Boeing awarded $23.4M for H18A System Configuration Sets, a sole-source engineering services contract

Contract Overview

Contract Amount: $23,434,023 ($23.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-03-01

End Date: 2025-04-30

Contract Duration: 791 days

Daily Burn Rate: $29.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: H18A 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 $23.4 million to THE BOEING COMPANY for work described as: H18A SYSTEM CONFIGURATION SETS Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Engineering services are critical for complex defense systems. 3. Contract duration of 791 days suggests a significant, ongoing need. 4. The cost-plus-fixed-fee structure may incentivize cost increases. 5. Performance is managed by the Department of the Navy. 6. The contract is a delivery order under a larger agreement. 7. No small business set-aside was applied to this award.

Value Assessment

Rating: questionable

Benchmarking the value of this specific contract is challenging without more detailed scope information. However, the sole-source nature and cost-plus-fixed-fee pricing structure raise concerns about potential overpayment compared to a competitively bid fixed-price contract. The fixed fee component provides some cost control, but the overall cost is subject to the contractor's efficiency.

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 offerors. 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 limits the government's ability to negotiate the best possible price.

Taxpayer Impact: Taxpayers may not be receiving the best value due to the absence of competitive pressure to drive down costs. Sole-source awards can sometimes lead to higher prices than those achieved through open competition.

Public Impact

The primary beneficiary is the Department of the Navy, which receives essential engineering services for the H18A system. Services delivered include system configuration and related engineering support. The contract is geographically focused in Missouri, where the contractor is located. This contract supports specialized engineering roles within The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing.
Cost-plus-fixed-fee structure can lead to cost overruns.
Lack of transparency in sole-source justification.
Potential for contractor to prioritize profit over efficiency.

Positive Signals

Award to a large, established defense contractor with known capabilities.
Contract addresses a specific, critical system configuration need.
Fixed fee provides some level of cost predictability for the fee portion.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense systems. The aerospace and defense industry is characterized by high R&D costs, long product lifecycles, and significant government procurement. Spending in this area is often driven by national security requirements and technological advancements, with major contractors like Boeing playing a crucial role.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Boeing typically means that opportunities for small businesses would be through subcontracts, if Boeing chooses to engage them.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures would be defined in the contract terms and conditions, including performance standards and reporting requirements. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

Defense Engineering Services
Aerospace System Development
Naval Aviation Support
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.4 million to THE BOEING COMPANY. H18A 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 $23.4 million.

What is the period of performance?

Start: 2023-03-01. End: 2025-04-30.

What is the specific nature of the H18A System Configuration Sets and why is it considered sole-source?

The H18A System Configuration Sets likely refer to specific hardware, software, or integration packages required for a particular military system, possibly related to aircraft or command and control. The 'sole-source' designation implies that The Boeing Company is believed to be the only entity capable of providing these specific configurations, perhaps due to proprietary technology, unique manufacturing processes, existing system integration, or specialized expertise developed over time. Without further details on the H18A system itself, it's difficult to ascertain the precise technical or programmatic reasons for this sole-source determination. Government agencies must justify sole-source awards, often citing factors like urgency, unique capabilities, or lack of viable alternatives.

How does the Cost Plus Fixed Fee (CPFF) contract type typically impact project costs and contractor incentives?

A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used for research and development or complex projects where the final cost is uncertain. For the government, it offers flexibility but carries the risk of cost overruns if the contractor's actual costs are higher than anticipated. For the contractor, the fixed fee provides a guaranteed profit margin regardless of the final cost, which can sometimes reduce the incentive to control costs aggressively compared to fixed-price contracts. However, the fee itself is fixed, meaning the contractor does not earn more profit by spending more money.

What is the historical spending trend for engineering services related to the H18A system or similar platforms by the Department of the Navy?

Analyzing historical spending trends for the H18A system specifically is challenging with the provided data. However, the Department of the Navy consistently allocates significant funds towards engineering services for its complex platforms, including aircraft, ships, and communication systems. Spending in this category often fluctuates based on program lifecycles, modernization efforts, and new platform development. Contracts for engineering services can range from millions to billions of dollars annually across various programs. Without access to detailed historical contract databases for the H18A or comparable systems, a precise trend analysis is not feasible. Generally, the Navy's engineering services spending reflects its ongoing need to maintain, upgrade, and develop sophisticated defense capabilities.

What are the potential risks associated with a sole-source award of this magnitude to a single contractor?

The primary risk of a sole-source award of this magnitude ($23.4 million) is the lack of competitive pressure, which can lead to inflated pricing and reduced value for taxpayer money. Without competing bids, the government has less leverage to negotiate favorable terms and prices. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future options or flexibility. Furthermore, sole-source awards can sometimes indicate a lack of market research or a failure to identify potential alternative solutions or contractors. This can also raise concerns about fairness and equal opportunity for other capable businesses in the market.

How does the contract duration (791 days) and delivery order structure influence the overall program management and cost control?

A contract duration of 791 days (approximately 2.2 years) indicates a substantial and ongoing requirement for the H18A System Configuration Sets. As a delivery order, it suggests this award is part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar framework agreement. This structure allows the government to procure specific quantities or services as needed over a period. For program management, it provides flexibility in scheduling and resource allocation. From a cost control perspective, the delivery order approach allows the government to place orders based on evolving needs, potentially avoiding upfront over-procurement. However, the CPFF nature of this specific order means costs will be reimbursed as incurred, with a fixed fee, making total cost less predictable than a fixed-price order.

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: $34,851,099

Exercised Options: $34,851,099

Current Obligation: $23,434,023

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $5,121,521

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