Boeing awarded $698.8M for Joint Direct Attack Munitions (JDAM) amid limited competition

Contract Overview

Contract Amount: $698,840,871 ($698.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-03-25

End Date: 2022-05-31

Contract Duration: 797 days

Daily Burn Rate: $876.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JOINT DIRECT ATTACK MUNITION (JDAM)

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $698.8 million to THE BOEING COMPANY for work described as: JOINT DIRECT ATTACK MUNITION (JDAM) Key points: 1. Contract awarded to a single, established supplier, raising questions about price competitiveness. 2. Significant contract value suggests a critical role in defense logistics. 3. Fixed-price contract type aims to control costs, but limited competition may inflate unit prices. 4. Delivery order structure indicates ongoing demand and potential for follow-on awards. 5. Lack of small business involvement suggests a focus on large prime contractors. 6. Contract duration of nearly two years points to sustained operational requirements.

Value Assessment

Rating: fair

The contract's value of $698.8 million for JDAMs is substantial, reflecting the critical nature of these munitions. However, without competitive bidding, it's difficult to benchmark the value for money. The firm fixed-price structure provides cost certainty for the government, but the absence of competition means the government may not be achieving the lowest possible price per unit. Comparisons to similar, competitively awarded contracts for precision-guided munitions would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was solicited. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards limit taxpayer value by removing the downward price pressure that competition typically provides. This means taxpayers may be paying a premium for these munitions.

Public Impact

The primary beneficiaries are the U.S. Air Force and Navy, receiving critical air-to-ground munitions. The services delivered include the manufacturing and supply of JDAM guidance kits, enhancing the precision of unguided bombs. The geographic impact is national, supporting U.S. military readiness, with production likely concentrated in Missouri. Workforce implications include continued employment at Boeing facilities involved in defense manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in pricing due to non-competitive nature.
Reliance on a single supplier could create supply chain vulnerabilities.
No small business set-aside, potentially limiting opportunities for smaller firms in the defense industrial base.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to a known, experienced contractor like Boeing reduces performance risk.
JDAMs are a proven, essential munition for current military operations.
Sustained contract indicates ongoing demand and strategic importance.

Sector Analysis

The defense sector, specifically ammunition manufacturing, is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. The Joint Direct Attack Munition (JDAM) program represents a mature but critical component of the U.S. military's precision strike capability. Spending in this area is driven by operational tempo and modernization efforts. Comparable spending benchmarks would typically involve other large-scale munitions contracts, often awarded to a limited number of prime defense contractors.

Small Business Impact

This contract does not appear to include a small business set-aside. The award to The Boeing Company, a large prime contractor, suggests that subcontracting opportunities may exist for small businesses within Boeing's supply chain. However, the primary award mechanism does not directly benefit small businesses. The impact on the small business ecosystem is indirect, relying on the prime contractor's subcontracting plan, if any.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, likely within the Air Force Materiel Command. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified munitions. Transparency is limited due to the sole-source nature of the award. The Inspector General of the Department of Defense would have jurisdiction for audits and investigations into potential fraud, waste, or abuse.

Related Government Programs

Precision Guided Munitions
Air-to-Ground Munitions
Ordnance Manufacturing
Defense Logistics Agency Contracts
Air Force Munitions Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $698.8 million to THE BOEING COMPANY. JOINT DIRECT ATTACK MUNITION (JDAM)

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 Air Force).

What is the total obligated amount?

The obligated amount is $698.8 million.

What is the period of performance?

Start: 2020-03-25. End: 2022-05-31.

What is the historical spending trend for JDAMs awarded to The Boeing Company?

Analyzing historical spending on JDAMs awarded to The Boeing Company requires access to detailed federal procurement databases. Generally, JDAM production has been ongoing for many years, with significant contract awards occurring periodically to meet demand and sustain production lines. The total value awarded over time can reach billions of dollars, reflecting the munition's widespread use and importance. Specific trends would show fluctuations based on military operational needs, congressional appropriations, and modernization programs. For instance, periods of heightened conflict often correlate with increased JDAM procurement. Without specific historical data points for this analysis, it's challenging to provide precise figures, but the consistent need for precision strike capabilities suggests sustained, substantial investment in JDAMs over the past two decades.

How does the unit cost of these JDAMs compare to similar munitions procured competitively?

Directly comparing the unit cost of these JDAMs is challenging because this award was sole-source, lacking the price discovery inherent in competitive bidding. Typically, competitive procurements drive down unit prices as contractors vie for the contract. Sole-source awards, especially to established prime contractors like Boeing, often result in higher unit costs as the government accepts the offered price. To benchmark, one would need to identify recent, competitively awarded contracts for similar quantities and specifications of JDAM guidance kits or comparable precision-guided munitions. The difference in unit cost between this sole-source award and a hypothetical competitive award could represent a significant difference in taxpayer expenditure, potentially ranging from 10% to 30% or more, depending on market conditions and the specific nature of the requirement.

What are the primary risks associated with a sole-source award for critical munitions?

The primary risks associated with a sole-source award for critical munitions like JDAMs are multifaceted. Firstly, there is a significant risk of paying a premium price due to the lack of competition, which directly impacts the value for taxpayer money. Secondly, reliance on a single supplier can create supply chain vulnerabilities; any disruption at the contractor's facility or within their supply chain could halt production and impact military readiness. Thirdly, a sole-source award can stifle innovation, as there is less incentive for the incumbent contractor to invest in cost-saving technologies or process improvements when their position is guaranteed. Lastly, it can reduce transparency in the procurement process, making it harder for oversight bodies to ensure fair pricing and efficient use of funds.

What is the performance track record of The Boeing Company in delivering JDAMs?

The Boeing Company has a long-standing and generally strong track record in the production and delivery of Joint Direct Attack Munitions (JDAMs). As the primary contractor for the JDAM program for many years, Boeing has consistently supplied these critical munitions to the U.S. military. Performance metrics typically focus on on-time delivery, quality control, and meeting technical specifications. While specific contract performance data (e.g., number of late deliveries or quality issues) is often proprietary or requires deep database analysis, the continued awarding of substantial contracts to Boeing for JDAMs indicates a satisfactory level of performance and reliability in meeting the Department of Defense's requirements. The company possesses the established infrastructure and expertise necessary for large-scale munitions manufacturing.

How does this contract align with broader Department of Defense munitions strategy?

This contract aligns with the Department of Defense's (DoD) ongoing strategy to maintain and modernize its inventory of precision-guided munitions. The JDAM, despite being a mature system, remains a cornerstone of air-to-ground strike capabilities due to its effectiveness, relatively low cost per unit compared to newer systems, and adaptability to various bomb platforms. The award signifies the DoD's continued reliance on JDAMs for current and near-term operational needs. It also reflects a strategy that balances the need for proven, readily available munitions with investments in next-generation weapon systems. The sole-source nature, however, might indicate a strategy focused on ensuring supply continuity for a critical, existing capability rather than seeking new technological advancements through competition at this stage.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA821313R3032

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

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: $698,840,871

Exercised Options: $698,840,871

Current Obligation: $698,840,871

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $65,193,610

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA821315D0002

IDV Type: IDC

Timeline