Boeing awarded $69.3M in engineering services, but competition was limited, raising value concerns
Contract Overview
Contract Amount: $69,306,827 ($69.3M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2009-07-31
End Date: 2017-09-26
Contract Duration: 2,979 days
Daily Burn Rate: $23.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $69.3 million to THE BOEING COMPANY for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded via a sole-source justification, limiting price discovery and potentially increasing costs. 2. Long performance period of nearly 8 years suggests a need for ongoing, specialized services. 3. The firm-fixed-price contract type shifts risk to the contractor, but oversight is crucial for value. 4. Lack of competition may indicate a specialized need or a missed opportunity for broader market engagement. 5. Performance occurred primarily in Missouri, suggesting a localized impact for this significant federal spend.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to the sole-source award and lack of comparable bids. The firm-fixed-price structure is generally favorable for cost control, but without competitive pressure, the negotiated price may not reflect the best possible value for the government. The significant dollar amount over a long duration warrants scrutiny to ensure efficient use of taxpayer funds.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded using a sole-source justification, meaning only one contractor, The Boeing Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they inherently limit price discovery and can lead to higher costs compared to a fully competed contract.
Taxpayer Impact: The lack of competition means taxpayers did not benefit from the potential cost savings that a competitive bidding process could have generated. This could result in a higher overall expenditure for the engineering services provided.
Public Impact
The Department of Defense directly benefited from specialized engineering services. Services likely supported critical defense systems or platforms requiring Boeing's specific expertise. The contract's performance was concentrated in Missouri, potentially impacting the local economy and workforce. Specialized engineering roles were likely filled, contributing to the technical capabilities within the defense sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potential cost savings for taxpayers.
- Long contract duration without clear performance metrics could obscure efficiency issues.
- Lack of transparency in the sole-source justification process raises accountability questions.
Positive Signals
- Firm-fixed-price contract shifts performance risk to the contractor.
- Award to a major defense contractor suggests access to critical, specialized capabilities.
- Long-term award indicates a sustained need for essential engineering 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 often characterized by high barriers to entry due to specialized knowledge, security clearances, and established relationships. Spending in this area is substantial, driven by the need for design, development, testing, and sustainment of complex military systems. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of defense contracts, but significant investments are typical for major platforms.
Small Business Impact
This contract does not appear to have involved small business set-asides, as indicated by the 'sb' field being false. The award to a large prime contractor like Boeing suggests that subcontracting opportunities might exist for small businesses, but this is not guaranteed or explicitly detailed in the provided data. The primary focus was on securing specialized engineering services from a major industry player, rather than specifically fostering small business participation through set-asides.
Oversight & Accountability
Oversight for this contract would typically fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). The firm-fixed-price nature of the award places the onus on the contractor to manage costs effectively. However, the sole-source justification necessitates robust review to ensure the necessity and fairness of the award. Transparency is limited due to the non-competitive nature, and Inspector General investigations could be initiated if performance or pricing irregularities are suspected.
Related Government Programs
- Defense Engineering Services
- Aerospace Engineering Contracts
- Military Systems Development
- Sole-Source Defense Procurements
Risk Flags
- Sole-source award lacks competitive pricing.
- Long contract duration requires sustained oversight.
- Limited public data on specific service deliverables.
- Potential for cost overruns without competitive pressure.
Tags
defense, department-of-defense, engineering-services, not-competed, sole-source, firm-fixed-price, delivery-order, large-contract, missouri, the-boeing-company, aerospace, technical-services
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $69.3 million to THE BOEING COMPANY. ENGINEERING SERVICES
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 $69.3 million.
What is the period of performance?
Start: 2009-07-31. End: 2017-09-26.
What specific engineering services were provided under this contract?
The provided data indicates the contract was for 'ENGINEERING SERVICES' under NAICS code 541330. While the specific nature of these services is not detailed, engineering services in the defense sector typically encompass a wide range of activities. This can include research and development, design, systems integration, testing and evaluation, technical support, and lifecycle management for military platforms, weapons systems, or related technologies. Given the award to The Boeing Company, it is highly probable that these services were related to complex aerospace or defense systems where Boeing possesses specialized expertise and intellectual property.
How does the $69.3 million award compare to typical engineering service contracts within the Department of Defense?
The $69.3 million award is a substantial sum for a single contract, particularly one awarded on a sole-source basis. While the Department of Defense procures a vast array of engineering services, contracts of this magnitude often relate to major defense programs, platform development, or long-term sustainment efforts. Without specific details on the scope and duration, a direct comparison is difficult. However, it signifies a significant investment in specialized engineering capabilities, likely for a critical defense need. Many smaller engineering service contracts exist, but this figure places it among the larger awards for such specialized support.
What are the primary risks associated with a sole-source award of this magnitude?
The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the most cost-effective outcome. Additionally, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single contractor, potentially stifling innovation from other capable firms. There's also a risk that the contractor may not feel the same urgency to deliver optimal value or efficiency as they would in a competitive environment. Robust oversight and negotiation are critical to mitigate these risks.
What does the long performance period (2979 days) imply about the nature of the engineering services?
A performance period of nearly 8 years (2979 days) strongly suggests that the engineering services required were complex, long-term, and likely involved the full lifecycle of a system or program. This duration implies that the services were not for a short-term project but rather for ongoing support, development, sustainment, or integration of critical defense assets. Such extended periods are common for major defense acquisition programs where design, testing, production, and operational support span many years. It indicates a sustained need for specialized expertise that The Boeing Company was contracted to provide.
What is the significance of the 'NOT COMPETED' contract type for taxpayer value?
The 'NOT COMPETED' designation, synonymous with a sole-source award, is significant for taxpayer value because it bypasses the standard competitive bidding process. In a competitive environment, multiple companies vie for a contract, driving down prices through negotiation and innovation. When a contract is not competed, the government negotiates directly with a single source. While this can be justified for unique capabilities or urgent needs, it removes the inherent price discovery mechanism of competition. Consequently, taxpayers may end up paying a higher price than they would have in a competitive scenario, making robust justification and negotiation paramount for ensuring value.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $69,778,085
Exercised Options: $69,778,085
Current Obligation: $69,306,827
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: F3365701D0026
IDV Type: IDC
Timeline
Start Date: 2009-07-31
Current End Date: 2017-09-26
Potential End Date: 2017-09-26 00:00:00
Last Modified: 2019-11-14
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