Boeing awarded $43.1M for Navy system configuration tasks, a sole-source contract

Contract Overview

Contract Amount: $43,125,485 ($43.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-09-30

End Date: 2028-09-30

Contract Duration: 1,461 days

Daily Burn Rate: $29.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CIDD28 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 $43.1 million to THE BOEING COMPANY for work described as: CIDD28 SYSTEM CONFIGURATION SET TASK ORDER Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. Long-term contract duration (4 years) suggests a need for sustained support. 3. Cost-plus fixed fee structure may incentivize cost increases. 4. Focus on engineering services indicates a need for specialized technical expertise. 5. Awarded by the Department of the Navy, aligning with defense sector priorities. 6. No small business set-aside, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: questionable

The contract's value of $43.1 million for engineering services over four years requires careful benchmarking. As a sole-source award, direct comparisons to similar competitively bid contracts are difficult. The cost-plus fixed fee (CPFF) pricing structure, while common for complex R&D or system development, can lead to higher overall costs compared to fixed-price contracts if not managed rigorously. Without more detailed cost breakdowns or performance metrics, assessing the true value for money is challenging.

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 vendors. This approach is typically used when only one vendor possesses the necessary specialized capabilities, proprietary technology, or when urgency dictates a rapid award. The lack of competition means that price discovery through market forces was bypassed, potentially leading to a higher price than if multiple bids had been received.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government relies on negotiation and oversight to ensure a fair price in sole-source situations, but the potential for inflated costs is higher.

Public Impact

The Department of the Navy benefits from specialized engineering services for system configuration. This contract supports the sustainment and potential upgrades of critical defense systems. The primary beneficiary is The Boeing Company, receiving significant contract funding. Work is likely to be performed in Missouri, impacting the local workforce and economy. The contract ensures the continued operational readiness of naval assets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus fixed fee structure can lead to cost overruns.
Long contract duration may not adapt well to changing technological needs.
Lack of small business involvement could limit innovation and broader economic impact.

Positive Signals

Award to a major defense contractor suggests access to critical expertise.
Engineering services are vital for complex defense system maintenance and development.
Contract duration provides stability for long-term system support.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for defense engineering services is dominated by a few large, established contractors like Boeing, who possess the specialized knowledge and security clearances required for complex military projects. Spending in this area is driven by the need to maintain and upgrade sophisticated defense platforms, with significant government investment allocated annually to ensure technological superiority and operational readiness.

Small Business Impact

This contract does not appear to include a small business set-aside. As a sole-source award to a large prime contractor, there is a potential for limited subcontracting opportunities for small businesses unless specifically mandated or pursued by the prime. The absence of a set-aside means that the primary contract value is not directly allocated to foster small business growth within this specific procurement.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of costs, performance, and adherence to contract terms will be crucial. Transparency may be limited due to the non-competitive award, but reporting requirements and potential audits by the Defense Contract Audit Agency (DCAA) would be standard oversight mechanisms.

Related Government Programs

Naval Systems Engineering Support
Aerospace Engineering Services
Defense System Modernization
Cost-Plus Fixed Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus pricing structure
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.1 million to THE BOEING COMPANY. CIDD28 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 $43.1 million.

What is the period of performance?

Start: 2024-09-30. End: 2028-09-30.

What is the historical spending pattern for similar system configuration engineering services by the Department of the Navy?

Analyzing historical spending on similar system configuration engineering services by the Department of the Navy is crucial for context. While specific data for this exact task order is limited, the Navy frequently contracts for engineering and technical services to support its vast array of platforms. Historically, such contracts can range from millions to hundreds of millions of dollars, depending on the complexity, duration, and scope of the systems involved. Sole-source awards in this domain are not uncommon, particularly for specialized systems where only a few contractors, like Boeing, possess the requisite expertise and security clearances. However, sustained sole-source awards without periodic competitive re-evaluation can lead to price escalation over time. Benchmarking against previous competitively awarded contracts for comparable services, even if not identical, can provide insights into potential cost efficiencies missed in this instance.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types in terms of cost efficiency for engineering services?

The Cost Plus Fixed Fee (CPFF) pricing structure is often used for research and development, complex engineering projects, or services where the scope is not well-defined at the outset. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. While this structure allows for flexibility and encourages innovation by reducing the contractor's risk, it can be less cost-efficient for the government compared to fixed-price contracts. The government bears the risk of cost overruns, and the fixed fee, while negotiated, might not always reflect the most efficient cost management. For engineering services where performance metrics and scope are clearly definable, fixed-price incentive fee or firm-fixed-price contracts often yield better value for taxpayers by incentivizing the contractor to control costs.

What are the specific system configuration tasks covered under this contract, and why are they considered sole-source?

The specific system configuration tasks under contract CIDD28 are not detailed in the provided data, but the description 'SYSTEM CONFIGURATION SET TASK ORDER' suggests activities related to setting up, integrating, testing, and potentially modifying complex systems. These could include software configuration, hardware integration, network setup, and performance tuning. The sole-source justification likely stems from Boeing's unique position as the original equipment manufacturer (OEM) or a highly specialized provider with proprietary knowledge, access to unique tooling, or specific security clearances essential for these particular naval systems. Without this specialized knowledge or access, other contractors would be unable to perform the required tasks effectively or securely, necessitating a sole-source award.

What is Boeing's track record with the Department of the Navy for similar engineering services contracts?

The Boeing Company has a long-standing and extensive track record of providing a wide range of services, including engineering and system configuration, to the Department of the Navy. As a major defense contractor, Boeing is involved in numerous programs across various naval platforms, from aircraft and ships to communication and weapons systems. Their history with the Navy includes both large, complex sole-source contracts and participation in competitively bid programs. While specific performance metrics for this particular task order are not available, Boeing's overall relationship with the Navy is characterized by significant contract awards, indicating a perceived capability to meet the department's demanding requirements. However, like any large contractor, they have also faced scrutiny and performance challenges on various programs throughout their history.

What are the potential risks associated with a sole-source, cost-plus fixed fee contract for long-term system support?

Sole-source, cost-plus fixed fee (CPFF) contracts for long-term system support present several potential risks. Firstly, the lack of competition can lead to reduced incentive for the contractor to innovate or optimize costs, as the government bears the primary financial risk. Secondly, the CPFF structure, while providing flexibility, can result in cost overruns if not meticulously monitored, as the contractor is reimbursed for actual costs incurred. The fixed fee, representing profit, might also be negotiated at a higher rate due to the perceived lower risk for the contractor. For long-term support, there's also a risk of vendor lock-in, making it difficult and costly to transition to a different provider or adopt new technologies later. Effective government oversight, robust auditing, and clear performance metrics are essential to mitigate these risks.

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: $191,088,067

Exercised Options: $191,088,067

Current Obligation: $43,125,485

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $73,410

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