DoD's $840M Boeing contract for wireless communications equipment shows fair value with 2 bidders

Contract Overview

Contract Amount: $839,534,271 ($839.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2001-01-02

End Date: 2012-12-31

Contract Duration: 4,381 days

Daily Burn Rate: $191.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $839.5 million to THE BOEING COMPANY for work described as: Key points: 1. Contract value appears reasonable given the scope and duration. 2. Competition was robust, suggesting fair pricing was achieved. 3. No immediate red flags regarding contractor performance or risk. 4. This contract supported critical defense communications infrastructure. 5. The sector involves specialized manufacturing for defense applications.

Value Assessment

Rating: good

The contract's total value of approximately $840 million over 12 years suggests a significant investment in wireless communications equipment. Benchmarking against similar large-scale defense procurements indicates that the per-year spending aligns with industry norms for complex systems. The firm-fixed-price structure likely provided cost certainty for the government, although it may have limited flexibility for scope changes. Without specific unit cost data, a precise value-for-money assessment is challenging, but the overall scale and duration point to a substantial, albeit necessary, expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of two bidders suggests a competitive environment, though not as broad as might be seen in less specialized markets. The competition level is adequate for this type of defense-specific equipment, likely driving reasonable pricing. The government's ability to select from multiple offers is a positive indicator of market responsiveness.

Taxpayer Impact: A competitive bidding process for this contract helps ensure that taxpayer funds are used efficiently by preventing inflated prices and encouraging cost-effective solutions.

Public Impact

The Department of Defense benefits from advanced wireless communications capabilities essential for national security operations. This contract ensures the availability of critical equipment for military communication networks. The geographic impact is national, supporting defense installations across the country. The contract likely supported a specialized workforce within the aerospace and defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded under full and open competition.
Firm-fixed-price contract type provides cost certainty.
Long-term duration suggests a strategic investment in capabilities.

Sector Analysis

The wireless communications equipment sector is a vital component of the broader aerospace and defense industry. This contract falls within the manufacturing of specialized electronic equipment, a market characterized by high technological barriers to entry and significant government procurement. Spending in this area is driven by the need for secure, reliable, and advanced communication systems for military operations. Comparable spending benchmarks would typically involve multi-year procurements for complex electronic systems, often in the hundreds of millions to billions of dollars.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, as indicated by 'sb: false'. The prime contractor, The Boeing Company, is a large aerospace firm. While large prime contracts can sometimes lead to subcontracting opportunities for small businesses, there is no explicit information here to confirm or deny that impact. Further analysis would be needed to determine the extent of small business participation through subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The firm-fixed-price nature of the award provides a degree of accountability by fixing the cost. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Communications Systems
Aerospace Manufacturing
Wireless Technology Procurement
Military Electronics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $839.5 million to THE BOEING COMPANY. See the official description on USAspending.

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 Air Force).

What is the total obligated amount?

The obligated amount is $839.5 million.

What is the period of performance?

Start: 2001-01-02. End: 2012-12-31.

What is the historical spending trend for similar wireless communications equipment contracts by the Department of Defense?

Analyzing historical spending trends for similar wireless communications equipment contracts by the Department of Defense reveals a consistent and significant investment in this area. Over the past decade, the DoD has awarded numerous contracts for advanced communication systems, ranging from tactical radios to satellite communication terminals. These procurements are often characterized by long-term durations and substantial dollar values, reflecting the complex technological requirements and the strategic importance of robust communication networks. Spending patterns are influenced by evolving threats, technological advancements, and modernization initiatives. For instance, the shift towards more secure, software-defined radios and resilient network architectures has driven recent procurement strategies. While specific figures vary by contract and technology, the overall trend indicates a sustained commitment to maintaining and upgrading the DoD's wireless communication capabilities, with annual spending often in the billions across various programs.

How does the per-unit cost of the equipment procured under this contract compare to commercial off-the-shelf (COTS) alternatives?

Comparing the per-unit cost of equipment procured under this contract to Commercial Off-the-Shelf (COTS) alternatives is complex without specific unit cost data. Defense-specific wireless communications equipment often incorporates enhanced security features, ruggedization for harsh environments, specialized interoperability protocols, and extended lifecycle support requirements that are not typically found in COTS products. These added features and services contribute to a higher per-unit cost. While COTS equipment might offer a lower initial price point, it may not meet the stringent performance, security, or reliability standards required by the Department of Defense. Therefore, a direct cost comparison can be misleading. The value proposition for this contract likely lies in the specialized capabilities and assured performance tailored to military needs, rather than a simple price-per-unit metric against commercial equivalents.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Key Performance Indicators (KPIs) for a contract of this nature, involving the supply of wireless communications equipment, would typically focus on ensuring the delivered systems meet stringent military requirements. These KPIs often include reliability metrics, such as Mean Time Between Failures (MTBF), ensuring the equipment operates consistently in demanding conditions. Availability and uptime are critical, measured by the percentage of time the systems are operational and accessible. Performance metrics related to signal integrity, data throughput, and communication range are also vital. Furthermore, adherence to delivery schedules and successful integration into existing military networks are crucial KPIs. Security compliance, ensuring the equipment meets all relevant cybersecurity standards and protocols, is paramount. Finally, contractor responsiveness to technical issues and support requests would also be monitored.

What is the track record of The Boeing Company in delivering similar complex communication systems to the DoD?

The Boeing Company has a long and extensive track record of delivering complex systems, including communication and electronic warfare capabilities, to the Department of Defense. As a major aerospace and defense contractor, Boeing has been involved in numerous large-scale programs that require sophisticated communication technologies. Their experience spans aircraft communication systems, satellite communications, and integrated network solutions. While specific performance details for every contract are not publicly available, Boeing is generally recognized for its technical expertise and program management capabilities in delivering high-value, complex defense systems. Past performance reviews and contract awards from the DoD often reflect Boeing's capacity to handle challenging procurements, though like any large contractor, they may have faced specific program challenges or delays on certain projects. Their established presence and history with the DoD suggest a significant level of experience relevant to this contract.

What are the potential risks associated with relying on a single prime contractor for such a critical capability over a long period?

Relying on a single prime contractor, even one as established as Boeing, for a critical capability like wireless communications equipment over an extended period presents several potential risks. One primary risk is vendor lock-in, where the government becomes heavily dependent on the contractor's technology and support, making it difficult and costly to switch providers or adopt alternative solutions. This dependency can reduce the government's leverage in future negotiations. Another risk is complacency; the contractor might face less pressure to innovate or maintain competitive pricing once a long-term relationship is established. Furthermore, unforeseen financial difficulties or strategic shifts within the contractor's organization could jeopardize the long-term supply and support of the equipment. Finally, a single point of failure in terms of technical issues or supply chain disruptions could have a significant impact on national security operations.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: SPACE VEHICLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: F0470199R0065

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 900 N SEPULVEDA BLVD, EL SEGUNDO, CA, 36

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $199,258,293

Exercised Options: $199,258,293

Current Obligation: $839,534,271

Contract Characteristics

Cost or Pricing Data: NO

Timeline