Boeing Aerospace Operations contract for C-130 Hercules systems engineering services awarded $73.5M

Contract Overview

Contract Amount: $73,468,598 ($73.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2002-03-12

End Date: 2011-06-30

Contract Duration: 3,397 days

Daily Burn Rate: $21.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200206!000107!5700!GJ40 !WARNER ROBINS ALC/LUK !F3365798D0002 !A!N! !N!RJ10 !20020312!20080331!617869912!085188316!009256819!N!BOEING AEROSPACE OPERATIONS IN!BLDG 999 !FORT WALTON BE !FL!32547!24475!091!12!FORT WALTON BEACH !OKALOOSA !FLORIDA !+000002693390!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION !3ACD!C-130 HERCULES !334511!E! !5!B!S! ! !D!20060930!B! ! !B! !A!N!R!2!002!B! !A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001!

Place of Performance

Location: FORT WALTON BEACH, OKALOOSA County, FLORIDA, 32548, UNITED STATES OF AMERICA

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $73.5 million to THE BOEING COMPANY for work described as: 200206!000107!5700!GJ40 !WARNER ROBINS ALC/LUK !F3365798D0002 !A!N! !N!RJ10 !20020312!20080331!617869912!085188316!009256819!N!BOEING AEROSPACE OPERATIONS IN!BLDG 999 !FORT WALTON BE !FL!32547!24475!091!12!FORT WALTON BEACH !OKALO… Key points: 1. Contract awarded to Boeing Aerospace Operations for systems engineering services related to the C-130 Hercules aircraft. 2. The contract value is substantial, indicating a significant investment in aircraft sustainment and modernization. 3. Awarded under full and open competition, suggesting a competitive bidding process. 4. The contract duration of over 9 years points to a long-term need for these services. 5. The contract type is Cost Plus Award Fee, which incentivizes performance but carries inherent cost risks. 6. The primary place of performance is Florida, suggesting a concentration of related economic activity in that state.

Value Assessment

Rating: fair

The contract value of $73.5 million over approximately 9 years for systems engineering services for the C-130 Hercules appears to be within a reasonable range for such a critical and long-duration program. However, without specific details on the scope of work, deliverables, and the number of comparable contracts, a precise value-for-money assessment is challenging. The Cost Plus Award Fee (CPAF) structure means the final cost could exceed the base amount, depending on performance, which introduces a degree of uncertainty in cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of 3 bidders suggests a moderately competitive environment. While full and open competition is generally preferred for ensuring fair pricing and access to the best available solutions, the specific number of bidders (3) might not represent the maximum possible competition, and further analysis would be needed to understand if any barriers to entry existed.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down prices through market forces. A moderate number of bidders suggests that while competition was present, there may be opportunities to encourage even broader participation in future solicitations to maximize cost savings.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches operating the C-130 Hercules, ensuring the continued operational readiness and effectiveness of this vital transport aircraft. Services delivered include critical systems engineering, which supports the maintenance, upgrade, and sustainment of the C-130 fleet. The geographic impact is concentrated in Florida, where the primary place of performance is located, potentially supporting local jobs and businesses in the aerospace sector. Workforce implications include the employment of skilled engineers and technical personnel required for complex systems engineering tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee (CPAF) contracts can lead to costs exceeding initial estimates if performance targets are aggressively pursued or if scope creep occurs.
The long contract duration (over 9 years) increases the risk of cost escalation due to inflation, changing requirements, or unforeseen technical challenges.
Limited information on the specific systems engineering tasks makes it difficult to benchmark the efficiency and effectiveness of the services provided.
The concentration of performance in Florida could create single points of failure or logistical challenges if disruptions occur in that region.

Positive Signals

Awarded under full and open competition, indicating a structured and accessible bidding process.
The contract's focus on systems engineering for a critical platform like the C-130 suggests a commitment to maintaining essential defense capabilities.
The presence of multiple bidders (3) demonstrates a degree of market interest and capability in providing these specialized services.
The long duration suggests a stable, long-term relationship that can foster expertise and efficiency within the contractor.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and systems engineering. The market for such services is characterized by high barriers to entry due to specialized knowledge, security clearances, and established relationships with government agencies. Major defense contractors like Boeing are key players. Comparable spending benchmarks would involve analyzing other large, long-term sustainment contracts for major military aircraft platforms, which often run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

There is no explicit indication of a small business set-aside for this contract, and the prime contractor is The Boeing Company, a large aerospace firm. This suggests that small businesses are unlikely to be directly involved as prime contractors. However, Boeing may engage small businesses as subcontractors for specialized components or services, contributing to the broader small business ecosystem within the defense industrial base. Further investigation into subcontracting plans would be necessary to fully assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms, quality standards, and delivery schedules. Accountability measures are embedded within the Cost Plus Award Fee structure, where contractor performance against defined criteria influences the fee awarded. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance metrics and detailed cost breakdowns may be considered sensitive.

Related Government Programs

C-130 Hercules Sustainment Programs
Aerospace Systems Engineering Services
Department of Defense Aircraft Maintenance and Modernization
Air Mobility Command Logistics Support Contracts

Risk Flags

Long contract duration may lead to cost escalation.
Cost Plus Award Fee structure carries inherent cost risk.
Potential for vendor lock-in due to specialized, long-term services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.5 million to THE BOEING COMPANY. 200206!000107!5700!GJ40 !WARNER ROBINS ALC/LUK !F3365798D0002 !A!N! !N!RJ10 !20020312!20080331!617869912!085188316!009256819!N!BOEING AEROSPACE OPERATIONS IN!BLDG 999 !FORT WALTON BE !FL!32547!24475!091!12!FORT WALTON BEACH !OKALOOSA !FLORIDA !+000002693390!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION !3ACD!C-130 HERCULES !334511!E! !5!B!S! ! !D!20060930!B

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $73.5 million.

What is the period of performance?

Start: 2002-03-12. End: 2011-06-30.

What is the specific scope of 'systems engineering services' covered under this contract for the C-130 Hercules?

The term 'systems engineering services' in this context likely encompasses a broad range of activities critical to the lifecycle management of the C-130 Hercules aircraft. This could include requirements analysis, design integration, technical management, configuration management, risk management, and verification and validation of system performance. Specifically for the C-130, it might involve ensuring the seamless integration of new avionics, structural upgrades, or mission systems, as well as troubleshooting complex technical issues that arise during operations and maintenance. The services aim to maintain the aircraft's overall system integrity, performance, and safety throughout its extended operational life, ensuring it meets evolving military requirements and technological advancements.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types for similar long-term defense sustainment services?

Cost Plus Award Fee (CPAF) contracts are common for complex, long-term defense programs where the scope of work may evolve and performance incentives are desired. Unlike fixed-price contracts, CPAF allows the contractor to recover incurred costs plus a base fee, with an additional award fee contingent upon meeting or exceeding specific performance objectives. This contrasts with Cost Plus Incentive Fee (CPIF), which adjusts both profit and fee based on cost targets, or firm-fixed-price (FFP) contracts, which offer the most cost certainty but less flexibility for evolving requirements. For long-term sustainment, CPAF aims to balance the government's need for flexibility and performance with the contractor's need for cost recovery and motivation, though it carries a higher risk of cost overrun compared to FFP if not managed diligently.

What are the key performance indicators (KPIs) used to determine the award fee for Boeing Aerospace Operations under this contract?

While the specific Key Performance Indicators (KPIs) for determining the award fee are not publicly detailed in the provided data, they are typically established in the contract's Performance Work Statement (PWS) or Statement of Objectives (SOO). For systems engineering services on a platform like the C-130, common KPIs might include metrics related to on-time delivery of engineering reports and analyses, successful integration of new systems or modifications, reduction in aircraft downtime attributed to engineering issues, adherence to budget targets for specific tasks, effectiveness in resolving technical problems, and overall customer satisfaction surveys from the end-user (e.g., Air Mobility Command). The award fee structure incentivizes the contractor to go beyond minimum requirements and achieve superior performance in these critical areas.

What is the historical spending trend for C-130 Hercules systems engineering and sustainment services by the Department of Defense?

Historical spending on C-130 Hercules systems engineering and sustainment services by the Department of Defense has been substantial and consistent over decades, reflecting the platform's longevity and critical role. The C-130 fleet is one of the most widely operated military transport aircraft globally, requiring continuous support for upgrades, maintenance, and operational readiness. Annual spending can fluctuate based on modernization initiatives, depot maintenance cycles, and specific operational demands. While this specific contract represents a significant award, it is part of a larger, ongoing investment in the C-130 program. Analyzing historical data from sources like the Federal Procurement Data System (FPDS) would reveal multi-billion dollar cumulative expenditures across various contracts for sustainment, upgrades, and related engineering services for the C-130 fleet over its service life.

What are the potential risks associated with relying on a single contractor, Boeing, for such a critical and long-term systems engineering role?

Relying on a single contractor, even a large and capable one like Boeing, for a critical and long-term role like C-130 systems engineering presents several potential risks. These include vendor lock-in, where the government becomes overly dependent on the contractor's proprietary knowledge and processes, making it difficult or costly to switch providers. There's also the risk of complacency, where reduced competitive pressure might lead to less innovation or efficiency over time. Furthermore, a single point of failure exists; if Boeing faces financial difficulties, labor strikes, or significant operational disruptions, the C-130 program's continuity could be jeopardized. While the contract was awarded through competition, the long duration and specialized nature of the services can effectively lead to a de facto sole-source situation for ongoing support.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 626 ANCHORS ST NW, FORT WALTON BEACH, FL, 32548

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $73,441,598

Exercised Options: $73,441,598

Current Obligation: $73,468,598

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365798D0002

IDV Type: IDC

Timeline