Boeing awarded $947.7M for navigational instruments, with a significant portion for aircraft equipment

Contract Overview

Contract Amount: $41,404,251 ($41.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2004-10-07

End Date: 2008-03-31

Contract Duration: 1,271 days

Daily Burn Rate: $32.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200505!000409!5700!FA8103!OC-ALC/LID !F4261099D0006 !A!N! !N!SD25 ! !20041007!20050131!947764452!947764452!009256819!N!THE BOEING COMPANY !801 IRVING WICK DR W !NEWARK !OH!43056!34748!089!39!HEATH !LICKING !OHIO !+000004236866!N!N!000000000000!6605!NAVIGATIONAL INSTRUMENTS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !336413!E! !5!A!S! ! ! !20200930!B! ! !A! !D!N!R!2!001!N!1B!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!D!N! ! ! !Y! ! !0001! !

Place of Performance

Location: HEATH, LICKING County, OHIO, 43056, UNITED STATES OF AMERICA

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $41.4 million to THE BOEING COMPANY for work described as: 200505!000409!5700!FA8103!OC-ALC/LID !F4261099D0006 !A!N! !N!SD25 ! !20041007!20050131!947764452!947764452!009256819!N!THE BOEING COMPANY !801 IRVING WICK DR W !NEWARK !OH!43056!34748!089!39!HEATH !LICK… Key points: 1. Contract value exceeds $947 million, primarily for navigational instruments and other aircraft equipment. 2. Awarded to The Boeing Company, a major defense contractor with extensive experience. 3. Contract type is Cost Plus Award Fee, which can incentivize performance but may lead to higher costs. 4. Duration of over three years suggests a substantial and ongoing need for these services. 5. The contract is not competitively procured, raising questions about price discovery and potential cost efficiencies. 6. Geographic location of the contractor is in Ohio, indicating potential regional economic impact.

Value Assessment

Rating: fair

The total award amount of $947,764,452 is substantial. Without specific details on the deliverables and performance metrics, it is difficult to benchmark the value for money. The Cost Plus Award Fee (CPA) structure means that the final cost could exceed the initial estimate, depending on performance. Comparing this to similar contracts for navigational instruments is challenging without more granular data on the specific systems and quantities procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means that the government did not benefit from a bidding process, which could potentially lead to higher prices than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. The government's ability to negotiate favorable terms is limited in a sole-source scenario.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which requires these navigational instruments for its aircraft. The services delivered include the provision and potential maintenance of critical navigational systems essential for flight operations. The geographic impact is primarily centered around the contractor's location in Newark, Ohio, and the operational bases where the aircraft are deployed. Workforce implications include employment opportunities at The Boeing Company and its subcontractors, particularly in specialized manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Award Fee structure can lead to cost overruns if not managed tightly.
Lack of detailed performance metrics makes value assessment difficult.
Contract duration is lengthy, increasing exposure to potential changes in requirements or technology.

Positive Signals

Awarded to a reputable and experienced contractor, The Boeing Company.
Contract addresses critical defense needs for navigational instruments.
The award amount suggests a significant scope of work, potentially indicating robust program support.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on avionics and navigational systems. The market for these specialized components is often dominated by a few large, established players like Boeing due to high barriers to entry, including technological expertise, stringent quality control, and security clearances. Comparable spending benchmarks would involve analyzing other large sole-source or competitively awarded contracts for similar avionics systems within the Department of Defense.

Small Business Impact

There is no indication of a small business set-aside for this contract. Given the nature of the work and the sole-source award to a large prime contractor, the primary impact on small businesses would likely be through subcontracting opportunities. It is crucial for the prime contractor to have a robust subcontracting plan that includes small businesses to ensure broader economic participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Cost Plus Award Fee structure necessitates close monitoring of costs and performance to ensure that award fees are justified and that the overall program remains within acceptable financial parameters. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Aircraft Navigation Systems
Avionics Manufacturing
Defense Procurement
Air Force Equipment Contracts
Navigational Instrument Manufacturing
Aerospace Components

Risk Flags

Sole-source award
Cost Plus Award Fee structure
Potential for cost overruns
Lack of competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.4 million to THE BOEING COMPANY. 200505!000409!5700!FA8103!OC-ALC/LID !F4261099D0006 !A!N! !N!SD25 ! !20041007!20050131!947764452!947764452!009256819!N!THE BOEING COMPANY !801 IRVING WICK DR W !NEWARK !OH!43056!34748!089!39!HEATH !LICKING !OHIO !+000004236866!N!N!000000000000!6605!NAVIGATIONAL INSTRUMENTS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !336413!E! !5!A!S! ! ! !202

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 Air Force).

What is the total obligated amount?

The obligated amount is $41.4 million.

What is the period of performance?

Start: 2004-10-07. End: 2008-03-31.

What specific types of navigational instruments are being procured under this contract, and what is their intended application?

The contract specifies 'NAVIGATIONAL INSTRUMENTS' and 'OTHER AIRCRAFT EQUIPMENT' under the Product Service Code (PSC) 6605. While the data does not detail the exact models or types, these instruments are critical for aircraft operation, likely including systems such as GPS receivers, inertial navigation systems (INS), flight management systems (FMS), radar altimeters, and other sensors that provide positional, directional, and altitude data. Their application is essential for safe and efficient flight operations across various Air Force platforms, supporting missions ranging from transport to combat.

How does the Cost Plus Award Fee (CPAF) structure typically impact contractor performance and final costs compared to other contract types?

The Cost Plus Award Fee (CPAF) contract type allows the contractor to be reimbursed for all allowable costs incurred, plus a base fee that is a percentage of the estimated cost, and an additional award fee. The award fee is determined by the government based on performance against pre-defined criteria. This structure incentivizes contractors to exceed minimum performance standards to earn higher fees. However, it also introduces uncertainty in the final cost, as the award fee component can significantly increase the total amount paid. Effective oversight and clearly defined performance metrics are crucial to ensure that the award fee is earned legitimately and that costs remain controlled.

What are the potential risks associated with a sole-source award for critical aircraft components like navigational instruments?

Sole-source awards, while sometimes necessary, carry inherent risks. The primary risk is the lack of price competition, which can lead to the government paying a higher price than if multiple bidders had vied for the contract. This can reduce the overall value for money. Additionally, reliance on a single supplier can create vulnerabilities in the supply chain. If the sole-source contractor experiences production issues, financial instability, or decides to discontinue a product line, the government may face significant disruptions and difficulties in finding an alternative source, potentially leading to program delays and increased costs.

What is the historical spending pattern for navigational instruments by the Department of Defense, and how does this contract compare?

Historical spending on navigational instruments by the Department of Defense is substantial, reflecting the critical nature of these systems for military aviation. While this specific contract's value of $947.7 million is significant, it represents a single award. DoD procures such equipment through various contract types and vehicles over time. Analyzing historical data would reveal trends in spending, average contract values, and the prevalence of sole-source versus competitive awards for similar items. This contract's value appears to be within the range of major procurement actions for advanced avionics, but a comprehensive comparison would require access to detailed historical spending databases and analysis of specific system procurements over multiple fiscal years.

What are the implications of the contract duration (1271 days) for technological obsolescence and future upgrades?

A contract duration of 1271 days (approximately 3.5 years) for navigational instruments presents a moderate risk of technological obsolescence. While this timeframe is not excessively long in defense procurement, the pace of technological advancement in avionics can be rapid. The government must ensure that the contract includes provisions for incorporating technological improvements or that the procured systems have a sufficiently long service life. If the instruments are designed for upgradeability, the risk is mitigated. However, if they are fixed-function systems, they may require replacement sooner than anticipated, necessitating future procurement actions and potentially increasing long-term costs.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 801 IRVING WICK DR W, HEATH, OH, 43056

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F4261099D0006

IDV Type: IDC

Timeline