Boeing awarded $242M for Small Diameter Bomb I production, a sole-source contract for ammunition manufacturing

Contract Overview

Contract Amount: $242,340,869 ($242.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2016-09-13

End Date: 2020-03-02

Contract Duration: 1,266 days

Daily Burn Rate: $191.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: SMALL DIAMETER BOMB I (SDB I) DELIVERY ORDER 1 (LOT 12)

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $242.3 million to THE BOEING COMPANY for work described as: SMALL DIAMETER BOMB I (SDB I) DELIVERY ORDER 1 (LOT 12) Key points: 1. Contract awarded to a single supplier, raising questions about price competitiveness. 2. Focus on ammunition manufacturing, a critical defense sector. 3. Long contract duration (1266 days) may indicate complex production or supply chain factors. 4. Fixed Price Incentive contract type suggests shared risk between government and contractor. 5. No small business set-aside, potentially limiting opportunities for smaller firms. 6. High dollar value indicates significant investment in this specific munition.

Value Assessment

Rating: questionable

The contract's value of $242.3 million for SDB I production is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or alternative suppliers. The fixed-price incentive structure implies that cost overruns would be shared, but the initial price is not publicly justified through competition. Further analysis would be needed to compare this unit cost to similar munitions or previous SDB I procurements.

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 bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. The lack of competition means there was no direct price comparison or incentive for Boeing to offer the lowest possible price. This can sometimes lead to higher costs for the government.

Taxpayer Impact: Taxpayers may not be receiving the best possible value due to the absence of a competitive bidding process. Without competing offers, the government lacks leverage to negotiate lower prices, potentially resulting in higher overall expenditure for this munition.

Public Impact

The primary beneficiary is the Department of Defense, which receives advanced munitions for its operations. The contract ensures the continued production and supply of Small Diameter Bomb I (SDB I) munitions. The contract is being performed in Missouri, supporting the defense industrial base in that state. This contract supports jobs within The Boeing Company's defense manufacturing division.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may reduce incentives for innovation or efficiency improvements from the contractor.
Fixed Price Incentive contract type, while sharing risk, can still lead to cost overruns if not managed tightly.

Positive Signals

Contract ensures supply of a critical munition, supporting national defense objectives.
Boeing is a major defense contractor with established expertise in munitions manufacturing.
Fixed Price Incentive contract aligns some contractor incentives with government cost goals.

Sector Analysis

This contract falls within the Defense sector, specifically the manufacturing of ammunition. The market for advanced munitions is often characterized by a limited number of highly specialized suppliers, with significant barriers to entry due to technology, security, and regulatory requirements. Spending in this area is driven by military modernization and operational needs. Comparable spending benchmarks would typically involve other large-scale munition production contracts.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Boeing actively engages small businesses in its supply chain for this specific program. Further investigation into Boeing's subcontracting plans would be necessary to assess any indirect benefits.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The fixed-price incentive nature of the contract requires careful monitoring of costs and performance metrics to ensure value for money. Transparency regarding the justification for the sole-source award and the pricing structure would be key accountability measures.

Related Government Programs

Small Diameter Bomb II (SDB II)
Joint Direct Attack Munition (JDAM)
Advanced Precision Kill Weapon System (APKWS)

Risk Flags

Sole-source award raises concerns about potential lack of competition and inflated pricing.
Long contract duration could indicate production complexities or potential for delays.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $242.3 million to THE BOEING COMPANY. SMALL DIAMETER BOMB I (SDB I) DELIVERY ORDER 1 (LOT 12)

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 $242.3 million.

What is the period of performance?

Start: 2016-09-13. End: 2020-03-02.

What is the historical spending trend for Small Diameter Bomb I (SDB I) production by the Department of Defense?

Analyzing historical spending for SDB I production is crucial for understanding the long-term investment in this munition. While this specific delivery order represents a significant single award of $242.3 million, a comprehensive view requires examining all prior and subsequent contracts for SDB I. This includes looking at the total obligated amounts over various fiscal years, the number of contracts awarded, and the primary contractors involved. Trends might reveal increasing or decreasing demand, price fluctuations over time, and the overall lifecycle cost of the program. Without access to a broader contract history database, it's challenging to establish a definitive trend, but this large award suggests sustained or significant recent investment in SDB I capabilities.

How does the unit cost of the SDB I under this contract compare to similar munitions or previous SDB I procurements?

Benchmarking the unit cost of the SDB I under this $242.3 million contract is essential for assessing value for money. However, the provided data lacks specific unit cost details or the total number of units procured within this award. Furthermore, as this was a sole-source contract, direct price comparisons with competing munitions are inherently difficult. To perform a robust comparison, one would need access to the contract's detailed pricing structure, the quantity of bombs delivered, and historical pricing data for SDB I from previous contracts. Comparing it to similar precision-guided munitions from other manufacturers or even different variants of the SDB program could offer some context, but the lack of competitive pricing makes definitive value assessment challenging.

What are the specific performance metrics and incentives tied to the Fixed Price Incentive (FPI) contract type for this SDB I production?

The Fixed Price Incentive (FPI) contract type for the SDB I production implies a shared risk and reward structure between the Department of Defense and The Boeing Company. Typically, an FPI contract establishes a target cost, a target profit, and a price ceiling. If the final cost is below the target cost, both parties share in the savings according to a predetermined formula. Conversely, if the final cost exceeds the target cost but remains below the ceiling, the contractor's profit is reduced, and the government pays a higher price. The specific performance metrics could relate to production rate, quality control, delivery schedules, and munition reliability. Understanding the exact sharing ratio, the price ceiling, and the specific performance targets is critical to evaluating the effectiveness of this incentive structure in controlling costs and ensuring timely delivery of high-quality munitions.

What is the justification provided by the Department of Defense for awarding this SDB I production contract on a sole-source basis?

Sole-source contract awards are typically justified when only one responsible source is available or capable of meeting the government's requirements. For munitions like the Small Diameter Bomb I (SDB I), justifications often stem from factors such as unique technical capabilities, proprietary technology, existing production lines that are difficult or costly to replicate, or urgent national security needs where competition would cause unacceptable delays. The Department of Defense would have had to formally document the rationale, likely citing reasons such as Boeing's exclusive rights to the design, specialized manufacturing processes, or the need to maintain a specific production capability without interruption. Without access to the official justification documentation (e.g., a Justification and Approval document), the precise reasons remain speculative, but they generally revolve around necessity and lack of viable alternatives.

What is The Boeing Company's track record in producing munitions, particularly for the Department of Defense?

The Boeing Company has a long and extensive track record as a major defense contractor, involved in the production of a wide array of military systems, including munitions. They are known for manufacturing advanced weapons systems, guided munitions, and related components. Their experience spans decades, and they have consistently secured large contracts with the Department of Defense for various platforms and armaments. For specific munitions like the Small Diameter Bomb I (SDB I), Boeing's involvement suggests a deep understanding of the weapon system's design, manufacturing requirements, and integration into military platforms. Their established position in the defense industry implies a capacity to handle complex production runs and meet stringent quality and performance standards, although the specifics of their performance on any given contract would require detailed review.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JS 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: $242,340,869

Exercised Options: $242,340,869

Current Obligation: $242,340,869

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA867216D0010

IDV Type: IDC

Timeline