DoD's $920M Boeing contract for extended-range missiles shows R&D focus, with potential for future production

Contract Overview

Contract Amount: $9,206,935 ($9.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-09-01

End Date: 2026-02-28

Contract Duration: 911 days

Daily Burn Rate: $10.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: COUNTER AIR SCIENCE AND TECHNOLOGY (CAST) - EXTENDED RANGE AIR TO AIR MISSILE (ERAAM) SYSTEMS MATURATION

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $9.2 million to THE BOEING COMPANY for work described as: COUNTER AIR SCIENCE AND TECHNOLOGY (CAST) - EXTENDED RANGE AIR TO AIR MISSILE (ERAAM) SYSTEMS MATURATION Key points: 1. Contract supports critical defense technology development for air-to-air missile systems. 2. Boeing's selection indicates confidence in their R&D capabilities for advanced weaponry. 3. The cost-plus-fixed-fee structure allows for flexibility in research but requires careful oversight. 4. This contract is a significant investment in maintaining air superiority. 5. Long duration suggests a complex, multi-phase development process. 6. Focus on 'systems maturation' implies moving beyond basic research towards a deployable product.

Value Assessment

Rating: good

The contract value of $920 million for research and development is substantial, reflecting the complexity and strategic importance of advanced missile systems. While specific cost benchmarks for 'systems maturation' of extended-range air-to-air missiles are difficult to ascertain due to the specialized nature of the technology and the R&D phase, the cost-plus-fixed-fee (CPFF) pricing structure is common for such efforts. This structure allows for flexibility as research progresses but necessitates robust oversight to ensure costs remain reasonable and aligned with project milestones. Comparisons to similar large-scale defense R&D programs suggest this is within the expected range for cutting-edge weapon system development.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The specific number of bidders is not provided, but the 'full and open' designation suggests a competitive process was utilized. This approach is generally favored for ensuring the government receives the best value by leveraging market competition. The existence of competition, even if the number of bidders is unknown, provides a baseline for price discovery and encourages innovation among potential contractors.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down costs through market forces and increases the likelihood of selecting the most capable and cost-effective solution for developing critical defense technologies.

Public Impact

The U.S. Air Force and potentially other branches of the military will benefit from advanced air-to-air missile capabilities. This contract supports the development of next-generation missile systems crucial for maintaining air superiority. The primary beneficiaries are military personnel who will operate these advanced systems. Geographic impact is primarily within the contractor's facilities, likely in Missouri, but the end-use is global defense operations. Workforce implications include highly skilled engineering, research, and technical jobs within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to cost overruns if not managed diligently.
The long duration of the contract increases the risk of scope creep or evolving technological requirements.
Reliance on a single contractor for a critical technology development phase warrants close monitoring.
The 'systems maturation' phase can be prone to unforeseen technical challenges.

Positive Signals

Awarded under full and open competition, suggesting a robust selection process.
The contractor, Boeing, has extensive experience in aerospace and defense systems.
Focus on 'systems maturation' indicates a clear path towards a functional product.
The contract duration is aligned with the typical lifecycle of complex defense R&D projects.

Sector Analysis

The aerospace and defense sector is characterized by high R&D investment, long product development cycles, and significant government procurement. This contract falls within the Research and Development (R&D) category, specifically focusing on advanced physical sciences and engineering for defense applications. The market for advanced missile systems is highly specialized, dominated by a few major defense contractors. Spending in this area is critical for national security and maintaining technological superiority. Comparable spending benchmarks for similar R&D programs in advanced weapon systems often run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, as indicated by 'sb': false. However, large prime contractors like Boeing are typically required to subcontract portions of their work to small businesses. The extent of small business participation will depend on Boeing's subcontracting plan and the specific needs of the missile systems maturation process. This contract could provide opportunities for small businesses specializing in niche technologies, components, or support services within the aerospace and defense supply chain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force, with specific program management offices responsible for monitoring progress, costs, and adherence to technical specifications. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable to the contract. Transparency will be maintained through regular reporting requirements from the contractor. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Air-to-Air Missiles
Advanced Weapon Systems Development
Defense Research and Development Programs
Missile Technology Development
Aerospace Engineering Services

Risk Flags

Cost Overrun Potential (CPFF)
Technological Obsolescence Risk
Long Program Duration
Dependency on Single Contractor for Critical R&D

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.2 million to THE BOEING COMPANY. COUNTER AIR SCIENCE AND TECHNOLOGY (CAST) - EXTENDED RANGE AIR TO AIR MISSILE (ERAAM) SYSTEMS MATURATION

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 $9.2 million.

What is the period of performance?

Start: 2023-09-01. End: 2026-02-28.

What is the specific technological advancement sought by the 'Extended Range Air to Air Missile (ERAAM) Systems Maturation' contract?

The 'Extended Range Air to Air Missile (ERAAM) Systems Maturation' contract aims to advance the development of air-to-air missiles with significantly increased range capabilities. This involves maturing the system's design, components, and performance characteristics beyond initial research phases. Key areas likely include propulsion systems for extended flight, advanced seeker and guidance technologies for long-distance targeting, aerodynamic improvements for stability and efficiency at extended ranges, and potentially enhanced warhead or countermeasure capabilities. The 'systems maturation' aspect suggests a focus on refining existing concepts or prototypes to a point where they are closer to production readiness, addressing technical challenges, and validating performance under realistic operational conditions. This is crucial for maintaining air superiority against evolving threats.

How does the 'Cost Plus Fixed Fee' (CPFF) contract type influence cost control for this R&D project?

The Cost Plus Fixed Fee (CPFF) contract type is common for research and development efforts where the scope of work can be uncertain or evolve. Under CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to complete the work efficiently to maximize their profit margin, as the fee is fixed regardless of the final cost. However, it places a significant burden on the government to meticulously monitor and audit all incurred costs to ensure they are reasonable, allocable, and allowable. Without stringent oversight, there is a risk of cost overruns, as the contractor is guaranteed cost reimbursement. The fixed fee provides some predictability for the contractor's profit but less certainty on the total project cost for the government compared to fixed-price contracts.

What is Boeing's track record with similar large-scale defense R&D contracts?

The Boeing Company has an extensive and well-established track record in developing and producing complex defense systems, including advanced aircraft, missiles, and related technologies, for the U.S. Department of Defense and international partners. They have consistently been awarded large-scale R&D contracts for next-generation weapon systems, often involving significant technological innovation and long development cycles. Examples include their involvement in fighter jet programs, strategic missile systems, and various advanced munitions. Their history suggests a strong capability in managing complex R&D projects, integrating diverse technologies, and meeting stringent performance requirements. However, like any major defense contractor, they have also faced scrutiny and challenges on specific programs related to cost, schedule, and performance, underscoring the importance of ongoing government oversight.

What are the potential risks associated with the long duration (911 days) of this contract?

The 911-day duration (approximately 2.5 years) for this 'systems maturation' contract presents several potential risks. Firstly, technological advancements in the rapidly evolving field of missile defense could render the developed system less relevant or require significant modifications mid-project, leading to scope creep or increased costs. Secondly, geopolitical landscapes and strategic priorities can shift, potentially altering the requirements or urgency of the program. Thirdly, long-duration contracts increase the potential for personnel turnover within both the contractor's team and the government oversight team, which can lead to knowledge loss and inconsistencies. Finally, extended timelines can introduce economic risks, such as inflation impacting material costs or changes in funding priorities within the government's budget cycle, potentially affecting the program's stability and ultimate completion.

How does this contract fit into the broader context of U.S. Air Force modernization efforts?

This contract for Extended Range Air to Air Missile (ERAAM) Systems Maturation is a critical component of the U.S. Air Force's broader modernization strategy, which emphasizes maintaining air superiority in increasingly contested environments. As potential adversaries develop advanced air defense systems and long-range strike capabilities, the Air Force requires next-generation air-to-air missiles to counter these threats effectively. Enhancing missile range allows fighter aircraft to engage targets from safer distances, increasing survivability and operational flexibility. This R&D effort directly supports the Air Force's goal of fielding advanced, high-performance weapon systems that can operate across the spectrum of conflict, ensuring dominance in the air domain for years to come.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Pricing Type: COST PLUS FIXED FEE (U)

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: $9,206,935

Exercised Options: $9,206,935

Current Obligation: $9,206,935

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $2,483,354

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA865122DA009

IDV Type: IDC

Timeline