Boeing awarded $12.7B for R&D services, a significant investment in engineering and development

Contract Overview

Contract Amount: $12,744,887,539 ($12.7B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2005-09-23

End Date: 2014-12-31

Contract Duration: 3,386 days

Daily Burn Rate: $3.8M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: 200512!010860!2100!W56HZV!TACOM - WARREN !W56HZV05C0724 !A!N! !Y! ! !20050923!20141231!016544780!016544780!009256819!N!THE BOEING COMPANY !J S MCDONNELL BLVD !SAINT LOUIS !MO!63166!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !+000219245691!N!N!000000000000!AZ15!RDTE/OTHER RESEARCH&DEVELOPMENT-ENG/MANUF DEVEL !S1 !SERVICES !301 !FCS !541330!E! !1! ! ! ! ! !20200930!B! ! !A! !D!U!U!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! ! TAS::21 2040::TAS

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $12.74 billion to THE BOEING COMPANY for work described as: 200512!010860!2100!W56HZV!TACOM - WARREN !W56HZV05C0724 !A!N! !Y! ! !20050923!20141231!016544780!016544780!009256819!N!THE BOEING COMPANY !J S MCDONNELL BLVD !SAINT LOUIS !MO!63166!65000!510!29!ST. LOUIS !ST. … Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competition. 2. Long contract duration of nearly 10 years suggests a sustained need for services. 3. Cost-plus fixed-fee structure may incentivize higher spending without strict cost controls. 4. Significant funding allocated, indicating a high-priority program within the Department of the Army. 5. Focus on R&D and engineering services points to innovation and future capability development.

Value Assessment

Rating: questionable

The contract's value of over $12.7 billion over its nearly 10-year duration is substantial. Without comparable contracts for similar R&D services, it's difficult to benchmark the value for money. The cost-plus fixed-fee (CPFF) pricing structure, while common for R&D where costs are uncertain, can lead to higher overall expenditures compared to fixed-price contracts if not managed carefully. The lack of competitive bidding further complicates a direct value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the unique capabilities or technology required for the service. The lack of competition means there was no opportunity for price discovery through bidding, potentially leading to a higher price than if multiple companies had competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to lower costs. The government did not benefit from the potential cost savings that often arise from a competitive bidding process.

Public Impact

The primary beneficiary is the Department of the Army, which receives advanced research and development services. Services delivered likely include advanced engineering, design, prototyping, and testing for military systems. The geographic impact is centered around the contractor's facilities in Missouri, but the ultimate impact is on national defense capabilities. Workforce implications include employment for highly skilled engineers, scientists, and technicians at The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus fixed-fee contract type can lead to cost overruns if not closely monitored.
Long contract duration may reduce flexibility to adapt to changing technological needs or market conditions.

Positive Signals

Award to a major defense contractor like Boeing suggests access to significant technical expertise and established capabilities.
Focus on R&D indicates investment in future technologies and maintaining a technological edge.
The substantial funding reflects the perceived importance and criticality of the services to national security.

Sector Analysis

This contract falls within the Research, Development, Test, and Evaluation (R&D) sector, specifically focusing on engineering services. The aerospace and defense industry, where Boeing is a major player, is characterized by large, complex contracts often awarded through non-competitive or limited-competition processes due to specialized requirements. Comparable spending benchmarks are difficult to establish without knowing the specific R&D focus, but significant government investment in defense R&D is common.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to a large prime contractor, The Boeing Company. There is no explicit information regarding subcontracting plans for small businesses. The focus on R&D and engineering services by a major aerospace firm may limit direct opportunities for small businesses unless they are part of Boeing's supply chain or are awarded specific subcontracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the R&D nature and sole-source award, rigorous oversight of technical progress, cost expenditures, and adherence to contract terms would be crucial. Transparency may be limited due to the non-competitive nature and the proprietary information often involved in R&D. Inspector General involvement would depend on specific allegations of fraud, waste, or abuse.

Related Government Programs

Defense Research and Development
Aerospace Engineering Services
Advanced Technology Development
Military Systems Research

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.74 billion to THE BOEING COMPANY. 200512!010860!2100!W56HZV!TACOM - WARREN !W56HZV05C0724 !A!N! !Y! ! !20050923!20141231!016544780!016544780!009256819!N!THE BOEING COMPANY !J S MCDONNELL BLVD !SAINT LOUIS !MO!63166!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !+000219245691!N!N!000000000000!AZ15!RDTE/OTHER RESEARCH&DEVELOPMENT-ENG/MANUF DEVEL !S1 !SERVICES !301 !FCS !541330!E! !1! ! ! ! ! !20200

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 Army).

What is the total obligated amount?

The obligated amount is $12.74 billion.

What is the period of performance?

Start: 2005-09-23. End: 2014-12-31.

What specific research and development projects or technologies does this contract support?

The provided data indicates the contract is for 'RDTE/OTHER RESEARCH&DEVELOPMENT-ENG/MANUF DEVEL' and falls under NAICS code 541330 (Engineering Services). While the specific projects are not detailed, this classification suggests the contract supports the engineering, manufacturing development, and general research and development activities for advanced military systems or technologies. This could encompass a wide range of areas, from conceptual design and feasibility studies to the development and testing of prototypes for future defense capabilities. The substantial value and long duration imply a significant, ongoing R&D effort critical to the Department of the Army's strategic objectives.

How does the cost-plus fixed-fee (CPFF) structure compare to other contract types for R&D, and what are the implications for cost control?

Cost-plus fixed-fee (CPFF) contracts are common for research and development where the scope of work and associated costs are uncertain at the outset. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure incentivizes the contractor to perform the work but provides less incentive for cost reduction compared to fixed-price contracts. The government bears the risk of cost overruns, making robust oversight and negotiation of the fixed fee critical. Compared to other R&D contract types like cost-plus-incentive-fee (CPIF) or fixed-price-incentive (FPI), CPFF offers less direct cost control for the government, highlighting the importance of detailed cost monitoring and management by the contracting agency.

What is the historical spending trend for similar R&D engineering services within the Department of the Army?

Historical spending on R&D engineering services within the Department of the Army is substantial and fluctuates based on strategic priorities and technological advancements. While specific historical data for this exact contract or vendor is not provided, the Army consistently invests billions annually in research, development, test, and evaluation (RDT&E). This includes significant allocations for engineering services, often through large, long-term contracts with major defense contractors. Trends show a continuous need for innovation in areas like artificial intelligence, cybersecurity, advanced materials, and next-generation weapon systems, driving sustained spending in engineering and development services. The $12.7 billion awarded to Boeing represents a significant portion of this annual investment for a specific, long-term R&D initiative.

What are the potential risks associated with a sole-source award of this magnitude for R&D services?

The primary risk associated with a sole-source award of this magnitude is the lack of competitive pressure, which can lead to inflated pricing and reduced innovation. Without competing bids, the government may not achieve the best possible value for its investment. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single contractor, potentially limiting future flexibility. Furthermore, sole-source contracts require exceptionally strong justification and rigorous oversight to ensure the contractor is performing efficiently and effectively, as the usual market checks and balances are absent. This necessitates robust government program management to mitigate these inherent risks.

How does the contract's performance period (2005-2014) reflect the typical lifecycle of major defense R&D programs?

The contract's performance period from September 23, 2005, to December 31, 2014, spanning nearly a decade, is indicative of the long development cycles common in major defense R&D programs. Developing advanced military technologies often requires extensive research, prototyping, testing, and refinement, which can take many years. This extended duration allows for the maturation of complex technologies and ensures sustained support for critical development efforts. While long lifecycles are typical, they also present challenges in adapting to rapidly evolving threats and technological landscapes, and require careful management to ensure the final product remains relevant and effective throughout its intended service life.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV05R0705

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 63134

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

Financial Breakdown

Contract Ceiling: $2,137,523,868

Current Obligation: $12,744,887,539

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline