Boeing awarded $271M contract for Small Diameter Bomb Increment 1, Lot 14 by the Air Force

Contract Overview

Contract Amount: $271,140,482 ($271.1M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-08-16

End Date: 2024-01-31

Contract Duration: 1,994 days

Daily Burn Rate: $136.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: SMALL DIAMETER BOMB INCREMENT 1, LOT 14

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $271.1 million to THE BOEING COMPANY for work described as: SMALL DIAMETER BOMB INCREMENT 1, LOT 14 Key points: 1. Contract awarded to a single, established defense contractor, raising questions about competitive pricing. 2. The contract type, Fixed Price Incentive, aims to balance cost control with performance incentives. 3. Long contract duration of 1994 days suggests a sustained need for these munitions. 4. The award is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, indicating a pre-existing relationship. 5. The specific product, Small Diameter Bomb Increment 1, is a critical component in modern air-to-ground warfare. 6. Lack of competition suggests potential for higher costs compared to a fully competed scenario.

Value Assessment

Rating: fair

The contract's value of $271.14 million for Small Diameter Bomb Increment 1, Lot 14, awarded to The Boeing Company, requires careful benchmarking. As a sole-source or limited competition award, direct price comparisons to similar, fully competed contracts are challenging. However, the fixed-price incentive structure suggests an attempt to manage costs while ensuring performance. Without access to the underlying IDIQ contract details or historical pricing for this specific lot, a definitive value-for-money assessment is difficult, but the lack of competition is a potential risk factor for cost efficiency.

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 used when a specific capability is only available from a single source or when it's deemed not to be in the government's best interest to compete. The lack of multiple bidders means there was no direct price competition to drive down costs or encourage innovative solutions from a wider market.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to offer the lowest possible cost. This limits the government's ability to leverage market forces for cost savings.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the military requiring advanced air-to-ground munitions. The contract delivers critical components for the Small Diameter Bomb Increment 1 system, enhancing aerial combat capabilities. The geographic impact is primarily national, supporting defense readiness, with potential implications for the workforce at Boeing facilities. This contract supports specialized manufacturing jobs within the defense industrial base, particularly at Boeing's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher unit costs for taxpayers.
Sole-source awards limit opportunities for emerging or smaller defense contractors.
The long contract duration could mask inefficiencies if not closely monitored.
Reliance on a single contractor for critical munitions raises supply chain risk.

Positive Signals

Award to an established contractor like Boeing suggests a high likelihood of meeting technical requirements.
Fixed-price incentive contract type provides some cost control mechanisms.
The contract supports the production of a key weapon system, contributing to national security.
Delivery order under an existing IDIQ suggests a streamlined procurement process for an ongoing need.

Sector Analysis

The defense sector, specifically munitions manufacturing, is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. The Small Diameter Bomb (SDB) program represents a significant advancement in precision-guided munitions, offering reduced collateral damage and increased standoff capability. Spending in this area is driven by evolving military requirements and technological advancements. Comparable spending benchmarks would typically involve other large-scale munitions contracts or advanced weapon system procurements, often dominated by a few major defense contractors.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, The Boeing Company, is a large aerospace and defense firm. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a set-aside means opportunities for direct prime contracting with small businesses were not prioritized for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Department of the Air Force. The contract type (Fixed Price Incentive) includes specific clauses that incentivize the contractor to meet cost targets while achieving performance objectives, providing a level of financial oversight. Transparency is generally maintained through contract databases like FPDS, though detailed performance metrics and cost breakdowns may be sensitive. Inspector General investigations could be initiated if fraud, waste, or abuse is suspected.

Related Government Programs

Small Diameter Bomb (SDB) Program
Air Force Munitions Procurement
Precision-Guided Munitions Contracts
Boeing Defense Contracts
Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (inherent in FPI if not managed)
Supply chain dependency on a single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $271.1 million to THE BOEING COMPANY. SMALL DIAMETER BOMB INCREMENT 1, LOT 14

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 $271.1 million.

What is the period of performance?

Start: 2018-08-16. End: 2024-01-31.

What is the historical spending trend for Small Diameter Bomb Increment 1, Lot 14, and similar munitions from The Boeing Company?

Analyzing historical spending for Small Diameter Bomb Increment 1, Lot 14, specifically requires access to prior delivery orders under the same IDIQ contract. Without that granular data, we can look at broader trends. The Boeing Company is a major supplier of munitions to the U.S. military. Spending on precision-guided munitions, including SDB variants, has been substantial over the past decade, driven by ongoing conflicts and modernization efforts. For example, total Air Force spending on munitions can fluctuate significantly year-to-year based on operational tempo and budget allocations. Comparing this $271 million award to previous SDB procurements or other Boeing-manufactured munitions would provide context on the scale and frequency of such awards. However, direct comparisons are often limited by the proprietary nature of contract details and the specific configurations or lots being procured.

How does the Fixed Price Incentive (FPI) contract type typically perform in terms of cost control compared to other contract types for munitions?

Fixed Price Incentive (FPI) contracts are designed to share cost risks and benefits between the government and the contractor. They establish an initial target cost, a target profit, and a price ceiling. If the final cost is below the target, both parties share in the savings according to a pre-negotiated formula. If the final cost exceeds the target but remains below the ceiling, the profit is reduced. If the cost exceeds the ceiling, the contractor absorbs the excess cost. Compared to Firm Fixed Price (FFP), FPI offers more flexibility if cost overruns occur, potentially preventing contract termination or costly renegotiations. However, it can be less predictable in final cost than FFP. Compared to Cost Plus Incentive Fee (CPIF), FPI places more cost risk on the contractor. For munitions, FPI can be effective when production costs are somewhat uncertain but can be reasonably estimated, balancing the need for performance with cost accountability.

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

Sole-source awards for critical defense components like the Small Diameter Bomb (SDB) present several risks. Firstly, the primary risk is a lack of price competition, which can lead to the government paying a higher price than if the contract were competed. This reduces overall value for taxpayer money. Secondly, it can stifle innovation, as there is no competitive pressure on the sole contractor to develop more cost-effective or technologically superior solutions. Thirdly, it creates a dependency on a single supplier, which can pose supply chain risks; any disruption at the contractor's facility could significantly impact military readiness. Lastly, it limits opportunities for other qualified manufacturers, potentially hindering the growth and diversification of the defense industrial base.

What is The Boeing Company's track record in delivering complex munitions systems to the Department of Defense?

The Boeing Company has a long and extensive track record of delivering complex defense systems, including various munitions, to the Department of Defense. They are a major prime contractor for numerous aircraft, missile, and weapons systems. For the Small Diameter Bomb program specifically, Boeing has been the prime developer and manufacturer. Historically, their performance on major defense contracts has varied, as is common with large, complex programs. While they possess significant technical expertise and manufacturing capabilities, like any large defense contractor, they have faced challenges related to cost overruns, schedule delays, and performance issues on certain programs. However, for critical systems like the SDB, the DoD generally relies on established contractors with proven capabilities, suggesting a level of confidence in Boeing's ability to meet the program's requirements, albeit with ongoing oversight.

How does the geographic location of the contractor (Missouri) potentially impact delivery timelines and costs for this contract?

The contractor, The Boeing Company, has facilities in Missouri, which is noted in the data ('sn': 'MISSOURI'). The specific impact of this location on delivery timelines and costs for the Small Diameter Bomb Increment 1, Lot 14 contract depends on several factors. Proximity to military bases or key transportation hubs can facilitate efficient logistics. However, if the primary manufacturing or assembly occurs in Missouri, the cost of labor, materials, and overhead in that region will be factored into the contract price. Compared to contractors located in areas with lower operating costs, a Missouri-based facility might incur higher per-unit costs. Delivery timelines can be affected by the distance to the point of delivery and the efficiency of the transportation infrastructure available from Missouri. Without knowing the specific delivery locations and comparing Missouri's cost structure to other potential manufacturing sites, it's difficult to quantify the precise impact.

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: $271,140,482

Exercised Options: $271,140,482

Current Obligation: $271,140,482

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