Boeing Awarded $200M for Systems Engineering Services, Facing Potential Cost Overruns
Contract Overview
Contract Amount: $2,003,775,685 ($2.0B)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2002-06-24
End Date: 2013-03-31
Contract Duration: 3,933 days
Daily Burn Rate: $509.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: 200209!003576!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0702CC403 !A!N! !N! !20020624!20080131!008369050!008369050!009256819!N!THE BOEING COMPANY !3370 E MIRALOMA AVE !ANAHEIM !CA!92806!02000!059!06!ANAHEIM !ORANGE !CALIFORNIA!+000073666000!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION !1000!NOT DISCERNABLE OR CLASSIFIED !334220!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!R!2!002!B! !Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001!
Place of Performance
Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647
Plain-Language Summary
Department of Defense obligated $2.00 billion to THE BOEING COMPANY for work described as: 200209!003576!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0702CC403 !A!N! !N! !20020624!20080131!008369050!008369050!009256819!N!THE BOEING COMPANY !3370 E MIRALOMA AVE !ANAHEIM !CA!92806!02000!059!06!ANAHEIM !ORANG… Key points: 1. The contract is for systems engineering services related to electronics and communication. 2. Awarded to The Boeing Company, a major defense contractor. 3. Potential for cost overruns exists due to the Cost Plus Award Fee contract type. 4. The sector is Defense, specifically within electronics and communication equipment manufacturing.
Value Assessment
Rating: questionable
The contract value is substantial at over $200 million. However, the Cost Plus Award Fee (CPA) structure introduces uncertainty in the final cost, making a direct pricing assessment difficult without performance data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the Cost Plus Award Fee structure may incentivize higher spending to achieve award fees.
Taxpayer Impact: While competition was present, the CPA structure could lead to higher than anticipated costs for taxpayers if not managed effectively.
Public Impact
Significant taxpayer funds allocated for advanced defense systems engineering. Potential impact on national security capabilities depending on the effectiveness of the services. The large contract value could influence market dynamics for specialized engineering services.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure can lead to cost overruns.
- Long contract duration (over 10 years) increases risk exposure.
- Lack of specific performance metrics makes oversight challenging.
Positive Signals
- Awarded through full and open competition.
- Experienced contractor (Boeing) likely to deliver quality services.
Sector Analysis
This contract falls within the Defense sector, specifically supporting electronics and communication systems. The NAICS code 334220 indicates manufacturing of radio and television broadcasting and wireless communications equipment, suggesting a focus on advanced technological components.
Small Business Impact
No specific information is provided regarding small business participation in this contract. The award went to a large prime contractor, The Boeing Company.
Oversight & Accountability
The contract's long duration and Cost Plus Award Fee structure necessitate robust oversight from the Defense Contract Management Agency to ensure cost control and effective performance.
Related Government Programs
- Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Cost Overruns
- Contract Scope Creep
- Technological Obsolescence
- Lack of Transparency due to Classification
Tags
radio-and-television-broadcasting-and-wi, department-of-defense, ca, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.00 billion to THE BOEING COMPANY. 200209!003576!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0702CC403 !A!N! !N! !20020624!20080131!008369050!008369050!009256819!N!THE BOEING COMPANY !3370 E MIRALOMA AVE !ANAHEIM !CA!92806!02000!059!06!ANAHEIM !ORANGE !CALIFORNIA!+000073666000!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION !1000!NOT DISCERNABLE OR CLASSIFIED !334220!E! !3! ! ! ! ! !99990909!B
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 Contract Management Agency).
What is the total obligated amount?
The obligated amount is $2.00 billion.
What is the period of performance?
Start: 2002-06-24. End: 2013-03-31.
What specific systems engineering services are being provided, and how do they align with current defense needs?
The contract specifies 'SYSTEMS ENGINEERING SERVICES' for 'ELECTRONICS AND COMMUNICATION'. While the exact nature is classified, it likely involves the design, integration, testing, and lifecycle support of complex electronic and communication systems critical for defense operations. This could range from satellite communications to tactical radio networks, ensuring interoperability and advanced capabilities.
How will the Cost Plus Award Fee structure be managed to prevent excessive costs and ensure value for money?
Effective management of the CPA structure requires clear, measurable performance objectives and rigorous oversight. The Defense Contract Management Agency must establish well-defined award fee criteria tied to mission success and cost efficiency. Regular audits and performance reviews are crucial to ensure that award fees are earned based on demonstrable value, not just effort, thereby controlling taxpayer expenditure.
What are the potential risks associated with the long contract duration and the classified nature of the services?
The extended duration (over 10 years) increases the risk of technological obsolescence, shifting defense priorities, and potential cost escalation due to inflation or unforeseen challenges. The classified nature of the services, while necessary for national security, can also hinder transparency and make it more difficult for external stakeholders to assess the contract's effectiveness and value for money.
Industry Classification
NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 3370 E MIRALOMA AVE, ANAHEIM, CA, 92806
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2002-06-24
Current End Date: 2013-03-31
Potential End Date: 2013-03-31 00:00:00
Last Modified: 2018-01-17
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