DoD Awards Boeing $219M for H20 System Configuration Sets, Raising Oversight Concerns
Contract Overview
Contract Amount: $218,947,211 ($218.9M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2023-03-13
End Date: 2026-09-12
Contract Duration: 1,279 days
Daily Burn Rate: $171.2K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: H20 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 $218.9 million to THE BOEING COMPANY for work described as: H20 SYSTEM CONFIGURATION SETS Key points: 1. Significant contract value of $219M awarded to a single large contractor. 2. Lack of competition raises questions about price discovery and potential overspending. 3. Engineering services sector is prone to cost overruns without robust oversight. 4. Sole-source award limits opportunities for small businesses and innovative solutions.
Value Assessment
Rating: questionable
The contract is a Cost Plus Fixed Fee type, which can lead to higher costs if not managed carefully. Benchmarking against similar engineering services contracts is difficult without more detailed cost breakdowns, but the lack of competition suggests potential for inflated pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and competitive pressure, potentially leading to higher costs for taxpayers. The justification for a sole-source award needs careful scrutiny.
Taxpayer Impact: The sole-source nature of this award means taxpayers may not be receiving the best possible price due to the absence of competitive bidding.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. Limited visibility into cost drivers for this large engineering services contract. Potential for reduced innovation by not engaging a broader range of contractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of transparency in cost build-up
- Limited small business participation
Positive Signals
- Award to established contractor with relevant experience
- Long-term contract duration provides stability
Sector Analysis
This contract falls under Engineering Services (NAICS 541330), a sector often characterized by complex projects requiring specialized expertise. Spending in this sector can vary widely, but large sole-source awards warrant close examination for cost-effectiveness.
Small Business Impact
The contract data indicates that small business participation was not a factor ('sb': false). Sole-source awards often bypass opportunities for small businesses to compete and demonstrate their capabilities, potentially limiting market access for these firms.
Oversight & Accountability
The sole-source nature of this award necessitates enhanced oversight to ensure cost reasonableness and prevent potential waste. Robust monitoring of the Cost Plus Fixed Fee elements is crucial to hold the contractor accountable for efficient performance.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award lacks competitive pressure.
- Cost Plus Fixed Fee structure can incentivize higher spending.
- Limited transparency on cost build-up.
- No explicit small business participation noted.
- Potential for contractor lock-in.
Tags
engineering-services, department-of-defense, mo, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $218.9 million to THE BOEING COMPANY. H20 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 $218.9 million.
What is the period of performance?
Start: 2023-03-13. End: 2026-09-12.
What is the specific justification for awarding this significant contract on a sole-source basis, and what steps are being taken to ensure cost reasonableness?
The justification for a sole-source award typically involves unique capabilities or urgent needs. To ensure cost reasonableness, the Department of Defense should implement rigorous cost analysis, independent government cost estimates, and detailed performance monitoring throughout the contract's lifecycle. Regular audits and reviews of the contractor's incurred costs are also essential.
How will the government mitigate the risks associated with a Cost Plus Fixed Fee contract, particularly regarding potential cost overruns and contractor incentives?
Mitigation strategies for CPFF contracts include establishing a realistic fixed fee that incentivizes performance, setting clear contract scope and deliverables, and implementing robust oversight mechanisms. The government must actively manage the contract, track costs diligently, and ensure the contractor is operating efficiently. Performance metrics and regular progress reviews are key to identifying and addressing potential cost escalations early.
What is the expected impact of this sole-source award on future competition and innovation within the engineering services sector for similar defense systems?
Sole-source awards can stifle future competition by signaling a lack of openness to new entrants or alternative solutions. This can discourage investment in innovation by smaller firms who perceive limited market access. Over time, this can lead to reduced technological advancement and potentially higher long-term costs for the government as competitive pressures diminish.
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: $244,490,743
Exercised Options: $244,490,743
Current Obligation: $218,947,211
Actual Outlays: $11,000
Subaward Activity
Number of Subawards: 30
Total Subaward Amount: $13,419,816
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
Start Date: 2023-03-13
Current End Date: 2026-09-12
Potential End Date: 2026-09-12 00:00:00
Last Modified: 2025-11-06
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