DoD's $68.3M Scan Eagle ISR contract awarded to Boeing shows a high unit cost for aircraft manufacturing

Contract Overview

Contract Amount: $68,306,622 ($68.3M)

Contractor: THE Boeing Company (0674)

Awarding Agency: Department of Defense

Start Date: 2010-12-31

End Date: 2011-12-31

Contract Duration: 365 days

Daily Burn Rate: $187.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: [PIIN: M67854-07-D-2052-0019] SCAN EAGLE ISR

Plain-Language Summary

Department of Defense obligated $68.3 million to THE BOEING COMPANY (0674) for work described as: [PIIN: M67854-07-D-2052-0019] SCAN EAGLE ISR Key points: 1. The contract's value of $68.3 million for a single year of service suggests a significant investment in intelligence, surveillance, and reconnaissance capabilities. 2. Awarded to a major defense contractor, Boeing, this contract highlights the concentration of large-scale ISR services within established industry players. 3. The firm-fixed-price contract type indicates that the government has a clear understanding of the costs involved, transferring most of the risk to the contractor. 4. The duration of the contract (365 days) and the delivery order nature suggest a specific, time-bound operational requirement for the Scan Eagle system. 5. The absence of small business set-asides points to a focus on specialized capabilities likely requiring extensive experience and resources. 6. The North American Industry Classification System (NAICS) code 336411 for Aircraft Manufacturing is relevant, though the service provided is ISR, indicating the manufacturing aspect of the platform.

Value Assessment

Rating: fair

The total award of $68.3 million for a 365-day contract period for Scan Eagle ISR services appears high when considering the unit cost. While specific performance metrics and the exact number of aircraft or operational hours are not detailed, the benchmark for similar ISR platforms can vary significantly. Without more granular data on the scope of services, it is difficult to definitively assess value for money, but the raw expenditure warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The fact that it resulted in a single delivery order suggests that while the initial competition was broad, the specific requirements may have led to a focused selection process. The presence of multiple bidders in the initial phase is generally positive for price discovery.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages a wider range of offers, potentially leading to more competitive pricing and better value.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Army, receiving enhanced intelligence, surveillance, and reconnaissance capabilities. The services delivered include the operation and support of the Scan Eagle Unmanned Aerial System (UAS) for intelligence gathering. The geographic impact is likely focused on operational theaters where the Army is deployed, providing real-time battlefield awareness. Workforce implications include the employment of pilots, sensor operators, maintenance personnel, and support staff for the Scan Eagle system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High unit cost for ISR services may indicate potential for cost efficiencies.
Limited public data on specific performance metrics makes it challenging to fully assess effectiveness.
Reliance on a single contractor for a critical ISR capability could pose a risk if performance falters.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Firm-fixed-price contract type provides cost certainty for the government.
The Scan Eagle system is a proven ISR platform with established operational history.

Sector Analysis

The defense sector, particularly the segment focused on intelligence, surveillance, and reconnaissance (ISR) platforms, is characterized by high technological sophistication and significant government investment. The market includes a range of unmanned aerial systems (UAS) and manned aircraft providing similar capabilities. Spending in this area is driven by evolving geopolitical landscapes and the need for persistent battlefield awareness. Comparable spending benchmarks would typically involve analyzing other UAS contracts or manned ISR platform procurements within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. The prime contractor, The Boeing Company, is a large aerospace corporation. There is no explicit information provided regarding subcontracting plans or performance related to small businesses for this specific contract. The focus on a large, established prime contractor suggests that the primary contract is unlikely to directly benefit small businesses through set-asides, though they may participate as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures. Accountability measures are inherent in the firm-fixed-price contract type, which holds the contractor responsible for delivering the specified services within the agreed-upon cost. Transparency is facilitated through contract award databases, though detailed operational performance data may be classified or limited. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Intelligence, Surveillance, and Reconnaissance (ISR) Services
Unmanned Aerial Systems (UAS) Procurement
Department of the Army Aircraft Procurement
Defense Contract Management Agency (DCMA) Oversight

Risk Flags

High Total Contract Value for Single Year
Potential for Cost Overruns if Contractor Performance is Inefficient (though FFP mitigates government risk)
Limited Public Data on Specific Performance Metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.3 million to THE BOEING COMPANY (0674). [PIIN: M67854-07-D-2052-0019] SCAN EAGLE ISR

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY (0674).

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $68.3 million.

What is the period of performance?

Start: 2010-12-31. End: 2011-12-31.

What is the historical spending trend for Scan Eagle ISR services by the Department of the Army?

Analyzing historical spending for Scan Eagle ISR services by the Department of the Army requires accessing detailed contract databases over multiple fiscal years. Without specific historical data for this PIIN (M67854-07-D-2052-0019) or related contracts for the Scan Eagle system, a precise trend cannot be established. However, generally, ISR capabilities have seen consistent or increasing investment within the DoD due to their critical role in modern warfare. Factors influencing spending include operational tempo, technological advancements, and strategic priorities. A comprehensive review would involve aggregating data from similar contracts awarded to Boeing or other Scan Eagle providers over time to identify patterns of increased, decreased, or stable investment.

How does the unit cost of the Scan Eagle ISR platform in this contract compare to similar unmanned aerial systems?

Benchmarking the unit cost of the Scan Eagle ISR platform in this $68.3 million contract against similar unmanned aerial systems (UAS) is challenging without specific details on the number of aircraft, operational hours, or support provided. The Scan Eagle is a relatively small, tactical UAS. However, the total contract value for a one-year period suggests a significant operational deployment. Comparable systems range from small, hand-launched drones to larger, more sophisticated platforms like the Predator or Reaper. The cost per flight hour or per system can vary dramatically based on size, payload, endurance, and mission complexity. Given the contract's total value, the implied cost per unit or per operational day appears substantial, warranting comparison with other tactical ISR UAS providers to ascertain if it represents a competitive market rate.

What is Boeing's track record with Department of Defense ISR contracts, particularly involving unmanned systems?

The Boeing Company has a long and extensive track record with the Department of Defense (DoD) across a wide spectrum of defense programs, including significant involvement in Intelligence, Surveillance, and Reconnaissance (ISR) capabilities and unmanned systems. Boeing is a major aerospace manufacturer and defense contractor, known for producing a variety of aircraft, including those designed for ISR missions. Their portfolio includes both manned and unmanned platforms. For unmanned systems, Boeing has been involved in developing, manufacturing, and supporting various UAS, such as the aforementioned Scan Eagle (through its Insitu subsidiary), the Phantom Ray, and others. Their history with the DoD demonstrates a capacity to handle large, complex contracts, often involving advanced technologies and long-term support, making them a frequent recipient of significant ISR-related awards.

What are the primary risks associated with a firm-fixed-price contract for ISR services like the Scan Eagle?

The primary risks associated with a firm-fixed-price (FFP) contract for ISR services, such as the Scan Eagle contract, are largely shifted to the contractor, The Boeing Company. For the government, the main risk is that the contractor may cut corners on quality or performance to maintain profitability if unforeseen cost increases arise, although the FFP structure aims to prevent this by fixing the price. The contractor bears the risk of cost overruns due to poor performance, inefficient execution, or unexpected material/labor cost increases. If the contractor cannot deliver the required services within the fixed price, they may incur losses. For the government, a less direct risk is that the contractor might be less flexible in accommodating minor scope changes or additional requirements without formal contract modifications and associated costs, potentially impacting responsiveness to evolving operational needs.

How does the competition level (full and open) typically influence the pricing and innovation for ISR contracts?

A 'full and open' competition level for ISR contracts generally fosters a more competitive environment, which can positively influence both pricing and innovation. When multiple bidders, including established players and potentially newer entrants, are vying for a contract, they are incentivized to offer the most competitive pricing to win the award. This price pressure can lead to greater value for the government. Furthermore, a broad competition encourages bidders to showcase their most advanced technologies and innovative solutions to differentiate themselves. Companies are motivated to invest in research and development to offer superior capabilities or more cost-effective approaches. This dynamic can lead to the government securing cutting-edge ISR technology at potentially lower costs than if the contract were awarded through a less competitive process like sole-source or limited competition.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company (UEI: 009256819)

Address: 6200 J S MCDONNELL BLVD, SAINT LOUIS, MO, 63134

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $68,306,622

Exercised Options: $68,306,622

Current Obligation: $68,306,622

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785407D2052

IDV Type: IDC

Timeline