Demilitarization of Government Property Contract Awarded to The Boeing Company for Over $32.7 Million

Contract Overview

Contract Amount: $32,703,686 ($32.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2007-10-30

End Date: 2011-01-31

Contract Duration: 1,189 days

Daily Burn Rate: $27.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: DEMILITARIZATION OF GOVERNMENT PROPERTY

Place of Performance

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

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $32.7 million to THE BOEING COMPANY for work described as: DEMILITARIZATION OF GOVERNMENT PROPERTY Key points: 1. Contract awarded for demilitarization services, indicating a need for secure disposal of government assets. 2. The contract was not competed, raising questions about potential cost efficiencies and market-driven pricing. 3. A Cost Plus Award Fee (CPA) structure suggests performance incentives but can lead to higher overall costs if not managed carefully. 4. The duration of the contract (over 3 years) implies a significant and ongoing requirement for these services. 5. The specific NAICS code (334511) points to a specialized manufacturing sector for navigation and guidance systems. 6. The award to a single, large defense contractor like Boeing suggests a focus on established capabilities and potentially high-value assets.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar demilitarization services. The Cost Plus Award Fee (CPA) structure, while incentivizing performance, can sometimes lead to costs exceeding fixed-price contracts if the award fee criteria are not stringently managed. The lack of competition further complicates a direct value assessment, as market forces that typically drive down prices were absent. Without more granular data on the specific assets demilitarized and the associated labor and material costs, it's difficult to definitively state if the $32.7 million represents excellent value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a rapid award. However, the absence of competition limits the government's ability to solicit the best possible pricing and terms from the market, potentially leading to higher costs than if multiple bids were considered.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without a competitive process, there's less assurance that the government secured the most cost-effective solution for demilitarization services.

Public Impact

The Department of Defense, specifically the Air Force, benefits from the secure and compliant demilitarization of government property. Services delivered include the processing and disposal of potentially sensitive or hazardous military equipment and assets. The contract's performance location in Ohio (st: OH, sn: OHIO) indicates a specific geographic focus for these operations. This contract likely supports a specialized workforce within The Boeing Company, requiring expertise in handling and disposing of defense-related materials.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost Plus Award Fee structure can lead to cost overruns if not meticulously managed.
Lack of transparency in the specific demilitarization processes and asset types handled.

Positive Signals

Award to a major defense contractor like Boeing suggests established expertise and reliability in handling sensitive government property.
The contract's duration indicates a sustained need and commitment to proper asset disposition.
Performance incentives within the CPA structure aim to ensure high-quality service delivery.

Sector Analysis

This contract falls within the "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" sector (NAICS 334511). This industry is characterized by high technological complexity and significant government procurement, particularly from defense contractors. The market size for such specialized manufacturing and related services is substantial, driven by ongoing defense modernization and asset lifecycle management. This contract represents a specific, albeit significant, expenditure within the broader defense industrial base for the demilitarization of complex systems.

Small Business Impact

This contract was awarded directly to The Boeing Company and does not appear to have a specific small business set-aside component. As a large sole-source award, it is unlikely to involve significant subcontracting opportunities for small businesses unless The Boeing Company voluntarily includes them in its supply chain. The absence of a set-aside suggests that the primary focus was on securing the specialized capabilities of the prime contractor, rather than promoting small business participation.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. The Cost Plus Award Fee (CPA) structure necessitates robust oversight to ensure that award fees are justified based on performance metrics and that costs are reasonable and allocable. Transparency regarding the specific demilitarization processes and the justification for the sole-source award would be key areas for public accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Demilitarization Services
Government Property Disposal
Aerospace and Defense Manufacturing
Military Equipment Lifecycle Management
Department of Defense Procurement
Air Force Logistics and Maintenance

Risk Flags

Sole-source award
Cost-plus contract type
Potential for cost overruns
Lack of competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.7 million to THE BOEING COMPANY. DEMILITARIZATION OF GOVERNMENT PROPERTY

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 $32.7 million.

What is the period of performance?

Start: 2007-10-30. End: 2011-01-31.

What specific types of government property were demilitarized under this contract?

The provided data does not specify the exact types of government property demilitarized. However, given the contractor (The Boeing Company) and the NAICS code (334511 - Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing), it is highly probable that the contract involved the demilitarization of complex defense systems, including aircraft components, navigation equipment, radar systems, or other sensitive technological assets. The demilitarization process typically involves rendering such equipment inoperable, non-repairable, and incapable of being restored to operational condition, often including the destruction or secure disposal of sensitive data and materials.

How does the Cost Plus Award Fee (CPA) structure typically impact the final cost compared to other contract types?

The Cost Plus Award Fee (CPA) structure allows the contractor to recover all allowable costs plus a base fee, with the potential for an additional award fee based on performance against defined criteria. This structure can lead to higher final costs compared to fixed-price contracts because the government bears the risk of cost overruns, and the award fee is intended to incentivize superior performance, which can inflate the total payment. While it offers flexibility and can be suitable for complex projects where cost estimation is difficult, it requires stringent oversight to ensure costs are controlled and award fees are genuinely earned. Without effective management, the 'cost plus' element can drive up expenses, and the 'award fee' can become a de facto entitlement rather than a true incentive for exceptional outcomes.

What are the risks associated with a sole-source contract for demilitarization services?

The primary risk of a sole-source contract for demilitarization services is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for efficiency. Without competing bids, the government may not secure the most cost-effective solution available in the market. There's also a risk that the chosen contractor may not be the most innovative or capable provider if alternatives were not explored. Furthermore, sole-source awards can raise concerns about fairness and transparency, potentially leading to perceptions of favoritism or missed opportunities for other qualified vendors, including small businesses.

What is the typical track record of The Boeing Company in handling government demilitarization contracts?

The Boeing Company is a major global aerospace and defense contractor with extensive experience in managing complex government programs, including those involving the lifecycle management of military assets. While specific details on their demilitarization contract history are not provided here, their long-standing relationship with the Department of Defense and their role as a prime contractor for numerous weapon systems suggest a significant capacity and established processes for handling sensitive materials and equipment. Their track record generally indicates a high level of technical capability and adherence to stringent government regulations, though like any large contractor, specific contract performance can vary.

How does the $32.7 million contract value compare to historical spending on similar demilitarization services?

Direct comparison of this $32.7 million contract value to historical spending on similar demilitarization services is difficult without access to a comprehensive database of past contracts, including their scope, duration, and specific services rendered. Demilitarization costs can vary significantly based on the type and quantity of assets, the complexity of the equipment, and the required disposal methods (e.g., hazardous materials, data destruction). As a sole-source award to a major contractor over a period of approximately three years, this value suggests a substantial requirement. Broader spending trends in defense logistics and asset disposition would provide context, but a precise benchmark requires more granular comparative data.

What are the potential environmental or safety risks associated with demilitarizing government property, and how are they managed?

Demilitarizing government property, particularly military hardware, can involve significant environmental and safety risks. These can include exposure to hazardous materials (e.g., fuels, lubricants, explosives residue, heavy metals), chemical agents, or radioactive components. Safety risks involve potential explosions, fires, or structural failures during dismantling. Management of these risks typically involves strict adherence to environmental regulations (like RCRA), safety protocols, specialized training for personnel, use of personal protective equipment (PPE), containment procedures, and certified disposal methods for hazardous waste. Contractors are expected to have robust environmental, health, and safety (EHS) programs in place, subject to government oversight.

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

Financial Breakdown

Contract Ceiling: $32,703,686

Exercised Options: $32,703,686

Current Obligation: $32,703,686

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4261099D0006

IDV Type: IDC

Timeline