DHS awarded Boeing a $51.5M contract for system integration, with significant cost-plus-fixed-fee elements
Contract Overview
Contract Amount: $51,494,223 ($51.5M)
Contractor: Boeing Company, the
Awarding Agency: Department of Homeland Security
Start Date: 2011-07-20
End Date: 2015-12-30
Contract Duration: 1,624 days
Daily Burn Rate: $31.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: SUGGESTED VENDORS - LOCKHEED MARTIN, BOEING, RAYTHEON AND SAIC CONTRACT NO.: TBD SI - SYSTEM INTEGRATION CONTRACT SYSTEM INTEGRATION WORK IN ORDER TO INSTALL PSP EQUIPMENT TO THE WESTERN REGION
Place of Performance
Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202
State: Virginia Government Spending
Plain-Language Summary
Department of Homeland Security obligated $51.5 million to BOEING COMPANY, THE for work described as: SUGGESTED VENDORS - LOCKHEED MARTIN, BOEING, RAYTHEON AND SAIC CONTRACT NO.: TBD SI - SYSTEM INTEGRATION CONTRACT SYSTEM INTEGRATION WORK IN ORDER TO INSTALL PSP EQUIPMENT TO THE WESTERN REGION Key points: 1. The contract's cost-plus-fixed-fee structure introduces potential for cost overruns, requiring close monitoring. 2. With four bidders, the competition level suggests a moderately competitive environment for this system integration work. 3. The contract duration of over 1600 days indicates a long-term commitment to system integration services. 4. This award falls within engineering services, a sector critical for national infrastructure and security. 5. The system integration focus highlights the complexity of modernizing transportation security equipment.
Value Assessment
Rating: fair
The total award of $51.5 million for system integration over approximately 4.5 years suggests a substantial investment. Benchmarking this against similar large-scale system integration projects for critical infrastructure is challenging without more specific details on the scope of work. The cost-plus-fixed-fee (CPFF) pricing structure, while allowing for flexibility, can lead to higher final costs compared to fixed-price contracts if not managed diligently. The contract's value appears significant, but its value-for-money depends heavily on the successful and efficient integration of the PSP equipment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, with four bidders participating. This indicates a healthy level of market interest and suggests that the government sought a broad range of potential solutions. The presence of multiple bidders generally promotes price discovery and encourages contractors to offer competitive terms. However, the specific details of the bidding process and the evaluation criteria would further clarify the extent to which this competition translated into optimal pricing and value.
Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of receiving competitive pricing and innovative solutions, potentially leading to cost savings and better performance.
Public Impact
The Transportation Security Administration (TSA) is the primary beneficiary, aiming to enhance its security infrastructure. The contract delivers system integration services for installing PSP equipment, crucial for modernizing security capabilities. The geographic impact is focused on the Western Region of the United States. This contract likely supports a workforce skilled in engineering, system integration, and project management.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee contracts can lead to cost overruns if not managed tightly.
- The long duration of the contract may present challenges in adapting to evolving technologies.
- System integration projects are inherently complex and carry execution risks.
Positive Signals
- Awarded under full and open competition, suggesting a robust bidding process.
- The contract addresses a critical need for transportation security infrastructure modernization.
- The selected vendor, Boeing, has a significant track record in large-scale aerospace and defense projects.
Sector Analysis
This contract falls within the Engineering Services sector (NAICS 541330), a broad category encompassing the design and development of systems and infrastructure. The market for system integration services is substantial, driven by government and commercial demand for complex technological solutions. Comparable spending benchmarks would typically involve large-scale IT infrastructure upgrades, defense system integration, or critical infrastructure modernization projects. The $51.5 million award is a significant sum, indicative of a major project within this sector.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While the primary awardee is a large corporation, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on Boeing's strategy and the specific requirements outlined in the contract, which are not detailed here. Analysis of subcontracting plans would be necessary to fully assess the impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of Homeland Security and the Transportation Security Administration. As a cost-plus-fixed-fee contract, rigorous financial oversight and performance monitoring are crucial to ensure cost control and adherence to scope. Transparency would be facilitated through contract reporting mechanisms and potentially through public contract databases. The Inspector General for DHS would likely have jurisdiction to investigate any potential fraud, waste, or abuse.
Related Government Programs
- Department of Homeland Security - Technology Modernization Programs
- Transportation Security Administration - Security Equipment Procurement
- System Integration Services - Federal Contracts
- Engineering Services - Government Contracts
Risk Flags
- Cost-Plus-Fixed-Fee contract type carries inherent cost overrun risk.
- Long contract duration may lead to technology obsolescence or scope creep.
- System integration projects are complex and prone to technical and execution challenges.
Tags
transportation-security, system-integration, department-of-homeland-security, transportation-security-administration, boeing-company, cost-plus-fixed-fee, full-and-open-competition, engineering-services, western-region, large-contract, critical-infrastructure
Frequently Asked Questions
What is this federal contract paying for?
Department of Homeland Security awarded $51.5 million to BOEING COMPANY, THE. SUGGESTED VENDORS - LOCKHEED MARTIN, BOEING, RAYTHEON AND SAIC CONTRACT NO.: TBD SI - SYSTEM INTEGRATION CONTRACT SYSTEM INTEGRATION WORK IN ORDER TO INSTALL PSP EQUIPMENT TO THE WESTERN REGION
Who is the contractor on this award?
The obligated recipient is BOEING COMPANY, THE.
Which agency awarded this contract?
Awarding agency: Department of Homeland Security (Transportation Security Administration).
What is the total obligated amount?
The obligated amount is $51.5 million.
What is the period of performance?
Start: 2011-07-20. End: 2015-12-30.
What specific PSP equipment is being installed, and what are the key performance objectives of this system integration?
The provided data does not specify the exact 'PSP equipment' being installed. 'PSP' could refer to various systems, such as Passenger Screening Points, Perimeter Security, or a proprietary system. The key performance objectives would likely revolve around enhancing the efficiency, reliability, and security of the transportation network in the Western Region. This could include faster screening times, improved threat detection capabilities, reduced false alarms, and seamless integration with existing TSA systems. Without further details on the 'PSP' system, a precise assessment of performance objectives is not possible. However, the contract's focus on system integration implies a need to ensure interoperability and functional coherence of the new equipment within the broader TSA operational framework.
How does the cost-plus-fixed-fee (CPFF) structure compare to alternative contract types for this type of system integration work, and what are the implications for cost control?
Cost-Plus-Fixed-Fee (CPFF) contracts are often used when the scope of work is not precisely defined or when there is a high degree of uncertainty in the costs involved, such as in research and development or complex system integration projects. In this case, the CPFF structure allows the contractor (Boeing) to recover all allowable costs plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set upfront, and cost savings benefit the contractor, while cost overruns are borne by them. For taxpayers, CPFF contracts carry a higher risk of cost escalation because the government bears the risk of cost overruns. Effective cost control under CPFF relies heavily on robust government oversight, detailed cost accounting standards, and stringent review of incurred costs to ensure they are reasonable, allocable, and allowable. Without strong oversight, the potential for costs to exceed initial estimates is significant.
What is Boeing's track record with similar large-scale system integration contracts for federal agencies, particularly within DHS or TSA?
Boeing has an extensive track record of executing large-scale system integration contracts for various federal agencies, including the Department of Defense and, to some extent, the Department of Homeland Security. Their experience spans complex aerospace, defense, and IT infrastructure projects. While specific details on their past system integration work directly for TSA are not provided in this data snippet, Boeing's general capabilities in managing complex projects, integrating diverse technological components, and delivering mission-critical systems are well-established. Their involvement in programs like the Air Force's Next Generation Bomber (B-21) or various satellite and communication system integrations demonstrates their capacity for handling projects of this magnitude and technical complexity. However, the success of any specific contract depends on the unique requirements, management, and oversight applied to that particular effort.
Given the $51.5 million award and a duration of over 1600 days, what is the approximate annual spending rate, and how does this compare to typical spending for similar system integration projects?
The total award is $51,494,222.59 over a period of 1624 days (approximately 4.45 years). This equates to an average annual spending rate of roughly $11.57 million per year ($51.5M / 4.45 years). Comparing this to typical spending for similar system integration projects is challenging without more context on the specific nature of the 'PSP equipment' and the scope of integration. However, for large-scale federal IT or infrastructure modernization projects, an annual spending rate in the low double-digit millions is not uncommon, especially during peak execution phases. Projects involving the integration of complex hardware, software, and network components across multiple sites can easily reach these figures. The rate suggests a significant but not exceptionally high annual investment for a multi-year, region-wide system deployment.
What are the potential risks associated with integrating new 'PSP equipment' into the Western Region's existing transportation security infrastructure, and how might these be mitigated?
Potential risks in integrating new 'PSP equipment' include technical incompatibility with legacy systems, operational disruptions during installation and testing, cybersecurity vulnerabilities introduced by the new equipment, and user adoption challenges among security personnel. Mitigation strategies should involve thorough system architecture planning, phased deployment to minimize disruption, rigorous testing and validation before full rollout, comprehensive cybersecurity assessments and hardening, and robust training programs for end-users. The contract's system integration focus implies that the contractor is responsible for addressing many of these interoperability and integration challenges. Close collaboration between the contractor, TSA, and potentially other regional stakeholders would be crucial for successful mitigation. The CPFF structure necessitates proactive risk management to prevent cost overruns associated with unforeseen integration issues.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 4
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: THE Boeing Company (UEI: 009256819)
Address: 1421 JEFFERSON DAVIS HIGHWAY, STE 200, ARLINGTON, VA, 22202
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $51,494,223
Exercised Options: $51,494,223
Current Obligation: $51,494,223
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: HSTS0409DST2232
IDV Type: IDC
Timeline
Start Date: 2011-07-20
Current End Date: 2015-12-30
Potential End Date: 2015-12-30 00:00:00
Last Modified: 2018-04-24
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