DoD's $118M contract for PB SUPPORT UCA awarded to Boeing, raising questions about competition and value

Contract Overview

Contract Amount: $118,437,644 ($118.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-09-16

End Date: 2026-02-16

Contract Duration: 518 days

Daily Burn Rate: $228.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: PB SUPPORT UCA 6 MONTHS

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $118.4 million to THE BOEING COMPANY for work described as: PB SUPPORT UCA 6 MONTHS Key points: 1. Significant contract value awarded without full and open competition. 2. Sole-source award to a major defense contractor warrants scrutiny of pricing and necessity. 3. Contract duration of 518 days suggests a substantial, ongoing need for these support services. 4. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code indicates a specialized area of defense support. 5. Lack of competition may limit opportunities for innovative solutions and cost efficiencies. 6. Performance-based contract type (PB) aims to link payment to contractor outcomes. 7. The contract's value is substantial, representing a significant investment by the Defense Logistics Agency.

Value Assessment

Rating: questionable

Benchmarking the value of this $118.4 million contract is challenging without detailed cost breakdowns and comparisons to similar sole-source awards. The fixed-price incentive structure suggests an attempt to control costs, but the absence of competition makes it difficult to ascertain if the pricing reflects true market value. Without competitive bids, it's hard to definitively assess if the government is receiving excellent value for money. The contract's value is substantial, and the lack of transparency inherent in sole-source awards necessitates careful review of the justification for this pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple potential bidders. The Defense Logistics Agency likely determined that only The Boeing Company could provide the required support for the PB SUPPORT UCA. This approach bypasses the standard competitive bidding process, which typically involves soliciting proposals from various companies and selecting the best offer. While sole-source awards can be necessary in specific circumstances, they limit the government's ability to leverage market competition to drive down prices and encourage innovation.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without competing offers, there is less assurance that the price reflects the lowest possible cost for the services rendered.

Public Impact

The primary beneficiary is the Department of Defense, specifically units relying on the PB SUPPORT UCA system. The contract delivers essential support services for critical aircraft components or systems. The geographic impact is likely concentrated where the PB SUPPORT UCA system is deployed or maintained, with specific location noted as Missouri. Workforce implications include the potential for continued employment for Boeing personnel involved in supporting this program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in the procurement process due to non-competitive nature.
Reliance on a single contractor for critical support could pose supply chain risks.
The specific nature of 'PB SUPPORT UCA' is not detailed, making independent value assessment difficult.

Positive Signals

The contract utilizes a Fixed Price Incentive (FPI) pricing structure, which aims to incentivize contractor performance and cost control.
The award is made to a well-established defense contractor, The Boeing Company, suggesting a degree of reliability.
The contract duration indicates a long-term commitment, potentially ensuring stable support for the system.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for such specialized components and support services is often dominated by a few large, established players due to high barriers to entry, including technological expertise, regulatory compliance, and existing relationships with government agencies. The total addressable market for defense logistics and parts manufacturing is substantial, with significant annual government spending allocated to maintaining and upgrading military fleets. This contract represents a portion of that broader spending, aimed at ensuring the operational readiness of specific military assets.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor is The Boeing Company, a large aerospace corporation. While Boeing may engage small businesses as subcontractors, the primary award is not directed towards the small business sector. The absence of a specific small business set-aside means that opportunities for smaller enterprises to directly compete for this prime contract were likely limited or non-existent. The subcontracting plan, if any, would determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Logistics Agency (DLA) and potentially the Department of Defense's Inspector General. Mechanisms for oversight would include contract performance reviews, audits, and monitoring of deliverables against the contract's fixed-price incentive structure. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the decision-making process and pricing more challenging. Accountability rests with The Boeing Company to meet performance requirements and with the DLA to ensure the contract is administered effectively and in the government's best interest.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Logistics Support Services
Military Aircraft Maintenance and Repair
Propulsion Systems Support Contracts

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Lack of detailed justification for sole-source procurement.
Potential for cost overruns if performance incentives are not robust.
Dependence on a single contractor for critical support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $118.4 million to THE BOEING COMPANY. PB SUPPORT UCA 6 MONTHS

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 Logistics Agency).

What is the total obligated amount?

The obligated amount is $118.4 million.

What is the period of performance?

Start: 2024-09-16. End: 2026-02-16.

What is the specific 'PB SUPPORT UCA' system or component that this contract supports, and why is Boeing the sole provider?

The specific 'PB SUPPORT UCA' system is not detailed in the provided data, but 'UCA' often refers to Unmanned Combat Aircraft or similar advanced aerial platforms within military contexts. 'PB' likely denotes a Performance-Based contract type. The sole-source justification implies that Boeing possesses unique capabilities, proprietary technology, or essential knowledge related to this specific system that other contractors cannot replicate. This could stem from original equipment manufacturing, specialized maintenance expertise, or unique intellectual property rights. Without further classified or detailed information, the precise reasons for Boeing's sole-source status remain proprietary to the DoD's procurement decision.

How does the Fixed Price Incentive (FPI) pricing structure work in this contract, and what are the potential benefits or drawbacks for the government?

A Fixed Price Incentive (FPI) contract establishes a target cost, target profit, and a price ceiling. The final price is adjusted based on the contractor's actual cost performance relative to the target cost. If the contractor's costs are lower than the target, both the contractor and the government share in the savings (often through a reduced final price). Conversely, if costs exceed the target, the final price increases, but typically not beyond the established ceiling. For the government, the FPI structure aims to provide cost control by incentivizing the contractor to manage expenses efficiently. However, the price ceiling protects the government from unlimited cost overruns. The primary drawback, especially in a sole-source context, is that the incentive is based on internal targets rather than market-driven competition, potentially limiting the full benefit of cost savings.

What is the historical spending pattern for PB SUPPORT UCA services, and how does this $118 million contract compare?

Historical spending data for 'PB SUPPORT UCA' services is not provided in the current dataset. To assess this $118.4 million contract's place in historical spending, one would need access to prior contract awards for the same or similar services, ideally from the same agency (Defense Logistics Agency) or for the same system. Without this historical context, it's impossible to determine if this award represents an increase, decrease, or stable level of investment. Analyzing past awards would reveal trends in contract duration, value, and competition levels, providing a baseline against which to evaluate the current sole-source, multi-year award.

What are the key performance indicators (KPIs) or metrics used to measure the success of this contract under its Performance-Based (PB) structure?

The specific Key Performance Indicators (KPIs) for this Performance-Based (PB) contract are not detailed in the provided data. Typically, for support services related to aircraft parts and auxiliary equipment, KPIs might include metrics such as on-time delivery rates, defect rates, system availability, response times for technical support, or adherence to maintenance schedules. The contract's success would be measured by the contractor's ability to meet or exceed these predefined performance standards, which are directly linked to payment and profit. The effectiveness of the PB structure hinges on the clarity, measurability, and relevance of these KPIs to the overall mission objectives.

What is the potential impact of this contract on the broader aerospace and defense supply chain, particularly concerning competition and innovation?

As a sole-source award to a major prime contractor like Boeing, this contract's direct impact on fostering broader supply chain competition is limited. It reinforces Boeing's position as a key provider for this specific support function. While Boeing may utilize numerous subcontractors, potentially including small businesses, the lack of prime-level competition means other large firms are excluded from bidding. This can stifle innovation by reducing the pressure to develop novel solutions or more cost-effective methods that might emerge from a competitive environment. The long-term effect could be a consolidation of specialized support capabilities within a few dominant players, potentially increasing dependency and reducing market dynamism.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: SPRPA123R003U

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $215,974,636

Exercised Options: $215,974,636

Current Obligation: $118,437,644

Subaward Activity

Number of Subawards: 351

Total Subaward Amount: $122,095,640

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA124D9005

IDV Type: IDC

Timeline