Boeing awarded $12.18M for rotary rudder systems, with no competition

Contract Overview

Contract Amount: $12,178,975 ($12.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-10-19

End Date: 2026-05-31

Contract Duration: 1,320 days

Daily Burn Rate: $9.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ROTARY RUDDER

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $12.2 million to THE BOEING COMPANY for work described as: ROTARY RUDDER Key points: 1. Contract awarded without competition raises questions about potential overpayment. 2. Limited competition may have suppressed innovative solutions and cost efficiencies. 3. Long contract duration (1320 days) suggests a sustained need for these systems. 4. The contract is for search, detection, navigation, guidance, and related instrument manufacturing. 5. Boeing's established role in defense contracting suggests a strong incumbent advantage. 6. The firm fixed-price contract shifts cost risk to the contractor. 7. Delivery order indicates this is part of a larger contract vehicle.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The $12.18 million award for rotary rudder systems, spanning over three years, lacks a clear market comparison. The firm fixed-price structure is standard, but the absence of competition prevents an assessment of whether the pricing reflects market rates or if a more advantageous price could have been secured through a competitive process. This lack of comparison makes it challenging to determine if taxpayers are receiving optimal value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach bypasses the standard competitive procurement process. Without multiple bids, there is no direct comparison of pricing or technical solutions. The rationale for a sole-source award, such as unique capabilities or urgency, is not provided but is critical for understanding the procurement strategy.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to drive down prices, potentially leading to higher costs for taxpayers.

Public Impact

The Department of Defense benefits from the acquisition of critical rotary rudder systems. These systems are essential for the operation and maintenance of specific aircraft or naval vessels. The contract supports advanced manufacturing capabilities within the aerospace and defense sector. Work is likely concentrated in areas where Boeing has manufacturing facilities, potentially impacting the workforce in those regions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can reduce transparency in government spending.
Reliance on a single supplier could create future supply chain risks.
The specific need for a sole-source award requires further justification.
Contract duration could be optimized if competition were introduced later.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor.
Boeing is a well-established defense contractor with a proven track record.
The contract supports critical defense logistics and operational capabilities.
Delivery orders are a standard method for procuring specific items under larger agreements.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized segment of the aerospace and defense industry. This sector is characterized by high technological barriers to entry and significant government procurement. Spending in this area is often driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish without knowing the specific system, but large defense contractors like Boeing are typical recipients of such awards.

Small Business Impact

There is no indication that this contract includes small business set-asides or subcontracting requirements. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Boeing actively engages them for specific components or services. Further analysis would be needed to determine if subcontracting opportunities exist and if small businesses are being utilized.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Defense Contract Management Agency (DCMA) likely plays a role in monitoring performance and compliance. Inspector General reports for the Department of Defense may also review procurement practices, though specific contract details might not always be highlighted unless significant issues arise. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

Defense Logistics Agency Procurement
Aerospace System Manufacturing
Navigation and Guidance Systems
Aircraft Component Procurement
Military Instrument Manufacturing

Risk Flags

Sole-source award lacks competitive justification.
Potential for non-competitive pricing.
Limited transparency in procurement process.
Long contract duration without competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.2 million to THE BOEING COMPANY. ROTARY RUDDER

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 $12.2 million.

What is the period of performance?

Start: 2022-10-19. End: 2026-05-31.

What is the specific system or component being procured under this contract, and why was it deemed necessary to award it on a sole-source basis?

The contract is for rotary rudder systems, falling under the NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing). The specific reason for a sole-source award is not detailed in the provided data. Typically, sole-source justifications are based on factors such as the urgency of the need, the unavailability of other sources, or the existence of unique capabilities possessed only by the awarded contractor. Without this justification, it is impossible to fully assess the necessity and appropriateness of bypassing the competitive bidding process. This lack of transparency is a key concern for ensuring fair pricing and efficient use of taxpayer funds.

How does the awarded price of $12.18 million compare to similar rotary rudder systems procured by the government or in the commercial market?

Direct price comparison for this specific rotary rudder system is challenging without more detailed technical specifications and market intelligence. The provided data does not include unit costs or detailed system descriptions that would allow for a precise benchmark. However, given the sole-source nature of the award, there is a heightened risk that the price may not be as competitive as it would be in a fully open market. To conduct a thorough value assessment, one would need to identify comparable systems, analyze their pricing structures, and consider the specific performance requirements met by this Boeing system. The absence of competitive bids makes it difficult to ascertain if $12.18 million represents a fair market value or if a more cost-effective solution could have been obtained.

What is The Boeing Company's track record with similar defense contracts, particularly those involving navigation and guidance systems?

The Boeing Company has an extensive and long-standing track record as a major defense contractor, frequently awarded large-value contracts for complex systems, including those related to navigation, guidance, and aeronautical instruments. Their history includes the development and production of sophisticated avionics and integrated systems for various military platforms. While this extensive experience suggests a high level of technical capability and reliability, it also means they are often a sole-source provider due to the specialized nature of their offerings and the high barriers to entry for competitors. Analyzing past performance metrics, delivery timeliness, and cost overruns on similar contracts would provide further insight into their reliability and efficiency in fulfilling such requirements.

What are the potential risks associated with awarding a contract of this duration (1320 days) on a sole-source basis?

Awarding a contract for over three years on a sole-source basis carries several risks. Firstly, it locks the government into a single supplier, potentially limiting flexibility if market conditions change or if a better technological solution emerges from competitors. Secondly, without the pressure of ongoing competition, there's a risk of price creep over the contract's life, even with a firm fixed-price structure, as the contractor may not be incentivized to find cost efficiencies. Thirdly, it can stifle innovation from other companies that might otherwise develop competing or superior technologies. Finally, it raises concerns about long-term dependency on a single vendor, which could pose supply chain vulnerabilities.

How does this contract fit into the broader spending patterns for navigation and guidance systems within the Department of Defense?

This $12.18 million contract for rotary rudder systems is a component of the Department of Defense's overall investment in navigation, guidance, and related systems, which collectively represent a significant portion of the defense budget. Spending in this category is driven by the need to maintain and modernize military platforms, ensuring operational effectiveness in complex environments. While this specific award is relatively modest in the context of the entire defense budget, it highlights the ongoing requirement for specialized components that support critical mission functions. Analyzing historical spending trends for similar systems and the specific platforms they support would provide context on whether this award represents a typical or anomalous level of investment.

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: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5000 E MCDOWELL RD, MESA, AZ, 85215

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: $12,178,975

Exercised Options: $12,178,975

Current Obligation: $12,178,975

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $502,288

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA118D002U

IDV Type: IDC

Timeline