Boeing awarded $19.4M for Small Diameter Bomb redesign, facing limited competition

Contract Overview

Contract Amount: $19,357,124 ($19.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2017-11-27

End Date: 2026-02-28

Contract Duration: 3,015 days

Daily Burn Rate: $6.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SMALL DIAMETER BOMB - I GUIDED TEST VEHICLE OBSOLESCENCE REDESIGN FOR WEAPON SYSTEM EVALUATION PROGRAM CONVERSION WEAPON

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $19.4 million to THE BOEING COMPANY for work described as: SMALL DIAMETER BOMB - I GUIDED TEST VEHICLE OBSOLESCENCE REDESIGN FOR WEAPON SYSTEM EVALUATION PROGRAM CONVERSION WEAPON Key points: 1. Contract value represents a significant investment in weapon system modernization. 2. Limited competition raises questions about potential price efficiencies. 3. Obsolescence redesign indicates a proactive approach to maintaining weapon system readiness. 4. The contract duration suggests a long-term commitment to the weapon system's lifecycle. 5. Boeing's established role in defense contracting positions them as a key supplier. 6. The specific nature of the redesign may involve complex technical challenges.

Value Assessment

Rating: fair

Benchmarking the value of this specific redesign is challenging without comparable data on similar obsolescence redesigns for guided munitions. The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to higher costs if not carefully managed, as the contractor is reimbursed for all allowable costs plus a fixed fee. However, it is often used for research and development or when cost estimation is difficult. Further analysis would be needed to compare the fixed fee percentage and overall cost to industry standards for similar CPFF contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, The Boeing Company, was solicited. This approach is typically justified when only one responsible source is available or when there is a compelling urgency. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. This raises concerns about whether the government secured the best possible price and value.

Taxpayer Impact: Sole-source awards limit opportunities for other businesses and can result in higher costs for taxpayers due to the absence of competitive pressure to optimize pricing.

Public Impact

The Department of the Air Force benefits from an updated and potentially more reliable weapon system. The services delivered include engineering, testing, and redesign for the Small Diameter Bomb. The geographic impact is primarily within the United States, with potential implications for defense manufacturing hubs. Workforce implications include specialized engineering and technical roles within The Boeing Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
CPFF contract type may incentivize cost overruns if not rigorously overseen.
Lack of transparency in the sole-source justification requires scrutiny.
Long contract duration could lead to scope creep or evolving requirements.
Dependence on a single contractor for critical weapon system components.

Positive Signals

Addresses obsolescence, ensuring continued operational capability of a key weapon system.
Boeing's experience in defense manufacturing suggests technical proficiency.
Contract duration allows for thorough redesign and testing.
Focus on a specific, critical weapon system component.

Sector Analysis

The defense sector, particularly munitions manufacturing, is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts often involve complex systems integration and stringent performance requirements. Spending in this area is driven by national security needs and technological advancements. Comparable spending benchmarks are difficult to establish due to the specialized nature of weapon systems, but investments in guided munitions and their sustainment are typically substantial within the overall defense budget.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the prime contractor being a large defense firm, there is limited direct impact on small business set-asides. However, it is crucial to assess subcontracting plans to ensure that opportunities are made available to small businesses within Boeing's supply chain to foster broader economic participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are typically embedded within the CPFF structure, requiring detailed reporting on costs and progress. Transparency may be limited due to the sole-source nature, but contract modifications, performance reports, and final cost data should be accessible through federal procurement databases. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Small Diameter Bomb (SDB) Program
Weapon System Evaluation Programs
Ammunition Manufacturing
Defense Research and Development
Guided Munitions

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited transparency in competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.4 million to THE BOEING COMPANY. SMALL DIAMETER BOMB - I GUIDED TEST VEHICLE OBSOLESCENCE REDESIGN FOR WEAPON SYSTEM EVALUATION PROGRAM CONVERSION WEAPON

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 $19.4 million.

What is the period of performance?

Start: 2017-11-27. End: 2026-02-28.

What is the specific technical scope of the "obsolescence redesign" for the Small Diameter Bomb?

The provided data does not detail the specific technical scope of the obsolescence redesign. However, such redesigns typically involve identifying components or subsystems within the weapon that are no longer supported by manufacturers, are outdated in terms of technology, or pose reliability issues due to age. The process would likely involve engineering analysis, component selection or development of replacements, integration testing, and potentially requalification of the munition. The goal is to ensure the continued safe, reliable, and effective operation of the Small Diameter Bomb weapon system by addressing the identified obsolescence issues, thereby extending its service life and maintaining its combat effectiveness against evolving threats.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for similar defense redesign projects?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex projects where cost estimation is difficult, as is likely the case with an obsolescence redesign. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This differs from Fixed Price contracts, where the price is set regardless of actual costs, offering more cost certainty to the government but potentially higher risk for the contractor. Cost Plus Incentive Fee (CPIF) contracts share costs and profits based on performance against targets. For a redesign project, CPFF provides flexibility to adapt to unforeseen technical challenges, but it places a greater burden on the government to meticulously monitor costs and ensure efficiency to prevent overspending. Without specific benchmarks for this type of redesign, it's hard to definitively say if it's optimal, but it's a common choice for high-uncertainty R&D.

What are the potential risks associated with a sole-source award for a critical defense component like the Small Diameter Bomb?

A sole-source award for a critical defense component like the Small Diameter Bomb carries several potential risks. Primarily, the absence of competition can lead to higher prices than might be achieved in a competitive bidding process, as the contractor faces less pressure to optimize costs. This can result in a less efficient use of taxpayer funds. Secondly, it can stifle innovation from other potential suppliers who might offer alternative or more cost-effective solutions. Thirdly, it increases the government's reliance on a single contractor, potentially creating vulnerabilities if that contractor experiences financial difficulties, production issues, or strategic shifts. Finally, the justification for a sole-source award must be robust; if the justification is weak or flawed, it raises concerns about procurement integrity and fairness.

What is The Boeing Company's track record with the Small Diameter Bomb program or similar munitions?

The Boeing Company has a significant and long-standing track record with the Small Diameter Bomb (SDB) program. They are the prime contractor responsible for the development and production of various versions of the SDB, including the GBU-39/B. Their extensive experience encompasses the entire lifecycle of the weapon system, from initial design and testing through production and sustainment. This includes previous upgrades and modifications. Given their deep involvement and established expertise with the SDB, awarding them a contract for an obsolescence redesign is a logical step, leveraging their intimate knowledge of the system's architecture, performance characteristics, and manufacturing processes. This history suggests a high likelihood of successful technical execution.

How does the $19.4 million contract value compare to historical spending on the Small Diameter Bomb program?

The $19.4 million contract value for this specific obsolescence redesign is a component of the overall Small Diameter Bomb (SDB) program's lifecycle costs. The SDB program, as a whole, has seen substantial investment over many years, encompassing research, development, testing, and procurement of thousands of munitions. Individual contracts for specific modifications, upgrades, or sustainment efforts typically range from millions to tens of millions of dollars, depending on the scope. For instance, previous production contracts have been valued in the hundreds of millions. Therefore, $19.4 million for a targeted redesign effort appears to be a reasonable, albeit not insignificant, investment within the broader context of maintaining and modernizing a key weapon system that has seen extensive fielding and requires ongoing support.

What are the potential performance implications of this redesign for the Small Diameter Bomb's effectiveness?

The primary performance implication of this obsolescence redesign is the assurance of continued effectiveness and reliability of the Small Diameter Bomb (SDB). By addressing outdated components, the redesign aims to prevent potential failures, maintain accuracy, and ensure the munition can be safely deployed and operated for its intended service life. It may also incorporate minor improvements to enhance performance or compatibility with evolving platforms or threat environments, although the core objective is to resolve obsolescence. Ultimately, the redesign seeks to maintain, and potentially enhance, the SDB's capability to deliver precision strikes against a wide range of targets, ensuring its continued value as a critical asset for the Air Force.

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: COST PLUS FIXED FEE (U)

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: $19,357,124

Exercised Options: $19,357,124

Current Obligation: $19,357,124

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $6,249,054

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA867214D0007

IDV Type: IDC

Timeline