Boeing's $176M Ground-Based Midcourse Defense contract awarded by DoD for R&D in Alabama

Contract Overview

Contract Amount: $176,273,933 ($176.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-06-27

End Date: 2027-10-31

Contract Duration: 1,587 days

Daily Burn Rate: $111.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: GROUND-BASED MIDCOURSE DEFENSE READINESS

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35824

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $176.3 million to THE BOEING COMPANY for work described as: GROUND-BASED MIDCOURSE DEFENSE READINESS Key points: 1. Contract focuses on research and development for a critical defense system. 2. Full and open competition suggests a potentially competitive bidding process. 3. Cost Plus Incentive Fee contract type may incentivize performance but carries cost risk. 4. Long duration of over 4 years indicates a significant, ongoing project. 5. Awarded by the Missile Defense Agency, highlighting its strategic importance. 6. Geographic concentration in Alabama for R&D activities.

Value Assessment

Rating: fair

Benchmarking the value of this Cost Plus Incentive Fee contract is challenging without specific performance metrics and comparable R&D projects. The total award amount of $176 million over approximately 4 years suggests a substantial investment in defense readiness. However, the CPIF structure means the final cost could fluctuate based on performance, making a definitive value-for-money assessment difficult at this stage. Further analysis would require understanding the specific R&D objectives and their expected outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, which can lead to better pricing and innovation. The number of bidders and the specific evaluation criteria would provide further insight into the intensity of the competition and its impact on the final negotiated price.

Taxpayer Impact: A competitive bidding process for defense contracts like this one is intended to ensure taxpayer funds are used efficiently and to secure the best possible value for critical national security capabilities.

Public Impact

The primary beneficiaries are the U.S. military and national security apparatus, through the enhancement of missile defense capabilities. The contract supports research and development activities aimed at improving the Ground-Based Midcourse Defense system. Geographic impact is concentrated in Alabama, where the R&D work will be performed. Potential workforce implications include employment for scientists, engineers, and support staff in the aerospace and defense sectors within Alabama.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee (CPIF) contracts can lead to cost overruns if not managed rigorously, as contractor profit is tied to performance metrics.
The long duration of the contract increases the risk of scope creep or changing technological requirements over time.
Reliance on a single contractor for critical R&D may limit alternative solutions or innovations from other firms.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The Missile Defense Agency's oversight is expected to ensure adherence to technical and programmatic goals.
Focus on R&D for a critical defense system addresses a significant national security need.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on advanced research and development for missile defense systems. The market for such specialized R&D is characterized by high barriers to entry due to technical expertise and security clearances required. Spending in this area is driven by national security priorities and geopolitical considerations. Comparable spending benchmarks would typically be found within other large-scale defense R&D programs managed by agencies like the Missile Defense Agency or DARPA.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor is there explicit information regarding subcontracting plans for small businesses. Given the nature of advanced R&D in missile defense, the prime contractor, The Boeing Company, is likely to utilize specialized subcontractors. Further investigation into Boeing's subcontracting goals and performance would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Missile Defense Agency, a component of the Department of Defense. Accountability measures are typically embedded within the Cost Plus Incentive Fee structure, linking contractor profit to performance outcomes. Transparency may be limited due to the sensitive nature of defense research, but contract awards and basic details are publicly available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Ground-Based Strategic Deterrent
Space Development Agency Contracts
Advanced Conventional Ammunition
Tactical Technology Research

Risk Flags

Cost Plus Incentive Fee (CPIF) contract type requires careful monitoring to manage potential cost escalations.
Long contract duration increases exposure to evolving technological requirements and geopolitical landscapes.
Reliance on a single large contractor for critical R&D may present risks if performance falters.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $176.3 million to THE BOEING COMPANY. GROUND-BASED MIDCOURSE DEFENSE READINESS

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 $176.3 million.

What is the period of performance?

Start: 2023-06-27. End: 2027-10-31.

What is the historical spending pattern for Ground-Based Midcourse Defense readiness by the Missile Defense Agency?

Analyzing historical spending for Ground-Based Midcourse Defense (GMD) readiness by the Missile Defense Agency (MDA) reveals a consistent and significant investment over the years. While specific annual figures fluctuate based on program phases and modernization efforts, the overall trend indicates a sustained commitment to maintaining and enhancing this critical capability. For instance, in recent fiscal years, MDA's budget allocations for GMD have often been in the hundreds of millions of dollars, encompassing procurement, research, development, testing, and evaluation (RDT&E), and operations and maintenance. The contract awarded to The Boeing Company for $176 million represents a substantial portion of this ongoing investment, particularly within the R&D domain. Understanding these historical patterns is crucial for contextualizing the current contract's value and ensuring long-term budgetary planning aligns with strategic defense objectives.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact contractor performance and final costs in defense R&D contracts?

The Cost Plus Incentive Fee (CPIF) contract structure is designed to incentivize contractors to meet or exceed specific performance targets while managing costs. In this type of contract, the final profit is adjusted based on whether the final cost is below, at, or above a target cost, and whether performance objectives are met. For defense R&D, this can encourage innovation and efficiency as the contractor shares in the savings if costs are reduced below target or in the increased costs if they exceed the target. However, CPIF contracts also carry inherent risks. If the performance targets are not clearly defined or are difficult to measure, or if the target cost is set unrealistically high, the incentive may be weakened, or costs could escalate significantly. Rigorous oversight and well-defined performance metrics are essential to ensure that CPIF contracts deliver value for taxpayer money and achieve the desired R&D outcomes without excessive cost overruns.

What are the key performance indicators (KPIs) likely being used to assess Boeing's performance on this GMD readiness contract?

For a Ground-Based Midcourse Defense (GMD) readiness contract focused on Research and Development (R&D), key performance indicators (KPIs) would likely revolve around technical achievements, schedule adherence, and cost control within the Cost Plus Incentive Fee (CPIF) framework. Specific technical KPIs might include the successful development and testing of new system components, improvements in detection or interception capabilities, or enhanced system reliability metrics. Schedule KPIs would focus on meeting critical milestones for research phases, prototype development, and testing events. Cost KPIs would involve managing expenditures within the target cost range and achieving cost efficiencies where possible, as outlined in the incentive structure. The Missile Defense Agency would closely monitor these KPIs to ensure progress towards enhancing GMD capabilities and to determine the contractor's incentive fee payout.

What is The Boeing Company's track record with the Missile Defense Agency and similar large-scale defense R&D contracts?

The Boeing Company has a long and extensive history of working with the Missile Defense Agency (MDA) and other Department of Defense (DoD) entities on complex defense systems, including missile defense programs. Boeing has been a significant contractor for various aspects of missile defense, often involved in developing, integrating, and sustaining critical components and systems. Their track record includes participation in major programs like the Ground-Based Midcourse Defense (GMD) system itself, as well as other advanced technology development efforts. While specific performance details on individual contracts are often proprietary, Boeing's continued selection for large-scale, high-stakes R&D contracts by the MDA suggests a generally positive assessment of their technical capabilities, program management, and ability to meet stringent defense requirements. However, like any large contractor, they may have faced challenges or scrutiny on specific projects, underscoring the importance of ongoing oversight.

How does this contract compare in scope and value to other recent R&D awards within the missile defense sector?

This $176 million contract for Ground-Based Midcourse Defense (GMD) readiness R&D awarded to The Boeing Company is substantial, reflecting the high cost and complexity associated with advanced missile defense technologies. Within the broader missile defense sector, R&D contracts can range from tens of millions to several billion dollars, depending on the program's maturity, technological ambition, and duration. For instance, contracts related to developing next-generation interceptors, advanced sensor systems, or integrated battle management command and control (BMC2) systems often represent significant investments. Compared to other recent R&D awards, this contract appears to be of moderate to large size, indicative of a focused effort on enhancing an existing critical system rather than developing an entirely new one from scratch. Its value is consistent with the ongoing need for modernization and sustainment of the GMD architecture.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ085622R0001

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $298,298,356

Exercised Options: $236,792,374

Current Obligation: $176,273,933

Actual Outlays: $16,590,951

Subaward Activity

Number of Subawards: 69

Total Subaward Amount: $58,568,388

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ085622D0002

IDV Type: IDC

Timeline