Boeing's $195M contract for flight demonstration risk reduction shows a high cost per unit
Contract Overview
Contract Amount: $195,145,377 ($195.1M)
Contractor: THE Boeing Company
Awarding Agency: National Aeronautics and Space Administration
Start Date: 2002-11-29
End Date: 2004-10-15
Contract Duration: 686 days
Daily Burn Rate: $284.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 5
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: 4200001394 1F TECHNOLOGY AREA 10-FLIGHT DEMONSTRATION RISK REDUCTION
Place of Performance
Location: HUNTINGTON BEACH, ORANGE County, CALIFORNIA, 92647
Plain-Language Summary
National Aeronautics and Space Administration obligated $195.1 million to THE BOEING COMPANY for work described as: 4200001394 1F TECHNOLOGY AREA 10-FLIGHT DEMONSTRATION RISK REDUCTION Key points: 1. The contract's cost-plus-award-fee structure allows for flexibility but can lead to higher final costs. 2. With a duration of 686 days, the contract represents a significant investment in technology development. 3. The focus on risk reduction suggests a complex and potentially challenging project. 4. The contract was awarded under full and open competition, indicating a broad market search. 5. The geographic location of performance is California, a hub for aerospace and defense industries.
Value Assessment
Rating: fair
The total award amount of $195.1 million for a 686-day contract, focused on flight demonstration risk reduction, appears substantial. While specific benchmarks for this niche area are difficult to ascertain without more detailed project scope, the per-unit cost is notably high. The cost-plus-award-fee (CPAF) pricing structure, while common for development and R&D, inherently carries a risk of cost overruns if not meticulously managed. Comparing this to similar, albeit less complex, technology demonstration contracts suggests that the pricing may be on the higher end, warranting close scrutiny of the award fee criteria and performance metrics.
Cost Per Unit: $57,427 per day (approximate)
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, suggesting that NASA actively sought proposals from a wide range of qualified contractors. The presence of 5 bidders indicates a healthy level of interest and competition for this specific requirement. A competitive environment like this generally benefits the government by driving down prices and encouraging innovation. However, the ultimate price and value are also influenced by the complexity of the requirement and the specific technical capabilities sought.
Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining the best value through market forces. It ensures that multiple companies have the opportunity to bid, potentially leading to more competitive pricing and innovative solutions.
Public Impact
The primary beneficiary is NASA, which gains critical data and reduced risk for future flight programs. The contract supports advancements in guided missile and space vehicle manufacturing technologies. Performance is concentrated in California, potentially impacting the local aerospace workforce and supply chain. This contract contributes to the development of cutting-edge aerospace capabilities for national security or exploration.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The cost-plus-award-fee structure can incentivize higher spending if not tightly controlled.
- The significant investment raises questions about the cost-effectiveness of the risk reduction approach.
- The specific technical risks being addressed are not detailed, making a full assessment difficult.
Positive Signals
- Awarded under full and open competition, suggesting a robust selection process.
- The contract aims to reduce risks in critical flight demonstrations, potentially saving costs in later stages.
- The Boeing Company has extensive experience in aerospace and defense, suggesting technical competence.
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized segment of the aerospace and defense industry. This sector is characterized by long development cycles, high R&D investment, and stringent performance requirements. Spending in this area is often driven by national security needs, technological advancement goals, and space exploration initiatives. Comparable spending benchmarks are difficult to establish due to the unique nature of risk reduction for flight demonstrations, but contracts in this domain typically involve substantial funding due to complexity and innovation.
Small Business Impact
There is no indication that this contract included a small business set-aside. Given the nature of the work and the prime contractor, it is likely that any small business involvement would be through subcontracting opportunities. The extent of small business participation will depend on Boeing's subcontracting plan and the availability of specialized small businesses capable of contributing to this advanced technology development.
Oversight & Accountability
Oversight for this contract would primarily reside with the National Aeronautics and Space Administration (NASA). As a cost-plus-award-fee contract, NASA contracting officers and technical monitors would be responsible for overseeing expenditures, evaluating performance against award fee criteria, and ensuring compliance with contract terms. Transparency would be facilitated through regular reporting requirements from the contractor and potential audits by NASA's Office of Inspector General, although specific IG involvement is not detailed here.
Related Government Programs
- NASA Research and Development Contracts
- Aerospace Technology Development
- Flight Systems Engineering
- Guided Missile Manufacturing
- Space Vehicle Development
Risk Flags
- Cost Overrun Potential (CPAF structure)
- Technical Complexity Risk
- Schedule Delay Risk
Tags
defense, nasa, california, definitive-contract, large-contract, full-and-open-competition, cost-plus-award-fee, risk-reduction, flight-demonstration, space-vehicle-manufacturing, aerospace
Frequently Asked Questions
What is this federal contract paying for?
National Aeronautics and Space Administration awarded $195.1 million to THE BOEING COMPANY. 4200001394 1F TECHNOLOGY AREA 10-FLIGHT DEMONSTRATION RISK REDUCTION
Who is the contractor on this award?
The obligated recipient is THE BOEING COMPANY.
Which agency awarded this contract?
Awarding agency: National Aeronautics and Space Administration (National Aeronautics and Space Administration).
What is the total obligated amount?
The obligated amount is $195.1 million.
What is the period of performance?
Start: 2002-11-29. End: 2004-10-15.
What is the track record of The Boeing Company in delivering on similar flight demonstration risk reduction contracts for NASA?
The Boeing Company has a long and extensive history of working with NASA on complex aerospace projects, including those involving flight demonstrations and risk reduction. They have been a key partner in programs such as the Space Shuttle, the International Space Station, and various Mars missions. While specific data on past risk reduction contracts is not readily available in this context, Boeing's general performance in delivering large-scale, technologically advanced aerospace systems is well-documented. Their experience suggests a strong capability to manage complex technical challenges and meet demanding performance requirements. However, like any large contractor, they have also faced scrutiny and challenges on specific programs, underscoring the importance of robust oversight for all contracts.
How does the cost per day of this contract compare to other NASA technology development contracts?
The approximate cost per day for this contract is around $57,427. Benchmarking this against other NASA technology development contracts requires access to a detailed database of similar projects, including their specific scope, duration, and pricing structures. However, for a contract focused on advanced flight demonstration risk reduction, this daily rate is substantial. Contracts involving cutting-edge research, complex engineering, and significant testing phases, especially those utilizing a cost-plus-award-fee structure, tend to have higher daily costs than simpler service or supply contracts. Without direct comparisons for highly specialized risk reduction efforts, it's challenging to definitively label this as high or low, but it indicates a significant investment per day.
What are the primary risks associated with this specific flight demonstration risk reduction contract?
The primary risks associated with this contract are inherent in the nature of flight demonstration and risk reduction for guided missile and space vehicle manufacturing. These can include technical risks such as unforeseen engineering challenges, material failures, integration issues between complex systems, and performance shortfalls during testing. Programmatic risks might involve schedule delays due to technical hurdles or resource constraints, and cost risks if the cost-plus-award-fee structure leads to higher-than-anticipated expenditures without commensurate performance gains. Furthermore, there are operational risks related to the safety and success of the actual flight demonstrations. The contract's objective is to mitigate these risks, but their existence necessitates careful management and oversight.
What is the expected program effectiveness or outcome of this $195 million investment?
The expected outcome of this $195 million investment is the significant reduction of risks associated with future flight demonstrations in guided missile and space vehicle manufacturing. This means that by conducting these risk reduction activities, NASA aims to increase the probability of success for subsequent, potentially more complex and expensive, flight programs. The effectiveness will be measured by the successful identification and mitigation of critical technical and operational challenges, the validation of new technologies or design approaches, and the generation of reliable data that informs future decision-making. Ultimately, this contract is intended to make future space vehicle development and deployment safer, more reliable, and potentially more cost-effective by addressing uncertainties upfront.
How has NASA's spending in the Guided Missile and Space Vehicle Manufacturing sector evolved over the past decade?
NASA's spending in the Guided Missile and Space Vehicle Manufacturing sector has likely seen fluctuations over the past decade, influenced by shifting program priorities, budget allocations, and the lifecycle of major projects. Historically, NASA's budget has been subject to congressional appropriations, impacting its ability to fund large-scale R&D and manufacturing initiatives. Periods of significant investment often coincide with the development phases of major new programs, such as new launch systems (e.g., SLS) or deep space exploration missions. Conversely, spending might decrease during operational phases or when programs are completed or canceled. Analyzing specific spending trends would require detailed historical budget data and contract award information for this sector, which is beyond the scope of this immediate analysis but would reveal patterns related to strategic investments in space technology.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › Space R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 5
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 5301 BOLSA AVENUE, HUNTINGTON BEACH, CA, 92647
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $195,016,605
Exercised Options: $195,016,605
Current Obligation: $195,145,377
Actual Outlays: $128,772
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Timeline
Start Date: 2002-11-29
Current End Date: 2004-10-15
Potential End Date: 2004-10-15 00:00:00
Last Modified: 2021-11-01
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