Boeing awarded $106M contract for Minuteman III guidance subsystem repair, a sole-source, long-term effort

Contract Overview

Contract Amount: $106,048,179 ($106.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2024-07-29

End Date: 2039-09-27

Contract Duration: 5,538 days

Daily Burn Rate: $19.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: REPAIR THE GUIDANCE SUBSYSTEM OF THE MINUTEMAN III MISSILE

Place of Performance

Location: HEATH, LICKING County, OHIO, 43056

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $106.0 million to THE BOEING COMPANY for work described as: REPAIR THE GUIDANCE SUBSYSTEM OF THE MINUTEMAN III MISSILE Key points: 1. Contract awarded to a single vendor suggests limited market alternatives or specialized capabilities. 2. Long contract duration (over 15 years) indicates a critical, ongoing need for sustainment. 3. Cost Plus Award Fee (CPAF) structure incentivizes performance but requires robust oversight. 4. Focus on repair and maintenance highlights the aging nature of the Minuteman III system. 5. Geographic concentration in Ohio for performance may have local economic implications.

Value Assessment

Rating: fair

The contract's value of $106 million over 15 years for repair services requires careful benchmarking against similar sustainment contracts for complex defense systems. Without specific performance metrics or comparable contract data, assessing value for money is challenging. The Cost Plus Award Fee (CPAF) structure allows for flexibility but necessitates diligent monitoring to ensure costs remain reasonable and that award fees are tied to demonstrable performance improvements. The lack of competition inherently limits price discovery, potentially leading to higher costs than a competitive procurement.

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 typically justified when a unique capability, proprietary technology, or urgent need exists that only one contractor can fulfill. The absence of competition means that taxpayers do not benefit from the price reductions and innovation that typically arise from a competitive bidding process. This raises questions about whether alternative solutions or contractors were thoroughly explored.

Taxpayer Impact: The sole-source nature of this award means taxpayers may be paying a premium, as there was no competitive pressure to drive down costs. This also limits opportunities for other businesses to compete for this critical defense work.

Public Impact

The primary beneficiaries are the Department of Defense and the Air Force, ensuring the operational readiness of the Minuteman III intercontinental ballistic missile system. Services delivered include the repair and maintenance of the guidance subsystem, crucial for missile accuracy and reliability. The contract's performance location is specified in Ohio, potentially impacting the local workforce and economy in that region. This contract supports specialized technical jobs within The Boeing Company, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Long contract duration (15+ years) requires sustained oversight to manage evolving risks and costs.
Cost Plus Award Fee (CPAF) structure necessitates rigorous performance monitoring to ensure value.
Reliance on a single contractor for a critical missile component poses supply chain and technical risk.

Positive Signals

Contract awarded to a known prime contractor with extensive experience in missile systems.
Focus on repair and sustainment of an existing, critical strategic asset ensures national security.
Performance location in Ohio may leverage existing infrastructure and skilled workforce.

Sector Analysis

The defense electronics and repair market is highly specialized, with significant barriers to entry due to technical expertise, security clearances, and existing relationships. The Minuteman III missile system represents a legacy strategic asset, and its sustainment requires contractors with deep knowledge of its unique components, such as the guidance subsystem. Spending on sustainment and modernization of aging strategic weapons systems constitutes a significant portion of the defense budget, often involving long-term contracts with a limited number of qualified providers.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, nor is there an indication of significant subcontracting opportunities for small businesses in the provided data. The nature of the work, focusing on a highly specialized guidance subsystem for a legacy missile system, likely requires capabilities typically held by larger, established defense contractors. Further analysis would be needed to determine if Boeing has committed to subcontracting portions of this work to small businesses.

Oversight & Accountability

Oversight for this Cost Plus Award Fee (CPAF) contract will likely be managed by the Department of the Air Force contracting and program management offices. Key accountability measures will involve monitoring cost expenditures, evaluating contractor performance against defined award fee criteria, and ensuring compliance with contract terms. Transparency may be limited due to the sole-source nature and the sensitive defense context, but Inspector General (IG) offices typically retain jurisdiction for audits and investigations into waste, fraud, and abuse.

Related Government Programs

Minuteman III Sustainment Program
ICBM Modernization Programs
Aerospace Defense Contracting
Guidance, Navigation, and Control Systems Maintenance

Risk Flags

Sole-source award
Long contract duration
Cost Plus Award Fee structure
Critical defense system sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $106.0 million to THE BOEING COMPANY. REPAIR THE GUIDANCE SUBSYSTEM OF THE MINUTEMAN 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 $106.0 million.

What is the period of performance?

Start: 2024-07-29. End: 2039-09-27.

What is The Boeing Company's track record with the Minuteman III program and similar complex sustainment contracts?

The Boeing Company has a long-standing history with the Minuteman III program, serving as a prime contractor for various aspects of the system's sustainment and modernization over decades. Their experience encompasses a wide range of complex aerospace and defense systems, including missile guidance, control, and launch systems. This extensive background suggests a deep understanding of the technical requirements and operational context for maintaining the Minuteman III's guidance subsystem. However, like any large defense contractor, Boeing's history may include both successes and challenges in managing large, long-term contracts, necessitating ongoing performance evaluation.

How does the $106 million cost compare to similar guidance subsystem repair contracts for other strategic missile systems?

Directly comparing the $106 million cost for this 15-year contract to similar guidance subsystem repair contracts for other strategic missile systems is challenging without access to proprietary or classified contract data. However, the cost per year averages approximately $7 million. This figure needs to be benchmarked against the complexity, criticality, and technological sophistication of the specific guidance system, as well as the number of units requiring repair and the level of service required (e.g., depot-level repair vs. field maintenance). Given the sole-source nature and the long duration, this cost is likely influenced by factors beyond simple market competition, including specialized labor, unique tooling, and long-term support requirements.

What are the primary risks associated with a sole-source, long-term contract for critical missile components?

The primary risks associated with a sole-source, long-term contract for critical missile components like the Minuteman III guidance subsystem include potential cost overruns due to lack of competitive pressure, reduced incentive for innovation, and vendor lock-in. Taxpayers may face higher prices than in a competitive environment. There's also a risk of complacency from the sole provider, potentially impacting service quality or responsiveness over the contract's extended duration. Furthermore, reliance on a single entity for such a critical component can create vulnerabilities in the supply chain and increase the impact of any performance issues or disruptions experienced by the contractor.

How effective is the Cost Plus Award Fee (CPAF) structure in ensuring value for money in this context?

The Cost Plus Award Fee (CPAF) structure aims to balance cost control with performance incentives. In this context, it allows the government to reimburse Boeing for allowable costs while providing opportunities for award fees based on achieving specific performance objectives related to the repair and maintenance of the guidance subsystem. Its effectiveness hinges on the clarity and measurability of these objectives. If well-defined and rigorously monitored, CPAF can incentivize high performance and quality. However, if award criteria are vague or oversight is lax, it can lead to increased costs without commensurate performance gains, making robust government oversight critical to ensuring value for money.

What are the historical spending patterns for the Minuteman III guidance subsystem repair and maintenance?

Historical spending patterns for the Minuteman III guidance subsystem repair and maintenance are likely characterized by consistent, long-term investments reflecting the system's extended operational life. As a legacy system, its sustainment costs tend to increase over time due to aging components, obsolescence, and the need for specialized repair capabilities. While specific historical dollar figures for this particular subsystem repair contract are not provided, overall spending on Minuteman III sustainment has been substantial and ongoing, reflecting its continued role in the U.S. nuclear triad. This new contract, spanning over 15 years, indicates a continuation of this long-term investment strategy.

What are the implications of the contract's performance location in Ohio?

The contract's performance location in Ohio has several implications. It suggests that The Boeing Company likely has or will establish/utilize facilities and personnel in Ohio to carry out the repair and maintenance work. This can lead to job creation and economic benefits within the state, particularly in specialized technical fields. It may also indicate the presence of existing infrastructure or a skilled workforce in the region suited for this type of defense work. For the government, a concentrated performance location can sometimes simplify oversight, but it also means potential risks are geographically concentrated.

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, HEATH, 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: $128,620,566

Exercised Options: $128,620,566

Current Obligation: $106,048,179

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA821421D0003

IDV Type: IDC

Timeline