H18 System Configuration Sets' with The Boeing Company is not provided in the current data. However, The Boeing Company is a major defense contractor with a long history of receiving substantial federal contracts, particularly from the Department of Defense. Analyzing past awards for similar engineering services or system configuration contracts to Boeing could provide context. Without specific historical data on this particular system, it's difficult to establish a trend or benchmark current spending against past performance. Further investigation into contract databases like FPDS or USAspending would be necessary to uncover relevant historical spending patterns for this contractor and service type.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar engineering services?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex engineering projects where the scope of work is not fully defined at the outset, or where innovation is a key objective. Unlike fixed-price contracts, CPFF reimburses the contractor for allowable costs plus a predetermined fixed fee, which represents profit. This structure can lead to higher overall costs for the government compared to fixed-price contracts because the contractor bears less financial risk. For similar engineering services, fixed-price incentive fee (FPIF) or firm-fixed-price (FFP) contracts might offer better value if the scope is well-defined, as they incentivize cost control. However, for highly uncertain or novel engineering tasks, CPFF can be appropriate, provided there are strong oversight mechanisms to control costs and ensure the fee is justified.

What are the specific risks associated with a sole-source award for engineering services?

Sole-source awards for engineering services carry several significant risks. Primarily, the absence of competition means the government cannot leverage market forces to achieve the best possible price, potentially leading to inflated costs. It also limits the government's ability to explore alternative technical solutions or innovative approaches that other qualified firms might offer. Furthermore, without competitive benchmarks, assessing the reasonableness of the contractor's proposed costs and the overall value for money becomes more challenging. This can also create a perception of favoritism and reduce transparency in the procurement process. Finally, it can stifle competition in the long run by consolidating work with a single provider.

What is the typical performance period for contracts of this value and type in the defense sector?

The typical performance period for defense sector contracts valued around $33.6 million for engineering services can vary significantly based on the complexity and nature of the work. A duration of 779 days (approximately 2 years) is not uncommon for projects involving system configuration and engineering support, especially if it involves development, integration, or sustainment activities. Contracts with CPFF structures, which allow for flexibility, might sometimes have longer or more adaptable performance periods. However, the government aims to define realistic performance periods that align with project milestones and budget cycles. Shorter periods might be used for well-defined tasks, while longer periods could indicate ongoing support or phased development.

What are the potential implications for future competition if this sole-source contract is extended or renewed?

If this sole-source contract is extended or renewed without competition, it could have significant negative implications for future competition. It may signal to the market that the government is not actively seeking alternative solutions or providers for these services. This can discourage other firms, particularly small businesses, from investing in the capabilities needed to compete for similar work in the future. Over time, reliance on a single incumbent can lead to vendor lock-in, making it increasingly difficult and costly to transition to a new provider. This can reduce overall market dynamism and potentially lead to higher prices and less innovation in the long run.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6893620R0097

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: $62,425,367

Exercised Options: $62,425,367

Current Obligation: $33,636,310

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $45,628

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N6893623D0001

IDV Type: IDC

Timeline