DoD's $18M Boeing contract for engineering services awarded without competition, spanning over 4 years
Contract Overview
Contract Amount: $18,013,972 ($18.0M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2006-12-19
End Date: 2012-03-31
Contract Duration: 1,929 days
Daily Burn Rate: $9.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: HUNTSVILLE, MADISON County, ALABAMA, 35824
State: Alabama Government Spending
Plain-Language Summary
Department of Defense obligated $18.0 million to THE BOEING COMPANY for work described as: ENGINEERING SERVICES Key points: 1. The contract's value of $18 million over 1929 days suggests a significant investment in specialized engineering capabilities. 2. Awarded to a single, large defense contractor, this raises questions about the extent of market exploration. 3. The 'NOT COMPETED' status is a key risk indicator, potentially leading to higher costs and reduced innovation. 4. The contract's duration and cost structure warrant scrutiny to ensure sustained value for taxpayer funds. 5. Performance context is limited without specific deliverables, but the engineering services category implies complex technical support. 6. Positioned within the broader defense sector, this contract likely supports critical military systems or platforms.
Value Assessment
Rating: questionable
Benchmarking the value of this $18 million contract is challenging without specific details on the engineering services provided. However, the absence of competition suggests potential for inflated pricing compared to a scenario with multiple bidders. The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to cost overruns if not meticulously managed. Comparing this to similar sole-source engineering contracts within the Department of Defense would be necessary for a more precise value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not openly competed among multiple potential vendors. The 'NOT COMPETED' designation indicates that the Department of the Army identified The Boeing Company as the only viable source for these specific engineering services. This lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.
Taxpayer Impact: Sole-source awards can result in taxpayers paying a premium, as there is no competitive pressure to drive down costs. This necessitates robust oversight to ensure the awarded price is fair and reasonable.
Public Impact
The primary beneficiaries are likely the Department of Defense, receiving specialized engineering support for its operations. The services delivered are broadly categorized as engineering, implying support for design, development, testing, or sustainment of defense systems. The geographic impact is centered in Alabama (AL), where the contract was administered. Workforce implications include employment opportunities for engineers and technical staff at The Boeing Company and potentially its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to suboptimal pricing and reduced incentive for innovation.
- The Cost Plus Fixed Fee structure requires careful monitoring to prevent cost escalation.
- Limited transparency due to sole-source award makes independent value assessment difficult.
- The long duration of the contract (over 4 years) increases the risk of scope creep or changing requirements not being adequately addressed.
Positive Signals
- Award to a major defense contractor like Boeing suggests access to specialized expertise and established capabilities.
- The contract supports the Department of Defense, indicating alignment with national security objectives.
- The fixed fee component of the contract type provides some level of cost certainty for the government.
Sector Analysis
This contract falls within the broader aerospace and defense sector, a significant area of federal spending. The market for specialized engineering services within this sector is often dominated by large, established prime contractors due to the complexity and security requirements of defense projects. Benchmarking comparable spending would involve looking at other sole-source or competitively awarded engineering support contracts for major defense platforms or systems, often valued in the tens to hundreds of millions of dollars.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the award to a large prime contractor like The Boeing Company suggests that any subcontracting opportunities for small businesses would be at the discretion of the prime. The impact on the small business ecosystem is likely indirect, depending on Boeing's subcontracting strategy for this specific award.
Oversight & Accountability
Oversight for this contract would primarily reside with the contracting officers and program managers within the Department of the Army. Given the sole-source nature, there is a heightened need for rigorous oversight to ensure fair pricing and effective performance. Transparency is limited due to the lack of a competitive bidding process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Defense Engineering Services
- Aerospace Manufacturing Support
- Department of Defense Research and Development
- Sole-Source Defense Contracts
- Cost Plus Fixed Fee Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns (CPFF)
- Long contract duration
Tags
defense, department-of-defense, department-of-the-army, alabama, definitive-contract, not-competed, sole-source, cost-plus-fixed-fee, large-contractor, engineering-services, electronic-component-manufacturing
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $18.0 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 (Department of the Army).
What is the total obligated amount?
The obligated amount is $18.0 million.
What is the period of performance?
Start: 2006-12-19. End: 2012-03-31.
What specific engineering services were procured under this contract, and what were the key performance objectives?
The provided data indicates the contract was for 'ENGINEERING SERVICES' (d: 'ENGINEERING SERVICES') with the North American Industry Classification System (NAICS) code 334419, which pertains to 'Other Electronic Component Manufacturing'. However, the specific nature of the engineering tasks, deliverables, and performance objectives are not detailed in the summary data. Typically, such contracts could involve system design, integration, testing, analysis, or sustainment support for complex defense systems. Without further documentation, it's impossible to ascertain the precise scope or the key performance metrics that The Boeing Company was expected to meet.
How was the determination made that The Boeing Company was the sole source for these engineering services?
The determination for a sole-source award typically stems from specific justifications outlined in federal acquisition regulations. Common reasons include the existence of unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when only one responsible source can provide the required supply or service. For this contract, the 'NOT COMPETED' status suggests that the Department of the Army likely documented a justification, such as Boeing possessing unique intellectual property, specialized facilities, or essential knowledge of a particular defense system that no other contractor could replicate within the required timeframe or cost parameters.
What is the typical cost structure for Cost Plus Fixed Fee (CPFF) contracts in the defense sector, and how does it compare to this award?
Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure aims to provide cost control while allowing for flexibility in scope. In the defense sector, CPFF contracts are common for R&D or complex services where the final cost is difficult to estimate upfront. The 'fixed fee' component is negotiated at the outset and generally does not change unless the contract scope is formally modified. For this $18 million contract, the fixed fee would represent a portion of that total value, negotiated based on the anticipated effort and risk. Benchmarking requires comparing the negotiated fee percentage against industry standards for similar services and contract types.
What is the historical spending trend for engineering services by the Department of the Army, and how does this contract fit within that trend?
Historical spending data for engineering services by the Department of the Army is extensive and fluctuates based on defense priorities, modernization efforts, and specific program needs. While this specific $18 million contract represents a notable investment, it must be viewed within the context of the Army's overall annual budget, which runs into hundreds of billions of dollars. Contracts for engineering services are a recurring necessity for maintaining and advancing military capabilities. Without access to detailed historical spending reports specifically for 'engineering services' or NAICS code 334419 by the Army, it's difficult to definitively state how this single contract fits into the broader trend. However, sole-source awards of this magnitude warrant scrutiny to ensure they are exceptions rather than the norm for routine services.
What are the potential risks associated with a sole-source award of this duration (over 4 years) to a large contractor like Boeing?
A sole-source award of this duration carries several potential risks. Firstly, the lack of competition throughout the contract's life means there's no ongoing market pressure to ensure the government continues to receive the best value. Secondly, the extended period increases the risk of cost escalation if the contractor's actual costs exceed initial projections, even with a fixed fee, especially if oversight is lax. Thirdly, requirements may evolve over four years; managing scope changes effectively in a sole-source environment requires strong government oversight to prevent scope creep and ensure fair pricing for any modifications. Lastly, reliance on a single contractor for critical engineering services can create dependency and limit future flexibility if alternative solutions emerge.
Industry Classification
NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q06R0147
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 499 BOEING BLVD SW, HUNTSVILLE, AL, 35824
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $63,010,068
Exercised Options: $18,013,972
Current Obligation: $18,013,972
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2006-12-19
Current End Date: 2012-03-31
Potential End Date: 2012-03-31 00:00:00
Last Modified: 2020-02-13
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