Boeing awarded $49.5M for Small Diameter Bomb I production, a sole-source contract for critical munitions

Contract Overview

Contract Amount: $49,466,000 ($49.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-03-16

End Date: 2025-09-30

Contract Duration: 929 days

Daily Burn Rate: $53.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: SMALL DIAMETER BOMB I PRODUCTION, LOT 18 USAF

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $49.5 million to THE BOEING COMPANY for work described as: SMALL DIAMETER BOMB I PRODUCTION, LOT 18 USAF Key points: 1. This contract represents a significant investment in advanced munitions capabilities for the Air Force. 2. The fixed-price incentive structure aims to balance cost control with performance incentives. 3. Sole-source procurement suggests a lack of readily available alternatives or a need for specialized expertise. 4. The duration of the contract extends over two fiscal years, indicating a sustained production requirement. 5. The specific nature of the Small Diameter Bomb I points to a focus on precision strike capabilities. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without comparable bids. The fixed-price incentive (FPI) contract type suggests an attempt to manage costs by linking contractor profit to performance metrics. However, the lack of competition inherently limits the government's ability to ensure the lowest possible price. Further analysis would require understanding the cost drivers for this specific munition and comparing them to industry standards or previous production runs.

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 responsible source can provide the required supplies or services, or when there is a compelling justification for avoiding full and open competition. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without competing offers, the government cannot be assured it is receiving the best possible price for these munitions.

Public Impact

The U.S. Air Force is the primary beneficiary, receiving critical munitions for its operational needs. This contract supports the production of Small Diameter Bomb I, enhancing precision strike capabilities. The contract is being executed in Missouri, potentially creating or sustaining jobs in that region. The workforce implications include skilled labor in advanced manufacturing and defense production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the sole-source justification requires scrutiny to ensure necessity.
Fixed-price incentive contracts can still lead to cost overruns if performance targets are not met or if initial estimates are inaccurate.

Positive Signals

Awarding to a known, established contractor like Boeing ensures continuity and leverages existing expertise in SDB I production.
The fixed-price incentive structure provides some level of cost control and performance motivation.
Sustained production supports the Air Force's strategic munition requirements.

Sector Analysis

The defense sector, particularly munitions manufacturing, is characterized by high barriers to entry, specialized technology, and significant government investment. The Small Diameter Bomb (SDB) program represents a key component of modern air-to-ground warfare, emphasizing precision and reduced collateral damage. Spending in this area is driven by evolving military requirements and technological advancements. Comparable spending benchmarks would involve looking at other sole-source or limited-competition contracts for advanced munitions from major defense contractors.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature of the award, it is unlikely that subcontracting opportunities for small businesses were explicitly mandated as part of the competition. However, the prime contractor, Boeing, may still engage small businesses for components or services. An analysis of Boeing's subcontracting plan would be necessary to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of Defense's contracting and program management offices. The Air Force will monitor performance against the contract's requirements and milestones. Inspector General investigations could be initiated if any irregularities or fraud are suspected. Transparency is limited due to the sole-source nature, but contract modifications and performance reports are typically subject to internal review and potentially public disclosure under certain conditions.

Related Government Programs

Small Diameter Bomb II Production
Advanced Precision Munitions Programs
Air Force Munitions Procurement
Department of Defense Ammunition Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.5 million to THE BOEING COMPANY. SMALL DIAMETER BOMB I PRODUCTION, LOT 18 USAF

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 $49.5 million.

What is the period of performance?

Start: 2023-03-16. End: 2025-09-30.

What is the historical spending on Small Diameter Bomb I production by the Department of Defense?

Historical spending data on the Small Diameter Bomb I (SDB I) program is crucial for understanding the long-term investment and production trends. While specific figures for SDB I production alone can be difficult to isolate from broader munitions or Air Force procurement budgets, the program has been a significant focus for the Air Force for many years. The initial development and fielding of SDB I involved substantial investment. Subsequent production contracts, like the one awarded to Boeing, reflect ongoing sustainment and modernization efforts. Analyzing past contract awards for SDB I, including quantities and unit costs, would provide context for the current $49.5 million award. This historical perspective helps in assessing whether the current pricing is consistent with previous investments and if the program's overall cost trajectory is manageable.

How does the unit cost of the Small Diameter Bomb I compare to similar precision-guided munitions?

Comparing the unit cost of the Small Diameter Bomb I (SDB I) to similar precision-guided munitions is essential for evaluating value for money. The SDB I is designed to be a relatively low-cost, high-volume munition compared to some other advanced weapons systems, but its specific cost is influenced by its advanced features, such as its small size, GPS/INS guidance, and optional infrared seeker. Benchmarking against other guided bombs, air-to-ground missiles, or even other variants of the SDB program (like SDB II) would provide a clearer picture. Factors such as production volume, contract type (fixed-price vs. cost-plus), and the specific capabilities offered by competing munitions will significantly impact unit cost comparisons. Without access to detailed cost breakdowns and specific unit prices for comparable munitions, a precise comparison is difficult, but the SDB I is generally positioned as a cost-effective solution for certain strike missions.

What are the specific performance metrics tied to the incentive portion of this contract?

The 'Fixed Price Incentive' (FPI) contract type implies that the contractor's final profit is directly linked to achieving specific performance targets, cost goals, or delivery schedules. For the Small Diameter Bomb I (SDB I) production contract, these performance metrics could include factors such as production rate, defect rates, reliability, on-time delivery of lots, and potentially specific quality assurance measures. The incentive structure is designed to motivate Boeing to meet or exceed these predefined objectives. The contract would detail a target cost, a target profit, and an incentive fee formula. If Boeing achieves the target cost and performance, they earn the target profit. If they exceed cost targets, their profit is reduced, and if they fall below cost targets (while meeting performance), their profit increases, up to a ceiling. Conversely, if performance targets are not met, the incentive fee may be reduced or eliminated, impacting the contractor's overall profit.

What is the justification for awarding this contract on a sole-source basis?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency that precludes full and open competition. For the Small Diameter Bomb I (SDB I), the justification likely stems from Boeing's unique position as the original developer and sole manufacturer of this specific munition. Replicating the technology, manufacturing processes, and associated intellectual property for a competitive bid could be prohibitively expensive, time-consuming, and potentially compromise the weapon system's integrity or security. Therefore, the government likely determined that awarding to Boeing was the most efficient and effective way to ensure continued production of this critical capability, avoiding the risks and delays associated with developing a new source or re-competing a highly specialized product.

What is the track record of The Boeing Company in producing munitions for the U.S. military?

The Boeing Company has a long and extensive track record of producing a wide array of defense systems and munitions for the U.S. military. They are a major prime contractor across numerous platforms, including aircraft, missiles, and ordnance. In the realm of munitions, Boeing has been involved in the development and production of various guided bombs, missiles, and related systems. Their experience with the Small Diameter Bomb (SDB) program, including the SDB I, is a testament to their capabilities in this specialized area. While specific performance metrics for all past contracts are not publicly available, Boeing's continued selection for significant defense contracts, including sole-source awards for critical systems like the SDB I, suggests a history of meeting production requirements and delivering complex defense products to the U.S. military.

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: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JAMES S 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: $49,466,000

Exercised Options: $49,466,000

Current Obligation: $49,466,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA867220D0001

IDV Type: IDC

Timeline