DoD awards $200.9M to Boeing for JDAM tail kits, raising questions on competition and value

Contract Overview

Contract Amount: $200,887,330 ($200.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2025-07-31

End Date: 2027-07-31

Contract Duration: 730 days

Daily Burn Rate: $275.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: ACQUISITION OF JDAM SABR-Y TAIL KITS FOR USAF AND USN.

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $200.9 million to THE BOEING COMPANY for work described as: ACQUISITION OF JDAM SABR-Y TAIL KITS FOR USAF AND USN. Key points: 1. Contract awarded to a single, established supplier, limiting price discovery. 2. Fixed Price Incentive contract type suggests potential for cost overruns if not managed closely. 3. Long-term delivery orders indicate sustained demand for these components. 4. The contract is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, making direct comparison difficult. 5. Focus on sustainment and modernization of existing munitions capabilities. 6. Significant investment in a critical component for air-to-ground munitions.

Value Assessment

Rating: fair

The total award amount of $200.9 million for JDAM tail kits is substantial. However, without specific details on the number of units or the breakdown of costs for labor, materials, and profit, a direct value-for-money assessment is challenging. The Fixed Price Incentive (FPI) contract type introduces risk, as costs can increase if targets are not met, potentially impacting the overall value. Benchmarking against similar tail kit procurements or historical pricing for JDAM components would be necessary for a more definitive assessment.

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 often used when a specific capability is required from a particular contractor or when it's a follow-on to existing work where competition is not feasible or cost-effective. The lack of competition means that taxpayers do not benefit from the potential cost savings that could arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing. This can result in higher costs for taxpayers compared to what might be achieved through a fully competed contract.

Public Impact

The U.S. Air Force and Navy benefit from the continued supply of critical components for their air-to-ground munitions. This contract ensures the operational readiness and modernization of the JDAM (Joint Direct Attack Munition) system. The geographic impact is primarily within the United States, with potential for distribution to deployed forces globally. Workforce implications include continued employment at Boeing facilities involved in the manufacturing and assembly of these tail kits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Fixed Price Incentive contract type carries inherent risk of cost overruns if performance targets are missed.
Lack of detailed cost breakdowns makes independent value assessment difficult.
Long-term contract duration could lock in pricing without market adjustments.

Positive Signals

Ensures continued supply of a critical defense component, supporting national security objectives.
Award to a known, experienced contractor like Boeing suggests a focus on reliability and proven performance.
Delivery orders under an IDIQ structure can offer flexibility in managing demand over the contract period.

Sector Analysis

The defense industrial base relies heavily on specialized component manufacturers like The Boeing Company. This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical segment of the aerospace and defense industry. The market for precision-guided munitions components is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long development cycles. Spending in this area is driven by ongoing military operations, modernization efforts, and the need to maintain a strategic advantage.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large prime contractor, the primary focus is on the prime's capability. However, The Boeing Company is expected to utilize its supply chain, which may include small businesses for various components and services. The extent of subcontracting to small businesses will depend on Boeing's internal policies and the specific requirements of the JDAM tail kit production.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Department of Defense, specifically the contracting officers and program managers within the Air Force and Navy. The Fixed Price Incentive contract type necessitates close monitoring of performance against established targets to manage costs effectively. Transparency may be limited due to the sole-source nature and the classification of certain defense-related procurements. Inspector General offices within the DoD may conduct audits or investigations as deemed necessary.

Related Government Programs

Joint Direct Attack Munition (JDAM) Program
Air Force Munitions Procurement
Navy Weapons Systems
Precision-Guided Munitions Manufacturing
Defense Ammunition Supply Chain

Risk Flags

Sole-source award
Fixed Price Incentive contract type
Lack of detailed cost transparency
Long-term delivery schedule

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $200.9 million to THE BOEING COMPANY. ACQUISITION OF JDAM SABR-Y TAIL KITS FOR USAF AND USN.

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 $200.9 million.

What is the period of performance?

Start: 2025-07-31. End: 2027-07-31.

What is the historical spending pattern for JDAM tail kits with The Boeing Company?

Historical spending data for JDAM tail kits with The Boeing Company would reveal trends in procurement volume, pricing, and contract types over time. Analyzing past awards under similar IDIQ vehicles or direct procurements can indicate whether this $200.9 million award represents an increase, decrease, or stable level of investment. It can also highlight any shifts in contract structure, such as a move towards or away from incentive-based contracts, and whether previous sole-source awards have been consistent. Understanding this history is crucial for assessing the current award's context and identifying potential long-term cost efficiencies or escalations.

How does the unit cost of these JDAM tail kits compare to previous procurements or similar systems?

A detailed comparison of the unit cost for these JDAM tail kits against previous procurements or analogous systems is essential for evaluating value for money. Without specific unit counts and cost breakdowns, this comparison is challenging. However, if data were available, it would involve benchmarking the price per tail kit against historical awards to Boeing or other manufacturers for similar components. Factors such as inflation, technological upgrades, and changes in manufacturing processes would need to be considered. A significant deviation from historical or market benchmarks could signal potential overpricing or, conversely, reflect cost-saving efficiencies achieved.

What are the specific performance targets and incentive structures within this Fixed Price Incentive contract?

The Fixed Price Incentive (FPI) contract type implies that both the contractor and the government share the risks and benefits of cost savings or overruns. Specific performance targets, such as delivery schedules, quality standards, and cost ceilings, are negotiated. The incentive structure typically involves a target cost, a target profit, and a price ceiling. If the final cost is below the target cost, both parties share in the savings according to a pre-defined sharing ratio. Conversely, if the final cost exceeds the target cost, the contractor absorbs a portion of the overrun up to the price ceiling. Understanding these specific targets and sharing ratios is critical for assessing the potential financial exposure for both the government and the contractor, and for evaluating the effectiveness of the incentive mechanism in driving desired outcomes.

What is the rationale behind the sole-source award for this specific acquisition?

The rationale for a sole-source award typically stems from situations where only one responsible source can provide the required supplies or services. This could be due to proprietary technology, unique capabilities, the need for compatibility with existing systems, or if it's a follow-on contract where competition is not feasible or cost-effective. For JDAM tail kits, it might be that Boeing holds the intellectual property or has unique manufacturing processes essential for these specific components. The government would need to justify why other potential sources cannot meet the requirements, especially considering the significant dollar value of the contract.

What are the potential risks associated with the long-term delivery schedule (2025-2027)?

The long-term delivery schedule of July 2025 to July 2027 for these JDAM tail kits presents several potential risks. Firstly, there's the risk of price escalation over the contract period, especially if the contract doesn't adequately account for inflation or market fluctuations. Secondly, technological obsolescence could become a factor if advancements in munitions technology occur during this timeframe, potentially rendering the procured tail kits less effective or requiring costly upgrades. Thirdly, supply chain disruptions, geopolitical events, or changes in manufacturing capacity at Boeing could impact timely delivery. Finally, the government's long-term commitment might reduce flexibility to adapt to evolving threat environments or budget constraints.

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: $200,887,330

Exercised Options: $200,887,330

Current Obligation: $200,887,330

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA821324DB002

IDV Type: IDC

Timeline