Boeing awarded $55.6M for long lead materials for FCS, a contract competed on a sole-source basis

Contract Overview

Contract Amount: $55,586,022 ($55.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2008-03-21

End Date: 2010-07-31

Contract Duration: 862 days

Daily Burn Rate: $64.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: LONG LEAD MATERIALS FOR NLOS-C FOR FCS

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $55.6 million to THE BOEING COMPANY for work described as: LONG LEAD MATERIALS FOR NLOS-C FOR FCS Key points: 1. Contract awarded for long lead materials, indicating a focus on early-stage production needs. 2. Sole-source award suggests limited competition, potentially impacting price negotiation. 3. Contract duration of 862 days points to a significant, multi-year commitment. 4. The contract's value of $55.6M places it within a substantial spending category. 5. Awarded by the Department of the Army, aligning with defense procurement priorities. 6. The specific product code (PSC) and NAICS code (331315) relate to aluminum manufacturing, highlighting material sourcing.

Value Assessment

Rating: questionable

This contract's value of $55.6 million for long lead materials requires careful benchmarking against similar defense procurement actions. As a sole-source award, direct price comparisons are difficult. However, the 'Cost No Fee' (Cost Plus Fixed Fee) contract type can sometimes lead to higher costs if not managed rigorously, as the contractor is reimbursed for all allowable costs plus a fixed fee. Without more data on the specific materials and quantities, a definitive value-for-money assessment is challenging, but the lack of competition raises concerns.

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 is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where full and open competition is not feasible. The lack of competition means that taxpayers did not benefit from potential price reductions that could arise from multiple bidders vying for the contract.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competitive pressures to secure the best possible pricing, potentially leading to higher costs for taxpayers.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Army, in its pursuit of the Future Combat Systems (FCS) program. The contract delivers essential long lead materials, crucial for the timely production of advanced military hardware. The geographic impact is centered in Missouri (MO), where the contract is being performed. Workforce implications may include specialized manufacturing roles related to aluminum production and defense systems integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Cost-plus contract type can incentivize cost overruns if not closely monitored.
Lack of transparency in the sole-source justification requires scrutiny.
The 'long lead materials' nature suggests potential for schedule delays if not managed effectively.

Positive Signals

Award to a major defense contractor like Boeing suggests access to established supply chains and manufacturing expertise.
The contract supports a significant, albeit complex, defense modernization program (FCS).
Clear performance period (March 2008 - July 2010) provides a defined timeframe for delivery.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on the production of critical components for advanced military systems. The NAICS code 331315 indicates a focus on aluminum sheet, plate, and foil manufacturing, a foundational industry for many complex manufactured goods. The overall market for defense-related materials is substantial, driven by government procurement budgets. This contract represents a specific investment within the broader Future Combat Systems (FCS) program, which aimed to revolutionize Army ground warfare capabilities.

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 firm. There is no explicit information provided regarding subcontracting plans to small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless Boeing actively engages small businesses in its supply chain for these long lead materials.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the 'Cost No Fee' structure, rigorous financial oversight is crucial to ensure that costs are allowable and reasonable. Transparency is limited due to the sole-source nature of the award. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Future Combat Systems (FCS)
Department of the Army Procurement
Defense Manufacturing Contracts
Long Lead Time Material Procurement

Risk Flags

Sole-source award
Cost-reimbursement contract type
Programmatic uncertainty (FCS cancellation)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.6 million to THE BOEING COMPANY. LONG LEAD MATERIALS FOR NLOS-C FOR FCS

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 $55.6 million.

What is the period of performance?

Start: 2008-03-21. End: 2010-07-31.

What specific 'long lead materials' were procured under this contract, and what is their criticality to the FCS program?

The contract specifies 'LONG LEAD MATERIALS FOR NLOS-C FOR FCS'. NLOS-C stands for Non-Line-of-Sight Cannon, a component of the Future Combat Systems (FCS) program. Long lead materials are those components or raw materials that require a significant amount of time to procure or manufacture, often necessitating ordering them well in advance of the main production run to avoid schedule delays. For the NLOS-C, these materials likely included specialized aluminum alloys (as indicated by NAICS 331315) for the vehicle's chassis and components, advanced composites, or specific electronic sub-assemblies. Their criticality lies in ensuring that the production schedule for the NLOS-C vehicle could be met without bottlenecks caused by the unavailability of these essential, time-consuming-to-acquire items. The $55.6 million award suggests a substantial quantity or high-value nature of these materials.

How does the 'Cost No Fee' (Cost Plus Fixed Fee) contract type typically affect contractor performance and cost control compared to other contract types?

A Cost Plus Fixed Fee (CPFF) contract, often abbreviated as 'Cost No Fee' in some contexts though technically distinct, is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs incurred, plus a fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves significant uncertainty, making it difficult to estimate costs accurately upfront. For the contractor, it offers a reduced financial risk as costs are covered, and the profit is guaranteed. However, for the government, it presents a risk of cost overruns, as the contractor has less incentive to control costs once the fee is fixed. Effective oversight, detailed cost accounting, and clear performance metrics are crucial for managing CPFF contracts to ensure value for money and prevent excessive spending. In this specific case, the 'Cost No Fee' designation might imply that the fee itself is minimal or zero, focusing solely on cost reimbursement, which would further reduce contractor profit incentive but still requires diligent oversight of expenditures.

What is the historical spending trend for long lead materials for the FCS program or similar defense initiatives?

Historical spending on long lead materials for major defense programs like the Future Combat Systems (FCS) can be substantial and often represents a significant portion of the overall program budget. FCS, in particular, was a highly ambitious and complex program that underwent numerous reconfigurations and faced budget challenges. Spending on long lead items would have been concentrated in the earlier phases of development and initial production planning. For instance, programs like the Abrams tank or the Bradley Fighting Vehicle also required significant upfront investment in long lead materials for their respective chassis, armor, and weapon systems. Analyzing historical data for similar large-scale platform developments reveals that procurement of specialized alloys, advanced electronics, and long-lead-time components can account for 10-20% or more of the total acquisition cost, especially in the initial phases. The $55.6 million awarded to Boeing for NLOS-C long lead materials aligns with the expected scale of investment for such critical components within a major system development effort.

What are the implications of awarding this contract solely to The Boeing Company for the future development and production of the NLOS-C or related FCS components?

Awarding this contract solely to The Boeing Company, as a sole-source action, has several implications. Firstly, it consolidates expertise and production capabilities for these specific long lead materials within Boeing, potentially leading to efficiencies if Boeing is the sole or primary developer/integrator of the NLOS-C. Secondly, it reduces the immediate competitive pressure on pricing, which could mean the government paid a premium compared to a fully competed scenario. Thirdly, it creates a dependency on Boeing for these critical materials, which could pose a risk if Boeing faces production issues, financial instability, or strategic shifts. For future developments, this sole-source award might set a precedent, making it harder to introduce alternative suppliers or technologies later in the program lifecycle without significant re-competition efforts or justification. It also means that the government's leverage in negotiating future contracts related to the NLOS-C might be diminished.

Given the contract's end date of July 2010, what was the ultimate status or outcome of the NLOS-C component of the FCS program?

The Future Combat Systems (FCS) program, including the NLOS-C (Non-Line-of-Sight Cannon), underwent significant restructuring and eventual cancellation by the Department of Defense. The program faced escalating costs, technical challenges, and shifting strategic priorities. By 2009-2010, the program was already under intense scrutiny, leading to a major review. In 2011, the Obama administration officially canceled the FCS program in its original form. While some technologies and concepts developed under FCS were intended to be incorporated into other programs, the specific NLOS-C vehicle as envisioned within FCS did not proceed to full-scale production or fielding under that program's banner. Therefore, this contract for long lead materials, ending in July 2010, was part of an initiative that was ultimately discontinued, meaning the materials procured may not have been used for their originally intended purpose in the fielded NLOS-C system.

Industry Classification

NAICS: Manufacturing › Alumina and Aluminum Production and Processing › Aluminum Sheet, Plate, and Foil Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV07R0769

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $55,586,022

Exercised Options: $55,586,022

Current Obligation: $55,586,022

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline