Boeing awarded $61.5M for Minuteman III missile guidance subsystem repair, a sole-source contract

Contract Overview

Contract Amount: $61,469,144 ($61.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-09-28

End Date: 2020-09-27

Contract Duration: 365 days

Daily Burn Rate: $168.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 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 $61.5 million to THE BOEING COMPANY for work described as: THE PURPOSE OF THIS CONTRACT IS TO REPAIR THE GUIDANCE SUBSYSTEM OF THE MINTUEMAN III MISSILE. Key points: 1. Contract focuses on critical missile defense infrastructure, highlighting specialized repair needs. 2. Sole-source award suggests limited market availability for this specific repair capability. 3. Cost-plus award fee structure incentivizes performance but requires careful oversight. 4. Short 1-year duration may indicate a focused repair effort or a bridge to future solutions. 5. The contract's value is significant for a single repair task, warranting scrutiny. 6. Geographic focus on Ohio for this defense contract.

Value Assessment

Rating: fair

The contract value of $61.5 million for a one-year repair of a missile guidance subsystem appears substantial. Without comparable sole-source repair contracts for similar complex defense systems, it is difficult to benchmark value definitively. The cost-plus award fee structure allows for flexibility but necessitates rigorous monitoring of costs and performance to ensure fair pricing and prevent overruns. The absence of competition inherently limits price discovery, making it crucial to rely on robust cost analysis and performance metrics.

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 contractors. This approach is typically employed when only one contractor possesses the necessary specialized skills, technology, or security clearances to perform the required work. The lack of competition means that pricing and terms were negotiated directly with The Boeing Company, potentially leading to higher costs than if a competitive bidding process had been utilized.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. The government must ensure robust negotiation and oversight to secure the best possible value under these circumstances.

Public Impact

The primary beneficiary is the U.S. Air Force, ensuring the operational readiness 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 centered in Ohio, where the repair work is likely to be performed or managed. Workforce implications include specialized technical roles within The Boeing Company and potentially the Defense Contract Management Agency for oversight.

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 requires diligent oversight to manage expenses and ensure value.
The specific nature of missile guidance repair suggests high technical barriers to entry, limiting contractor options.
Short contract duration might indicate a need for further, potentially more expensive, follow-on work.

Positive Signals

Addresses a critical national security need for maintaining the Minuteman III missile system.
Leverages the specialized expertise of a known defense contractor, The Boeing Company.
The award fee component can incentivize strong performance and successful repair outcomes.
The contract specifies a clear deliverable: repair of the guidance subsystem.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for maintaining legacy systems like the Minuteman III are crucial for national security. Spending in this sub-sector often involves specialized repair, upgrade, and sustainment services for complex weapon platforms. Comparable spending benchmarks are difficult to establish due to the unique nature of strategic missile systems and the limited number of qualified contractors.

Small Business Impact

This contract does not appear to include specific small business set-asides. Given the specialized nature of missile guidance system repair and the sole-source award to a large prime contractor like Boeing, the direct impact on small businesses is likely minimal. However, Boeing may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data. The overall ecosystem impact on small businesses in this niche is likely limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The cost-plus award fee structure necessitates detailed financial and performance monitoring. Transparency is facilitated through contract reporting mechanisms, although the sole-source nature limits public insight into the negotiation process. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Minuteman III ICBM Sustainment Program
Strategic Missile Defense Systems
Aerospace and Defense Maintenance Contracts
Guidance and Control Systems Repair

Risk Flags

Sole-source award
Cost-plus contract type
Critical defense infrastructure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.5 million to THE BOEING COMPANY. 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $61.5 million.

What is the period of performance?

Start: 2019-09-28. End: 2020-09-27.

What is The Boeing Company's track record with Minuteman III missile systems and similar defense contracts?

The Boeing Company has a long and established history as a prime contractor for the U.S. Air Force's strategic missile programs, including significant roles in the development, production, and sustainment of the Minuteman III ICBM. They have been involved in various upgrades and maintenance efforts for the Minuteman III fleet over the decades. Their track record includes managing complex, high-value defense contracts, often involving sensitive technologies and stringent performance requirements. While specific details of past performance on guidance subsystem repairs are not provided here, Boeing's overall experience in the strategic deterrence domain suggests a high level of capability and familiarity with the systems involved. Their extensive experience positions them as a logical, albeit sole-source, provider for such critical maintenance tasks.

How does the $61.5 million contract value compare to historical spending on Minuteman III guidance subsystem repairs?

Direct historical spending comparisons for this specific repair task are challenging due to the sole-source nature of the award and the potential for variability in repair needs over time. The $61.5 million figure represents the total value for a one-year period (September 2019 - September 2020). Previous repairs might have been bundled into larger sustainment contracts, performed under different contract types, or had different scopes of work. Without access to detailed historical contract data specifically for Minuteman III guidance subsystem repairs, it's difficult to establish a precise benchmark. However, given the complexity and criticality of ICBM components, a contract value in the tens of millions for specialized repair services is not unexpected within the defense sector.

What are the primary risks associated with this sole-source contract for guidance subsystem repair?

The primary risk associated with this sole-source contract is the lack of competitive pricing, which could lead to the government paying a premium. Without competing bids, there is less pressure on the contractor to offer the lowest possible price. Another risk is potential cost overruns, inherent in cost-plus award fee contracts, which require diligent oversight to manage. Furthermore, reliance on a single contractor for such a critical component could create a vulnerability if that contractor faces production issues, financial instability, or decides to exit the market. Ensuring robust contract management, performance monitoring, and contingency planning is crucial to mitigate these risks.

How effective is the Cost Plus Award Fee (CPAF) contract structure in ensuring program effectiveness for this repair?

The Cost Plus Award Fee (CPAF) structure aims to balance cost control with performance incentives. It allows the contractor to recover allowable costs while providing an additional fee based on achieving specific performance objectives, which are typically outlined in the contract's performance evaluation plan. For the repair of a critical guidance subsystem, CPAF can be effective if the award criteria are well-defined, measurable, and directly linked to successful repair outcomes, system reliability, and timely delivery. The 'award' portion incentivizes the contractor (Boeing) to go beyond minimum requirements. However, the effectiveness hinges on the government's ability to objectively evaluate performance and administer the award fee fairly and rigorously. Poorly defined criteria or lax oversight can undermine the intended benefits.

What are the implications of the 1-year duration for this repair contract?

The 1-year duration of this contract suggests a focused scope of work, potentially addressing a specific set of identified repair needs or a scheduled maintenance cycle for the Minuteman III guidance subsystems. It could also indicate that this contract serves as a bridge to a future, potentially longer-term sustainment strategy or a more comprehensive upgrade program. A shorter duration might imply that the repair requirements are well-defined and achievable within that timeframe, or conversely, that the government is seeking flexibility to re-evaluate needs or competition after this period. It necessitates efficient execution by the contractor and close monitoring by the government to ensure objectives are met within the defined period.

What is the significance of the 'Other Electronic and Precision Equipment Repair and Maintenance' NAICS code (811219) in this context?

The North American Industry Classification System (NAICS) code 811219, 'Other Electronic and Precision Equipment Repair and Maintenance,' categorizes the type of service being procured. This code encompasses establishments primarily engaged in repairing electronic and precision equipment, not elsewhere classified. For the Minuteman III guidance subsystem, this code accurately reflects the specialized nature of the work, involving complex electronic components and precision engineering required for missile systems. It helps classify the contract within the broader economic landscape and identifies the industry sector involved, distinguishing it from general repair services.

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: $68,148,805

Exercised Options: $68,148,805

Current Obligation: $61,469,144

Actual Outlays: $20,545,212

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