DoD's $59.6M Minuteman III missile guidance repair contract awarded to Boeing without competition
Contract Overview
Contract Amount: $59,576,504 ($59.6M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2017-06-28
End Date: 2018-09-27
Contract Duration: 456 days
Daily Burn Rate: $130.7K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: IGF::OT::IGF THE PURPOSE OF THIS CONTRACT IS TO REPAIR THE GUIDANCE SUBSYSTEM OF THE MINTUEMAN III MISSILE.
Place of Performance
Location: HEATH, LICKING County, OHIO, 43056
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $59.6 million to THE BOEING COMPANY for work described as: IGF::OT::IGF THE PURPOSE OF THIS CONTRACT IS TO REPAIR THE GUIDANCE SUBSYSTEM OF THE MINTUEMAN III MISSILE. Key points: 1. Contract awarded for critical missile system repair, indicating high stakes for national defense. 2. Sole-source award to Boeing raises questions about potential price overruns and lack of market pressure. 3. Repair of guidance subsystem is essential for maintaining the operational readiness of the Minuteman III. 4. Contract duration of 456 days suggests a complex and potentially lengthy repair process. 5. The specific nature of missile guidance systems may necessitate specialized expertise, potentially limiting competition. 6. Lack of competition could lead to higher costs for taxpayers compared to a more open bidding process.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized, sensitive equipment involved. Without competitive bids, it's difficult to assess if the $59.6 million represents a fair market price for the repair of the guidance subsystem. The cost-plus award fee structure introduces some incentive for performance but also carries inherent risk of cost escalation if not managed tightly. Comparisons to similar missile system repair contracts are scarce due to the unique nature of the Minuteman III.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning the Department of Defense did not solicit bids from multiple potential contractors. This approach is typically justified when only one contractor possesses the necessary specialized knowledge, technology, or security clearances to perform the work. In this case, Boeing's historical role in the Minuteman III program likely made them the only viable option. The lack of competition means there was no price discovery through market forces, potentially leading to a higher price than if multiple bids had been received.
Taxpayer Impact: Taxpayers may have paid a premium for this repair due to the absence of competitive bidding. Without alternative quotes, it's harder to ensure the most cost-effective solution was secured.
Public Impact
The primary beneficiaries are the U.S. Air Force and the Department of Defense, ensuring the continued operational capability of the Minuteman III intercontinental ballistic missile (ICBM) system. The service delivered is the repair of the guidance subsystem, a critical component for missile accuracy and reliability. The geographic impact is national, as the Minuteman III is a key part of the U.S. strategic nuclear deterrent, deployed across several states. Workforce implications include specialized technicians and engineers at Boeing, potentially requiring high-level security clearances.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition, potentially increasing costs for taxpayers.
- Cost-plus award fee structure can incentivize cost overruns if not rigorously managed.
- Reliance on a single contractor for critical missile system repair creates program dependency.
- Lack of transparency in the procurement process due to sole-source justification.
Positive Signals
- Award to Boeing leverages existing expertise with the Minuteman III system, potentially ensuring quality repairs.
- Focus on repairing a critical guidance subsystem directly supports national defense readiness.
- The contract addresses a specific, essential maintenance need for a strategic asset.
Sector Analysis
The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government oversight. Contracts for maintaining strategic assets like the Minuteman III are often specialized and may involve proprietary technology. Boeing, as a major defense contractor with extensive experience in strategic missile systems, is a key player in this market. Spending on strategic weapons system maintenance is a significant portion of the defense budget, with contracts often being long-term and high-value.
Small Business Impact
This contract does not appear to involve small business set-asides. As a sole-source award to a large prime contractor like Boeing, the direct impact on small businesses is likely limited to their role as subcontractors to Boeing. There is no explicit indication of subcontracting plans for small businesses within the provided data. The focus is on the prime contractor's capabilities for this specialized repair.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, with potential involvement from the Air Force's Inspector General. The cost-plus award fee structure necessitates close monitoring of costs and performance to ensure value for money. Transparency is limited due to the sole-source nature, but reporting requirements for cost and progress would still apply. The specific Inspector General jurisdiction would be determined by the branch of service and the nature of the audit or investigation.
Related Government Programs
- Minuteman III ICBM Sustainment
- Strategic Weapons System Maintenance
- Aerospace and Defense Maintenance Contracts
- Guidance and Control Systems Repair
- Department of Defense Repair and Overhaul
Risk Flags
- Sole-source award
- Cost-plus contract type
- Aging weapon system maintenance
- Potential for cost overruns
Tags
defense, department-of-defense, air-force, minuteman-iii, missile-repair, guidance-subsystem, boeing, sole-source, cost-plus-award-fee, strategic-weapons, ohio, delivery-order
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $59.6 million to THE BOEING COMPANY. IGF::OT::IGF THE PURPOSE OF THIS CONTRACT IS TO REPAIR THE GUIDANCE SUBSYSTEM OF THE MINTUEMAN III MISSILE.
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 $59.6 million.
What is the period of performance?
Start: 2017-06-28. End: 2018-09-27.
What is Boeing's track record with the Minuteman III missile system?
Boeing has a long-standing and extensive history with the Minuteman III missile system, having served as a prime contractor for its development, production, and sustainment for decades. This includes manufacturing components, integrating systems, and providing ongoing maintenance and upgrade services. Their deep institutional knowledge and established infrastructure related to the Minuteman III are significant factors contributing to their selection for specialized repair tasks. This familiarity suggests a high level of technical expertise and a proven ability to manage the complexities associated with this strategic weapon system, which is crucial for ensuring the reliability and operational readiness of the missile.
How does the $59.6 million cost compare to similar missile guidance subsystem repairs?
Direct comparison of the $59.6 million cost for this specific Minuteman III guidance subsystem repair to similar contracts is difficult due to several factors. Firstly, the Minuteman III is a unique, aging strategic asset, and its guidance systems are highly specialized. Secondly, this contract was awarded sole-source to Boeing, limiting transparency and the availability of benchmark pricing from competitive bids. While other missile systems undergo guidance repairs, the scale, complexity, and specific technological requirements of the Minuteman III likely result in different cost structures. Without access to proprietary data or comparable sole-source awards for similar strategic systems, a precise value-for-money assessment against market rates is challenging.
What are the primary risks associated with this sole-source contract?
The primary risks associated with this sole-source contract revolve around cost control and potential lack of innovation. Without competitive pressure, there's an increased risk that the awarded price may not reflect the most economical option available, potentially leading to cost overruns for the government. The cost-plus award fee (CPAF) structure, while incentivizing performance, can also contribute to cost escalation if not managed with stringent oversight, as the contractor is reimbursed for allowable costs plus a fee. Furthermore, a sole-source award can stifle innovation by not exposing the government to alternative solutions or more efficient repair methodologies that other companies might offer. Dependency on a single contractor for critical repairs also poses a risk to program continuity.
How effective is the Cost Plus Award Fee (CPAF) structure in ensuring program effectiveness for this contract?
The Cost Plus Award Fee (CPAF) structure aims to balance cost control with performance incentives. For this contract, it means Boeing will be reimbursed for its allowable costs incurred during the repair of the Minuteman III guidance subsystem, plus a base fee and an award fee. The award fee is determined by the government based on predefined performance criteria, such as meeting schedules, quality standards, and technical objectives. This structure incentivizes Boeing to perform effectively and efficiently to maximize its fee. However, the effectiveness hinges heavily on the government's ability to establish clear, measurable performance metrics and conduct objective evaluations. Rigorous oversight is crucial to ensure the award fee truly reflects superior performance and doesn't become an automatic add-on, thereby mitigating the risk of cost escalation inherent in CPAF contracts.
What are the historical spending patterns for Minuteman III guidance subsystem repairs?
Historical spending patterns for Minuteman III guidance subsystem repairs are not explicitly detailed in the provided data. However, it is known that the Minuteman III is an aging system, originally deployed in the 1970s, and has undergone numerous sustainment and upgrade programs over its lifespan. Maintenance and repair of critical components like the guidance subsystem are ongoing necessities to maintain operational readiness. Given the system's age and the specialized nature of its components, repair costs can be substantial. Previous contracts for similar sustainment activities would likely have been awarded to Boeing or its predecessors due to their long-standing role. Understanding precise historical spending would require access to detailed contract databases and program history beyond this single award.
What is the significance of the contract's end date (2018-09-27) given the system's age?
The contract's end date of September 27, 2018, signifies the completion of the specific repair work on the Minuteman III guidance subsystem as defined in this delivery order. Given that the Minuteman III is an aging system, the need for ongoing maintenance and repair is continuous. This contract likely addressed a specific set of identified issues or a scheduled overhaul. The fact that the contract has concluded means that either the work was completed, or the government has since awarded subsequent contracts for further sustainment or repair needs. The aging nature of the missile implies that such repair and maintenance activities are essential and recurring, forming part of a larger, long-term sustainment strategy for the ICBM force.
Industry Classification
NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance
Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 801 IRVING WICK DR W, NEWARK, OH, 43056
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: $60,076,504
Exercised Options: $60,076,504
Current Obligation: $59,576,504
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA821415D0002
IDV Type: IDC
Timeline
Start Date: 2017-06-28
Current End Date: 2018-09-27
Potential End Date: 2023-09-27 00:00:00
Last Modified: 2023-09-13
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