Boeing awarded $104M for Missile Defense Systems Engineering & Integration, raising value-for-money questions
Contract Overview
Contract Amount: $104,236,465 ($104.2M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2013-11-29
End Date: 2015-12-01
Contract Duration: 732 days
Daily Burn Rate: $142.4K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS AWARD FEE
Sector: R&D
Official Description: IGF::OT::IGF THE TASKING OF MET-I CORE [MDA/DE] SYSTEMS ENGINEERING&INTEGRATION (SE&I) REQUIREMENTS ASSOCIATED WITH THE BMDS.
Place of Performance
Location: HUNTSVILLE, MADISON County, ALABAMA, 35824
State: Alabama Government Spending
Plain-Language Summary
Department of Defense obligated $104.2 million to THE BOEING COMPANY for work described as: IGF::OT::IGF THE TASKING OF MET-I CORE [MDA/DE] SYSTEMS ENGINEERING&INTEGRATION (SE&I) REQUIREMENTS ASSOCIATED WITH THE BMDS. Key points: 1. Contract awarded on a Cost Plus Award Fee basis, which can incentivize cost overruns. 2. Sole-source award limits price discovery and potentially increases costs for taxpayers. 3. Duration of 732 days for a task order suggests a significant scope of work. 4. Contractor, The Boeing Company, has a substantial presence in the aerospace and defense sector. 5. The tasking is for critical systems engineering and integration for the Ballistic Missile Defense System (BMDS). 6. No small business set-aside was indicated, suggesting limited opportunities for smaller firms in this specific award.
Value Assessment
Rating: questionable
The contract's Cost Plus Award Fee structure, while common in R&D, can lead to higher final costs compared to fixed-price contracts. Benchmarking the value-for-money is difficult without detailed cost breakdowns and comparison to similar SE&I contracts. The lack of competition further complicates a direct value assessment, as the government did not leverage market forces to secure the best possible price. The award amount of over $104 million for a two-year period warrants scrutiny regarding efficiency and cost control.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was solicited. This approach is typically used when a unique capability is required or when only one source can fulfill the requirement. The lack of competition means there was no opportunity for other qualified contractors to bid, potentially leading to a higher price than if multiple bids were received. This limits the government's ability to negotiate based on competitive offers.
Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's leverage in price negotiations.
Public Impact
The primary beneficiary is the Missile Defense Agency (MDA) and the Department of Defense, receiving critical systems engineering and integration support for the BMDS. Services delivered include technical expertise for the development, testing, and sustainment of complex missile defense systems. The geographic impact is national, supporting a critical defense infrastructure, though the contractor's primary operations may be concentrated in specific locations. Workforce implications include the employment of highly skilled engineers and technical specialists within The Boeing Company.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure may incentivize higher costs.
- Sole-source award limits competitive pricing and potential savings.
- Lack of transparency in detailed cost breakdowns makes value assessment challenging.
- Potential for scope creep in complex R&D projects without stringent oversight.
Positive Signals
- Awarded to a major defense contractor with extensive experience in aerospace and systems integration.
- Supports a critical national security program (BMDS).
- Task order is for essential systems engineering and integration functions.
- Contract duration aligns with the complexity of SE&I for advanced defense systems.
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on engineering and integration services for complex defense systems. The market for missile defense technology and associated systems engineering is highly specialized, dominated by a few large aerospace and defense contractors. Spending in this area is driven by national security priorities and technological advancements in threat detection and interception. Comparable spending benchmarks would likely be within the broader defense R&D and systems integration categories, often involving multi-billion dollar programs.
Small Business Impact
This contract does not appear to have a small business set-aside component. As a sole-source award to a large prime contractor, it is unlikely to involve significant subcontracting opportunities specifically designated for small businesses, unless Boeing voluntarily includes them in its subcontracting plan. The focus on specialized systems engineering for a major defense program typically involves large, established companies.
Oversight & Accountability
Oversight for this contract would primarily fall under the Missile Defense Agency and the Department of Defense's contracting and program management offices. The Cost Plus Award Fee structure necessitates robust oversight to ensure costs are reasonable and that performance targets are met to earn award fees. Transparency may be limited due to the sole-source nature and the proprietary aspects of defense R&D. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.
Related Government Programs
- Missile Defense Systems
- Ballistic Missile Defense System (BMDS)
- Systems Engineering and Integration Contracts
- Aerospace and Defense R&D
- Department of Defense Research Contracts
Risk Flags
- Sole-source award raises concerns about competition and potential cost inflation.
- Cost Plus Award Fee structure requires diligent oversight to manage costs effectively.
- Complexity of BMDS SE&I necessitates robust program management and technical expertise.
- Potential for contractor lock-in due to specialized nature of the work.
Tags
defense, missile-defense, systems-engineering, integration, research-and-development, cost-plus-award-fee, sole-source, department-of-defense, missile-defense-agency, alabama, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $104.2 million to THE BOEING COMPANY. IGF::OT::IGF THE TASKING OF MET-I CORE [MDA/DE] SYSTEMS ENGINEERING&INTEGRATION (SE&I) REQUIREMENTS ASSOCIATED WITH THE BMDS.
Who is the contractor on this award?
The obligated recipient is THE BOEING COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Missile Defense Agency).
What is the total obligated amount?
The obligated amount is $104.2 million.
What is the period of performance?
Start: 2013-11-29. End: 2015-12-01.
What is the track record of The Boeing Company in delivering similar systems engineering and integration services for complex defense programs?
The Boeing Company has a long and extensive track record in delivering complex systems engineering and integration (SE&I) services for major defense programs, including significant contributions to various aspects of the U.S. missile defense architecture. Their experience spans decades and encompasses a wide range of platforms and technologies. For instance, Boeing has been a key player in developing and integrating components for the Ground-based Midcourse Defense (GMD) system, the Aegis Ballistic Missile Defense (BMD) system, and various sensor and communication technologies. Their expertise often involves managing intricate supply chains, ensuring interoperability between diverse systems, and providing lifecycle support. While their overall performance is generally considered strong, like any large contractor, they have faced scrutiny on specific projects regarding cost, schedule, and technical challenges. However, their deep institutional knowledge and established relationships within the defense sector position them as a go-to contractor for critical SE&I requirements.
How does the Cost Plus Award Fee (CPAF) pricing structure compare to other contract types for R&D services, and what are its implications for value?
The Cost Plus Award Fee (CPAF) structure is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs plus a fee that is composed of a fixed base fee and an award amount. The award amount is contingent upon the contractor meeting or exceeding certain performance objectives established by the government. Compared to fixed-price contracts, CPAF offers greater flexibility for the government in R&D projects where the scope and technical challenges are uncertain, allowing for adjustments as the project evolves. However, it can lead to higher overall costs than fixed-price contracts because the government bears the cost risk. The 'award' component aims to incentivize performance, but it can also lead to contractors focusing on achieving award criteria rather than optimizing cost efficiency if not carefully managed. For taxpayers, CPAF can represent a higher risk of cost overruns if performance metrics are not rigorously defined and monitored, potentially yielding less value for money compared to well-defined fixed-price contracts.
What are the primary risks associated with a sole-source award for critical defense systems engineering, and how are they typically mitigated?
The primary risks associated with a sole-source award for critical defense systems engineering include a lack of competitive pricing, which can lead to higher costs for the government and taxpayers. There's also a reduced incentive for the contractor to innovate or improve efficiency beyond what is minimally required to meet contract terms, as there is no direct competition. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future. Mitigation strategies typically involve robust government oversight, including detailed cost analysis, performance monitoring, and stringent contract management. The government may also conduct market research to ensure a sole-source justification is valid and explore options for future competition or breaking down the requirement into smaller, more competitive segments. Strong negotiation skills by the contracting team are also crucial to secure the best possible terms and pricing under sole-source conditions.
What is the typical duration and funding level for similar Missile Defense Agency (MDA) systems engineering and integration contracts?
The duration and funding levels for MDA systems engineering and integration (SE&I) contracts can vary significantly based on the specific program phase, system complexity, and technological maturity. Contracts for SE&I can range from short-term task orders supporting specific testing events to multi-year, multi-billion dollar prime contracts for overall system development and sustainment. Task orders like the one awarded to Boeing, with a duration of 732 days (approximately two years) and an award value of $104 million, are indicative of significant, focused efforts within a larger program. Longer-term, comprehensive SE&I contracts for major MDA programs, such as the Ballistic Missile Defense System (BMDS) itself, often span many years and involve hundreds of millions, if not billions, of dollars in total contract value, spread across multiple contract vehicles and task orders awarded to various prime contractors.
What are the potential implications of this contract on the broader Ballistic Missile Defense System (BMDS) program's effectiveness and future development?
This contract, focusing on systems engineering and integration (SE&I) for the BMDS, is critical for the program's overall effectiveness and future development. SE&I ensures that the various complex components of the BMDS – including sensors, interceptors, command and control systems, and communication networks – work together seamlessly. Effective SE&I is vital for maintaining the system's reliability, enhancing its capabilities against evolving threats, and ensuring interoperability. By providing essential technical expertise, this contract helps to manage the complexity inherent in such a large and sophisticated defense system. Its successful execution contributes directly to the BMDS's ability to detect, track, and intercept ballistic missiles, thereby bolstering national security. The insights gained and integration achieved through this task order will likely inform future upgrades, modifications, and the development of next-generation missile defense capabilities.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 499 BOEING BLVD SW, HUNTSVILLE, AL, 35824
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: $109,637,693
Exercised Options: $109,637,693
Current Obligation: $104,236,465
Subaward Activity
Number of Subawards: 108
Total Subaward Amount: $53,775,925
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HQ014714D0001
IDV Type: IDC
Timeline
Start Date: 2013-11-29
Current End Date: 2015-12-01
Potential End Date: 2015-12-01 00:00:00
Last Modified: 2021-04-19
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