Boeing awarded $34.6M for H12K System Configuration Set Task Order by the Department of the Navy

Contract Overview

Contract Amount: $34,664,315 ($34.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-05-03

End Date: 2026-06-30

Contract Duration: 1,154 days

Daily Burn Rate: $30.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: H12K SYSTEM CONFIGURATION SET TASK ORDER

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $34.7 million to THE BOEING COMPANY for work described as: H12K SYSTEM CONFIGURATION SET TASK ORDER Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competition. 2. Task order for engineering services suggests a need for specialized technical expertise. 3. The Cost Plus Fixed Fee pricing structure may incentivize cost overruns. 4. Long performance period indicates a significant, ongoing requirement. 5. Geographic focus on Missouri for this task order. 6. No small business set-aside noted, potentially limiting broader participation.

Value Assessment

Rating: fair

The contract value of $34.6 million for engineering services appears substantial. Benchmarking against similar 'Engineering Services' contracts (NAICS 541330) is difficult without more specific details on the 'H12K System Configuration Set'. However, the Cost Plus Fixed Fee (CPFF) contract type, while common for complex R&D or services where costs are uncertain, carries inherent risks of higher final costs compared to fixed-price contracts. The lack of competition further complicates a direct value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a 'NOT COMPETED' delivery order, indicating a sole-source or limited competition scenario. Without further details on the justification for this approach, it's presumed that only The Boeing Company possessed the necessary qualifications or proprietary knowledge for this specific task order related to the H12K System Configuration Set. This limits the opportunity for price discovery through competitive bidding.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure fair pricing.

Public Impact

The Department of the Navy benefits from specialized engineering services for the H12K system. This contract supports the maintenance and configuration of a specific defense system. Work is primarily located in Missouri, potentially impacting the local economy and workforce. The contract ensures the continued operational readiness of a critical defense asset.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee pricing can lead to higher overall costs if not managed carefully.
Sole-source award limits competitive pressure, potentially impacting price efficiency.
Long contract duration (over 3 years) increases exposure to potential cost escalations.
Lack of small business participation may limit broader economic benefits.

Positive Signals

Award to a major defense contractor like Boeing suggests access to established expertise.
Task order structure allows for focused execution of specific system configuration needs.
Clear end date provides a defined period for service delivery.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a significant segment of the federal contracting market, particularly for the Department of Defense. This sector encompasses a wide range of activities from design and consulting to systems integration. Spending in this area is often driven by the need for specialized technical knowledge to support complex military platforms and systems. Comparable spending benchmarks are highly dependent on the specific system and services rendered.

Small Business Impact

The contract data indicates that this award was not competed and there is no indication of a small business set-aside (ss: false, sb: false). This suggests that small businesses were not specifically targeted for this particular task order. Consequently, there are no direct subcontracting implications for small businesses stemming from this award, and the broader small business ecosystem may not see direct benefits from this specific contract.

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 crucial to monitor costs and ensure the fixed fee remains appropriate. Transparency regarding the justification for the sole-source award and the detailed breakdown of costs would be key accountability measures. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Engineering Services
Naval Systems Support Contracts
Aerospace Engineering Services
System Configuration Management
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.7 million to THE BOEING COMPANY. H12K SYSTEM CONFIGURATION SET TASK ORDER

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 $34.7 million.

What is the period of performance?

Start: 2023-05-03. End: 2026-06-30.

What is the specific nature of the 'H12K System Configuration Set' and why does it require specialized engineering services from Boeing?

The 'H12K System Configuration Set' likely refers to a specific component, software suite, or set of hardware configurations within a larger naval system. Without classified details, its exact function remains undisclosed. However, the need for specialized engineering services from The Boeing Company suggests that Boeing is either the original manufacturer, holds unique intellectual property, or possesses the most relevant expertise for modifying, updating, or maintaining this particular configuration. This could involve software updates, hardware integration, performance tuning, or ensuring compatibility with other systems. The sole-source nature of the award reinforces the idea that Boeing's involvement is considered essential and potentially irreplaceable for this specific task.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar engineering services, and what are the potential value implications?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set upfront, or cost-reimbursement contracts without a fixed fee. CPFF is often used when the scope of work is not precisely defined or involves significant uncertainty, such as research and development or complex system integration. While it allows flexibility, it can incentivize higher costs as the contractor is reimbursed for expenses. For taxpayers, the value implication is that costs could potentially exceed what might be achieved under a competitive fixed-price bid, necessitating stringent oversight to control expenditures and ensure the fixed fee remains reasonable relative to the effort.

What is the historical spending pattern for 'Engineering Services' by the Department of the Navy, and how does this $34.6M award fit within that context?

The Department of the Navy consistently awards significant sums for Engineering Services (NAICS 541330) annually, often in the billions of dollars, reflecting the complexity and scale of its operations. This $34.6 million task order, while substantial for a single award, represents a relatively small fraction of the Navy's overall annual expenditure in this category. Historical patterns show a mix of competed and sole-source awards, with major defense contractors frequently receiving large portions. This specific award's size is typical for a defined task order supporting a particular system, rather than a broad, multi-year program. Analyzing its place requires comparing it to other task orders for similar system support rather than the entirety of Navy engineering services spending.

What are the potential risks associated with awarding a task order of this size and duration to a single contractor without competition?

The primary risks associated with awarding a $34.6 million task order, spanning over three years, to a single contractor without competition include: 1) Reduced price efficiency: The absence of competitive bidding means taxpayers may not benefit from the lowest possible price. 2) Potential for scope creep or cost overruns: Without competitive pressure to stay within a fixed bid, a CPFF contract can be more susceptible to escalating costs if not meticulously managed. 3) Contractor complacency: A lack of competition might reduce the incentive for the contractor to innovate or provide exceptional service beyond the contract's minimum requirements. 4) Limited market intelligence: The agency may not gain insights into alternative solutions or pricing structures available in the broader market.

What oversight mechanisms are in place to ensure the effective performance and fair pricing of this sole-source CPFF contract?

Effective oversight for this sole-source CPFF contract would involve several key mechanisms. The Department of the Navy's contracting officer and program managers are responsible for monitoring performance against the Statement of Work (SOW) and ensuring milestones are met. Financial oversight is critical for CPFF contracts; this includes regular audits of incurred costs to ensure they are allowable, allocable, and reasonable. The fixed fee requires careful justification and monitoring to ensure it remains appropriate for the defined scope. Performance metrics and regular progress reviews are essential. Furthermore, the agency should periodically assess the continued justification for the sole-source nature of the award and explore competitive options for future requirements if feasible.

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: $58,174,007

Exercised Options: $58,174,007

Current Obligation: $34,664,315

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $366,900

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