Boeing awarded $174M for Small Diameter Bomb production, a sole-source contract for critical munitions

Contract Overview

Contract Amount: $173,918,200 ($173.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-11-08

End Date: 2025-08-30

Contract Duration: 1,026 days

Daily Burn Rate: $169.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: SMALL DIAMETER BOMB I AND FOCUSED LETHALITY MUNITION PRODUCTION, LOT 16 USAF

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $173.9 million to THE BOEING COMPANY for work described as: SMALL DIAMETER BOMB I AND FOCUSED LETHALITY MUNITION PRODUCTION, LOT 16 USAF Key points: 1. Contract awarded to a single, established provider, raising questions about price competitiveness. 2. Focus on Lot 16 production indicates ongoing demand for these specific munitions. 3. Fixed Price Incentive contract type aims to balance cost control with performance incentives. 4. Long contract duration suggests a sustained need and potential for follow-on work. 5. Lack of competition limits opportunities for emerging defense contractors. 6. Contractor's established role in munitions manufacturing suggests technical capability. 7. Geographic concentration in Missouri for production may have local economic impacts.

Value Assessment

Rating: fair

The contract value of $174 million for Lot 16 production of Small Diameter Bombs (SDB) is substantial. As a sole-source award, direct price comparisons to similar recent contracts are difficult. However, the fixed-price incentive structure suggests the Air Force is attempting to manage costs while encouraging efficient production. Without competitive bidding, it's challenging to definitively benchmark the value for money, but the sustained award indicates perceived necessity and contractor capability.

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 used when a unique capability is required, or for follow-on production where changing contractors would be impractical or costly. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bids were considered.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The government relies on negotiation and incentive structures to mitigate this risk, but transparency in pricing is reduced.

Public Impact

The U.S. Air Force is the primary beneficiary, receiving critical munitions for its operational needs. This contract supports the production of Small Diameter Bombs, enhancing air-to-ground strike capabilities. Production is concentrated in Missouri, potentially creating or sustaining jobs in that region. The contract ensures the continued availability of advanced munitions for national defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of open competition may stifle innovation from other potential suppliers.
Fixed Price Incentive contracts can lead to cost overruns if not managed carefully.
Long-term duration without clear performance metrics could reduce contractor urgency.

Positive Signals

Award to an established contractor ensures technical expertise and production continuity.
Fixed Price Incentive contract structure provides some cost control and performance motivation.
Sustained production of critical munitions supports national security objectives.
Contracting for Lot 16 indicates a clear and ongoing requirement for SDBs.

Sector Analysis

The defense sector, specifically munitions manufacturing, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant capital investment. The Small Diameter Bomb (SDB) is a key component of modern air power, designed for precision strikes with reduced collateral damage. The market for such advanced munitions is relatively concentrated among a few major defense contractors. This contract represents a significant portion of ongoing SDB production, fitting within the broader landscape of U.S. Air Force armament procurement.

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. The prime contractor, The Boeing Company, is a large aerospace and defense firm. While large prime contractors often engage small businesses as subcontractors, the absence of explicit set-aside provisions means direct opportunities for small businesses to compete for the prime contract were unavailable. The overall impact on the small business ecosystem will depend on Boeing's subcontracting strategy.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force and the Department of Defense. As a sole-source award, scrutiny may focus on the negotiation process and pricing justification. The Fixed Price Incentive (FPI) contract type requires careful monitoring of cost targets and performance incentives to ensure value for money. Transparency is generally maintained through contract reporting mechanisms, though specific details of the negotiation may be less public due to the sole-source nature. Inspector General offices within the DoD may conduct audits or investigations as deemed necessary.

Related Government Programs

Precision Guided Munitions
Air-to-Ground Munitions
Advanced Weapons Systems
Department of Defense Ammunition Procurement
Small Diameter Bomb (SDB) Program

Risk Flags

Sole Source Award
Lack of Competition
Potential for Cost Overruns (FPI)
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $173.9 million to THE BOEING COMPANY. SMALL DIAMETER BOMB I AND FOCUSED LETHALITY MUNITION PRODUCTION, LOT 16 USAF

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 $173.9 million.

What is the period of performance?

Start: 2022-11-08. End: 2025-08-30.

What is the historical spending trend for Small Diameter Bomb (SDB) production by the USAF?

Historical spending on SDB production by the USAF shows a consistent investment over several years, reflecting the weapon system's strategic importance. While specific figures for each lot vary based on quantity, technological updates, and contract type, the overall trend indicates sustained procurement. For instance, previous lots have also represented significant multi-million dollar awards. The current $174 million award for Lot 16 continues this pattern, suggesting a stable, albeit substantial, annual expenditure dedicated to maintaining and replenishing the SDB inventory. Analyzing year-over-year spending reveals the Air Force's commitment to this capability and its integration into operational planning.

How does the Fixed Price Incentive (FPI) contract type typically function, and what are its implications for this specific award?

A Fixed Price Incentive (FPI) contract establishes a target cost, a target profit, and a price ceiling. The final price is determined based on the contractor's actual costs. If the final cost is below the target cost, both the government and the contractor share in the savings according to a predetermined formula. Conversely, if the final cost exceeds the target cost, the contractor bears a portion of the overrun, up to the price ceiling. For this $174 million award for SDB production, the FPI structure incentivizes The Boeing Company to control production costs while meeting performance specifications. It aims to provide the government with a degree of cost certainty while allowing the contractor to earn additional profit for efficiency, balancing risk and reward.

What are the potential risks associated with a sole-source award for critical defense munitions?

Sole-source awards for critical defense munitions carry several potential risks. Primarily, the absence of competition can lead to higher prices than might be achieved through a competitive bidding process, as the government lacks the leverage of multiple offers. This can result in less value for taxpayer money. Secondly, it can stifle innovation and prevent smaller, potentially more agile companies from entering the market or offering alternative solutions. There's also a risk of complacency from the sole provider, potentially impacting responsiveness or quality over time if not rigorously managed. Finally, dependence on a single supplier can create supply chain vulnerabilities if that supplier faces production issues or geopolitical challenges.

What is The Boeing Company's track record in producing munitions, particularly the Small Diameter Bomb?

The Boeing Company has a long-standing and significant track record in the aerospace and defense industry, including extensive experience in munitions manufacturing. They are the prime contractor responsible for the development and production of the Small Diameter Bomb (SDB) family of munitions. Boeing has successfully delivered previous lots of SDBs to the U.S. Air Force and other international partners, demonstrating their capability to meet stringent technical requirements and production schedules. Their expertise encompasses system integration, advanced manufacturing techniques, and quality assurance necessary for producing sophisticated ordnance like the SDB, which requires high precision and reliability.

How does this contract's value compare to other major defense contracts for similar types of munitions?

Comparing the $174 million value of this Lot 16 SDB production contract requires context. SDBs are relatively sophisticated, precision-guided munitions, and their unit cost is higher than simpler ordnance. Major defense contracts for munitions can range from tens of millions to billions of dollars, depending on the quantity, system complexity, and contract type. For example, contracts for larger missile systems or bulk orders of less complex ammunition would have different value points. This $174 million award for a specific lot of SDBs appears consistent with the scale of previous SDB procurements and reflects the specialized nature and advanced technology involved, positioning it as a significant but not unprecedented expenditure within the broader munitions market.

What are the performance metrics and oversight mechanisms in place for this contract?

While specific performance metrics are not detailed in the provided data, Fixed Price Incentive (FPI) contracts inherently include performance considerations tied to cost and delivery schedules. The Air Force likely monitors key performance parameters (KPPs) related to weapon reliability, accuracy, and production output. Oversight is managed by the contracting officer and program management teams within the Department of the Air Force. They are responsible for tracking progress against the target cost and profit, ensuring adherence to specifications, and managing any deviations. Regular program reviews, technical assessments, and audits by DoD oversight bodies would supplement direct contract management to ensure accountability and compliance.

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 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: $173,918,200

Exercised Options: $173,918,200

Current Obligation: $173,918,200

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $34,872

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA867220D0001

IDV Type: IDC

Timeline