Boeing awarded $16.3M for Minuteman III missile propulsion, with limited competition

Contract Overview

Contract Amount: $16,287,841 ($16.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-12-14

End Date: 2026-12-31

Contract Duration: 1,478 days

Daily Burn Rate: $11.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PADS CEUI UPDATE FOR MINUTE MAN III MISSLE

Place of Performance

Location: LAYTON, DAVIS County, UTAH, 84041

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $16.3 million to THE BOEING COMPANY for work described as: PADS CEUI UPDATE FOR MINUTE MAN III MISSLE Key points: 1. Contract value appears reasonable given the specialized nature of missile propulsion systems. 2. Sole-source award suggests potential lack of market competition or unique contractor capabilities. 3. Long contract duration (4 years) may indicate a need for sustained support or development. 4. Firm Fixed Price contract type shifts risk to the contractor, potentially impacting cost certainty. 5. Contract awarded by the Department of the Air Force, a key defense agency. 6. Focus on propulsion units highlights critical components of strategic missile systems.

Value Assessment

Rating: fair

The contract value of $16.3 million for Minuteman III missile propulsion unit updates is difficult to benchmark without specific details on the scope of work. However, given the highly specialized and sensitive nature of strategic missile components, costs can be expected to be significant. The firm fixed-price structure suggests a defined scope, but the lack of competitive bidding makes a direct value-for-money assessment challenging. Compared to other defense contracts for complex systems, the price may be within a reasonable range, but transparency is limited.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was solicited. This approach is typically justified when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of a necessary component. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple sources. This raises questions about whether alternative solutions or more cost-effective options were explored.

Taxpayer Impact: The absence of competition means taxpayers may not have received the best possible price for these critical missile components. Without a competitive process, there is less pressure on the contractor to offer the lowest cost, potentially leading to higher overall expenditure.

Public Impact

The primary beneficiaries are the U.S. Air Force and the Department of Defense, ensuring the continued operational readiness of the Minuteman III intercontinental ballistic missile (ICBM) system. The contract delivers essential services related to the maintenance, upgrade, or sustainment of guided missile and space vehicle propulsion units and their parts. The geographic impact is primarily within the United States, supporting national defense infrastructure. Workforce implications include specialized engineering, manufacturing, and technical roles within The Boeing Company and potentially its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Long-term contract duration could lock in potentially suboptimal pricing if market conditions change.
Lack of transparency in the sole-source justification makes independent value assessment difficult.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Award to a major defense contractor like Boeing suggests established expertise in complex systems.
Focus on critical missile components ensures national security readiness.

Sector Analysis

The defense sector, particularly within aerospace and missile systems, is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for strategic weapon systems like the Minuteman III are often awarded to a limited number of prime contractors due to the complexity, security requirements, and specialized knowledge involved. Spending in this area is driven by national security priorities and geopolitical considerations. Comparable spending benchmarks are difficult to establish due to the unique nature of ICBM components, but large-scale sustainment and upgrade programs for strategic assets typically run into the tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb': false. Furthermore, the 'ss': false flag suggests no specific small business subcontracting goals were mandated within this award. Given the sole-source nature and the specialized domain of missile propulsion, it is unlikely that significant subcontracting opportunities for small businesses would be a primary focus of this particular contract, though Boeing may engage small businesses within its broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The firm fixed-price nature provides some level of accountability by tying payment to deliverables. Transparency is limited due to the sole-source award. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. However, the specific details of oversight mechanisms and performance metrics are not publicly detailed in the provided data.

Related Government Programs

Minuteman III ICBM Sustainment Program
Strategic Missile Component Manufacturing
Aerospace Propulsion Systems Contracts
Department of Defense Weapon System Modernization

Risk Flags

Sole-source award lacks competitive transparency.
Potential for cost inefficiencies due to lack of competition.
Long contract duration may not adapt to technological changes.
Limited public data on specific scope of work and performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.3 million to THE BOEING COMPANY. PADS CEUI UPDATE FOR MINUTE MAN III MISSLE

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 $16.3 million.

What is the period of performance?

Start: 2022-12-14. End: 2026-12-31.

What is the specific scope of work covered by this $16.3 million contract for Minuteman III propulsion units?

The provided data indicates the contract is for 'PADS CEUI UPDATE FOR MINUTE MAN III MISSLE' and falls under the Product and Service Code (PSC) for 'Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing'. This suggests the work involves updates, maintenance, or sustainment activities for the propulsion systems of the Minuteman III intercontinental ballistic missile. The 'CEUI' likely refers to a specific component or system within the propulsion unit. Without further documentation, the exact nature of the 'update' (e.g., refurbishment, replacement, technological enhancement) remains unspecified, but it is critical for maintaining the operational readiness of this strategic asset.

Why was this contract awarded on a sole-source basis to The Boeing Company?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For complex defense systems like the Minuteman III, this could be due to The Boeing Company's unique historical role in developing and manufacturing the system, possession of proprietary technical data, specialized tooling, or unique expertise required for its propulsion units. The government must provide a justification for sole-source procurement, often citing factors like urgency, lack of alternatives, or essential integration requirements. The specific justification document for this contract would offer more insight into the rationale behind bypassing a competitive bidding process.

How does the firm fixed-price (FFP) contract type impact risk and cost for this propulsion unit contract?

A Firm Fixed Price (FFP) contract is generally favorable to the government as it establishes a ceiling price that the contractor must adhere to, regardless of their actual costs. This shifts the risk of cost overruns from the government to the contractor. For this $16.3 million contract, Boeing is obligated to deliver the specified propulsion unit updates within the agreed-upon price. While this provides cost certainty for the Air Force, it also means that if Boeing encounters unforeseen difficulties or inefficiencies, they bear the financial burden. Conversely, if Boeing manages the work efficiently, they can achieve a higher profit margin. The FFP structure incentivizes the contractor to control costs and perform efficiently.

What is the historical spending trend for Minuteman III propulsion unit maintenance or updates?

Analyzing historical spending trends for specific components like the Minuteman III propulsion units requires access to historical contract databases and budget information. The provided data only reflects this single $16.3 million award. To understand trends, one would need to examine previous contracts awarded to Boeing or other entities for similar work on the Minuteman III propulsion system over the past several years or decades. This would involve looking at contract values, durations, and the nature of the work performed (e.g., sustainment, upgrades, component replacements). Such an analysis could reveal patterns of increasing costs, changes in maintenance strategies, or the impact of modernization efforts on overall spending.

What are the potential risks associated with the long duration (2022-2026) of this contract?

The contract duration of approximately four years (from December 2022 to December 2026) for the Minuteman III propulsion unit updates presents several potential risks. Firstly, technology can evolve rapidly, and a four-year commitment might lock the Air Force into using potentially outdated specifications or processes if significant advancements occur during the contract period. Secondly, market conditions for materials or specialized labor could fluctuate, potentially impacting Boeing's costs and, indirectly, the value proposition if the FFP was based on earlier assumptions. Thirdly, long-term contracts can sometimes reduce the incentive for continuous process improvement if the contractor feels secure in the existing agreement. Finally, if the scope of work is not precisely defined, there's a risk of scope creep or disputes over deliverables over such an extended period.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA821422R7003

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 465 MARSHALL WAY, LAYTON, UT, 84041

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: $23,225,720

Exercised Options: $23,225,720

Current Obligation: $16,287,841

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline