DoD's $414M R&D contract with Boeing for physical sciences research shows long duration and cost-plus structure

Contract Overview

Contract Amount: $414,307,954 ($414.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2005-09-28

End Date: 2017-09-13

Contract Duration: 4,368 days

Daily Burn Rate: $94.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: INCREMENTAL FUNDING

Place of Performance

Location: ALBUQUERQUE, BERNALILLO County, NEW MEXICO, 87109

State: New Mexico Government Spending

Plain-Language Summary

Department of Defense obligated $414.3 million to THE BOEING COMPANY for work described as: INCREMENTAL FUNDING Key points: 1. The contract's cost-plus fixed fee (CPFF) structure, while allowing flexibility for R&D, can lead to cost overruns if not closely managed. 2. The extended period of performance (over 11 years) suggests a complex or evolving research scope, potentially impacting final cost and value. 3. With a single award, the initial competition dynamics are less transparent, raising questions about optimal price discovery. 4. The absence of small business set-asides indicates the primary contractor likely handled the bulk of the work, with limited subcontracting opportunities for smaller firms. 5. Performance context is limited without specific milestones or deliverables, making it difficult to assess the R&D's tangible outcomes. 6. The contract's focus on 'Research and Development in the Physical, Engineering, and Life Sciences' places it within a critical but often unpredictable sector.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging due to its specialized nature and long duration. The CPFF pricing model inherently carries risk for the government, as costs can escalate. Without detailed performance metrics or comparison to similar R&D efforts, it's difficult to definitively assess if the $414 million represents excellent value. The extended performance period suggests significant investment, but the return on that investment in terms of research outcomes is not immediately apparent from the data provided.

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. However, the data shows only one award was made to The Boeing Company. The specifics of the competition, such as the number of proposals received and the evaluation criteria, are not detailed. A single award following open competition suggests Boeing was deemed the most qualified or best value offeror, but it limits the direct price comparison that multiple competing bids would provide.

Taxpayer Impact: While open competition aims for best value, a single award means taxpayers did not benefit from the price reductions that could arise from intense bidding among multiple capable contractors.

Public Impact

The primary beneficiaries are likely the Department of Defense, which gains advancements in physical, engineering, and life sciences relevant to its mission. The contract supports research and development activities, potentially leading to new technologies, improved systems, or enhanced scientific understanding. The geographic impact is centered in New Mexico, where the contractor is located, potentially stimulating local economic activity and employment. Workforce implications include the employment of scientists, engineers, and support staff involved in the research projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus fixed fee contracts can incentivize higher spending if not rigorously monitored.
The long duration of the contract increases the risk of scope creep and budget overruns.
Lack of specific performance metrics makes it hard to gauge the true value and progress of the R&D.
Limited visibility into subcontracting limits assessment of small business participation.

Positive Signals

Awarded under full and open competition, suggesting a robust initial selection process.
The contract is with a major aerospace and defense contractor (Boeing), implying significant technical capability.
Focus on R&D in critical scientific fields aligns with long-term strategic goals.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a broad category encompassing fundamental research to applied development. The aerospace and defense industry, where Boeing is a major player, heavily relies on R&D to maintain technological superiority. Comparable spending benchmarks are difficult without knowing the specific research area, but R&D contracts can range from millions to billions, depending on complexity and strategic importance.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). This suggests the primary focus was on a large, established contractor like Boeing, capable of undertaking complex R&D. There is no explicit information on subcontracting plans or performance. Consequently, the direct impact on the small business ecosystem appears minimal unless Boeing actively engaged small businesses as subcontractors, which is not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring compliance with contract terms and monitoring performance. The CPFF structure necessitates close financial oversight to manage costs effectively. Transparency is moderate, as contract awards are public, but the specifics of R&D progress and detailed spending breakdowns may be less accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Aerospace Technology Development
Physical Sciences Research Grants
Engineering Research Contracts
Life Sciences Innovation Funding

Risk Flags

Long contract duration increases risk.
Cost-plus structure requires diligent oversight.
Lack of specific performance metrics hinders value assessment.
Limited small business participation potential.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $414.3 million to THE BOEING COMPANY. INCREMENTAL FUNDING

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 $414.3 million.

What is the period of performance?

Start: 2005-09-28. End: 2017-09-13.

What specific research areas within physical, engineering, and life sciences were covered by this contract?

The provided data categorizes the contract under NAICS code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences.' However, it does not specify the precise research domains. Given the contractor (Boeing) and the agency (Department of Defense), the research likely pertained to areas relevant to defense applications, such as advanced materials, propulsion systems, aerospace engineering, sensor technology, or potentially biotechnology with military applications. Further details would require accessing the contract's statement of work or related documentation.

How does the $414 million total obligation compare to similar R&D contracts awarded by the DoD in the physical sciences?

Comparing the $414 million obligation requires context on the specific R&D field and the contract's scope. The DoD awards numerous R&D contracts annually, varying significantly in value. Contracts for fundamental research might be smaller, while those for developing complex systems or technologies can easily reach hundreds of millions or even billions. Boeing, as a major defense contractor, often engages in large-scale R&D. Without knowing the exact research focus (e.g., basic vs. applied, specific technology area), a direct comparison is difficult. However, $414 million represents a substantial investment, indicative of a significant, multi-year research initiative.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D, and how were they mitigated?

The primary risk of a CPFF contract is that the contractor is reimbursed for all allowable costs plus a fixed fee representing profit. This can incentivize cost overruns, as the contractor may not be as motivated to control expenses as in a fixed-price contract. For R&D, where costs can be uncertain, CPFF offers flexibility. Mitigation strategies typically involve robust government oversight, detailed cost tracking, clear definition of allowable costs, and performance incentives or penalties tied to milestones. The long duration of this contract (over 11 years) amplifies these risks, requiring continuous and diligent management by the contracting agency to ensure costs remain reasonable and aligned with research objectives.

What was the intended outcome or objective of this R&D contract for the Department of Defense?

The specific objective of this R&D contract is not detailed in the provided summary data. However, contracts under NAICS code 541710 for the Department of Defense generally aim to advance scientific knowledge and capabilities in areas critical to national security. This could include developing new materials for aircraft or weapons, improving sensor technologies, enhancing computational modeling for engineering applications, or exploring novel propulsion methods. The long performance period suggests a goal of achieving significant breakthroughs or developing mature technologies rather than short-term research tasks.

How has Boeing's track record with similar DoD R&D contracts influenced its selection for this award?

While the provided data doesn't detail Boeing's specific track record for this contract, its selection as a major defense contractor implies a history of successfully performing complex R&D for the DoD. Agencies typically evaluate past performance as a key factor in source selection. Boeing's extensive experience in aerospace and defense research, including numerous previous contracts with the DoD, likely demonstrated its capability, technical expertise, and ability to manage large, complex projects. This established relationship and proven performance history would have been significant considerations during the 'full and open competition' evaluation process.

What does the 'NM' status code signify in relation to this contract?

The 'NM' status code, alongside 'NEW MEXICO' for the state, likely indicates that the contract's administrative or performance location is New Mexico. In federal procurement systems, status codes often provide additional classification details about the contract or the contractor. 'NM' could potentially stand for 'New Mexico' or another status relevant to the contract's lifecycle or reporting requirements within the specific database from which this data was extracted. Without the data dictionary for that system, its precise meaning remains inferred.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6200 UPTOWN BLVD, ALBUQUERQUE, NM, 87110

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $489,999,918

Exercised Options: $489,999,918

Current Obligation: $414,307,954

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline