Boeing awarded $695M for Joint Direct Attack Munition (JDAM) sustainment, raising questions on competition and value

Contract Overview

Contract Amount: $69,491,969 ($69.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-02-28

End Date: 2024-02-29

Contract Duration: 731 days

Daily Burn Rate: $95.1K/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 $69.5 million to THE BOEING COMPANY for work described as: JOINT DIRECT ATTACK MUNITION (JDAM) Key points: 1. Contract awarded to a single source raises concerns about price competitiveness. 2. Long-term sustainment contract may indicate critical reliance on a specific vendor. 3. Fixed-price contract type offers some cost certainty but may limit upside for innovation. 4. Performance period of two years suggests ongoing need for munition support. 5. The contract's value is significant within the defense sector's munitions category. 6. Lack of competition could lead to higher costs for taxpayers over time.

Value Assessment

Rating: questionable

The contract's value of $695 million for JDAM sustainment is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The firm fixed-price structure provides cost predictability, but the absence of competition prevents an assessment of whether this represents the best possible value for the government. Further analysis would be needed to compare unit costs or sustainment rates with historical data or industry standards for similar munitions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach is typically used when a specific capability is required that only one entity can provide, or in cases of urgent need. The lack of competition means there was no opportunity for other manufacturers to bid, potentially limiting price discovery and innovation. This raises concerns about whether the government secured the most cost-effective solution.

Taxpayer Impact: Sole-source awards can result in higher prices for taxpayers as the government lacks the leverage that competition provides. This can lead to less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, ensuring the operational readiness of critical munitions. Services delivered include sustainment, maintenance, and support for the Joint Direct Attack Munition (JDAM) system. The geographic impact is national, supporting military operations across various theaters. Workforce implications include continued employment for personnel involved in JDAM production, maintenance, and logistics at Boeing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially inflating costs.
Lack of transparency in pricing due to no-bid process.
Long-term reliance on a single contractor may create vendor lock-in.
Potential for cost overruns if not closely monitored due to lack of competition.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Boeing's established expertise in JDAM systems ensures continuity of support.
Sustainment contract ensures readiness of a critical defense asset.

Sector Analysis

The defense sector, particularly the munitions sub-sector, relies on specialized manufacturing and sustainment capabilities. The JDAM is a key component of precision-guided munitions, and its continued operational readiness is vital for air power projection. Spending in this area is driven by geopolitical factors and the need to maintain a technological edge. Comparable spending benchmarks would typically involve other large-scale sustainment contracts for complex weapon systems.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large prime contractor, there is a potential for subcontracting opportunities for small businesses. However, the extent to which small businesses will benefit depends on Boeing's subcontracting strategy and the specific components or services required for JDAM sustainment.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures would include performance reviews, delivery schedules, and quality control. Transparency may be limited due to the sole-source nature of the award, but contract modifications and performance reports are typically subject to internal review and potentially Inspector General oversight if issues arise.

Related Government Programs

Precision-Guided Munitions
Air-to-Ground Munitions
Defense Logistics and Sustainment
Ammunition Manufacturing
Joint Direct Attack Munition (JDAM) Program

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.5 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 $69.5 million.

What is the period of performance?

Start: 2022-02-28. End: 2024-02-29.

What is Boeing's track record with JDAM contracts and sustainment?

The Boeing Company has a long-standing history as the prime contractor for the Joint Direct Attack Munition (JDAM) program, responsible for its development, production, and sustainment. Their track record includes delivering millions of JDAM kits and providing ongoing support to ensure the system's operational readiness. This includes managing supply chains, performing maintenance, and incorporating necessary upgrades. Given their established role, Boeing possesses deep institutional knowledge and technical expertise specific to the JDAM system, which is often a factor in sole-source or limited-competition awards for sustainment of complex defense platforms.

How does the $695 million value compare to historical JDAM sustainment spending?

Comparing the $695 million value of this specific contract to historical JDAM sustainment spending requires access to detailed historical contract data. However, it is reasonable to infer that sustainment costs for a widely deployed munition like the JDAM would represent a significant, ongoing investment for the Department of Defense. Without specific historical figures for prior sustainment periods or comparable contracts, it's challenging to definitively state if this award is higher or lower than previous expenditures. Factors such as inflation, the number of units requiring sustainment, and the scope of services can influence year-over-year spending.

What are the primary risks associated with a sole-source award for JDAM sustainment?

The primary risks associated with a sole-source award for JDAM sustainment include potential for inflated pricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and vendor lock-in, making it difficult to switch providers in the future. Taxpayers may bear a higher cost than if the contract had been competed. Furthermore, a sole-source award can sometimes indicate a lack of market competition or a critical dependency on a single supplier, which can pose supply chain risks if the contractor faces production issues or financial instability.

What is the expected program effectiveness and performance based on this contract?

The expected program effectiveness hinges on Boeing's ability to deliver the contracted sustainment services reliably and within the specified performance standards. As the incumbent contractor with extensive experience, the expectation is that the JDAM system's operational readiness will be maintained. The firm fixed-price contract type aims to ensure cost predictability. However, the effectiveness in terms of achieving optimal value for money is inherently limited by the absence of competition. Performance will be measured against delivery schedules, quality metrics, and adherence to technical specifications outlined in the contract.

What are the implications of this contract for future munition procurement strategies?

This sole-source award for JDAM sustainment could have implications for future munition procurement by highlighting the challenges of maintaining legacy systems and the potential for single-contractor reliance. It may prompt the Department of Defense to explore strategies for fostering greater competition in the munitions market, such as encouraging new entrants, investing in alternative technologies, or structuring sustainment contracts to allow for more modularity and competition over time. Conversely, if this award is deemed successful in ensuring critical readiness, it might reinforce the use of sole-source awards for highly specialized or integrated systems where competition is deemed impractical.

Are there any alternative munitions or technologies that could fulfill similar roles, and how does this impact long-term spending?

The JDAM is a mature and widely deployed system, but the defense landscape is constantly evolving with new munition technologies. While this contract focuses on sustaining the existing JDAM fleet, the Department of Defense is also investing in next-generation precision-guided munitions, including hypersonic weapons and loitering munitions, which offer different capabilities and operational profiles. The long-term spending impact depends on the pace of adoption of these new technologies and whether they eventually supersede the JDAM's role. Continued investment in JDAM sustainment suggests it remains a critical capability for the foreseeable future, but future budgets will likely balance sustainment of legacy systems with investment in advanced capabilities.

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

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: $69,491,969

Exercised Options: $69,491,969

Current Obligation: $69,491,969

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $42,414,083

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA821315D0002

IDV Type: IDC

Timeline