Boeing awarded $329M for JDAM production, a significant investment in guidance systems

Contract Overview

Contract Amount: $329,288,539 ($329.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2006-11-14

End Date: 2010-01-31

Contract Duration: 1,174 days

Daily Burn Rate: $280.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JDAM PRODUCTION LOT 11

Place of Performance

Location: SAINT CHARLES, ST. CHARLES County, MISSOURI, 63301

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $329.3 million to THE BOEING COMPANY for work described as: JDAM PRODUCTION LOT 11 Key points: 1. This contract represents a substantial investment in critical defense technology. 2. The firm-fixed-price structure aims to control costs for the government. 3. Competition dynamics for this type of specialized defense manufacturing can be limited. 4. Performance is tied to the successful production and delivery of guidance kits. 5. This falls within the broader category of aerospace and defense manufacturing. 6. The duration of the contract suggests a long-term need for these munitions.

Value Assessment

Rating: good

The contract value of $329 million for JDAM production lot 11 appears reasonable given the nature of advanced munitions manufacturing. While specific per-unit cost benchmarks are not publicly available for this lot, the firm-fixed-price contract type suggests an effort to establish a predictable cost for the government. Benchmarking against similar large-scale defense production contracts would be necessary for a more precise value assessment, but the scale of the award is consistent with major defense procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The number of bidders is not specified, but the 'full and open' designation suggests a competitive process was utilized. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best possible price for these essential defense systems.

Public Impact

The primary beneficiaries are the U.S. Air Force and Navy, receiving advanced guidance systems for munitions. This contract ensures the continued production and availability of Joint Direct Attack Munitions (JDAMs). The geographic impact is primarily at the contractor's facilities, but the end-use is global for military operations. Workforce implications include skilled manufacturing jobs in aerospace and defense sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if production complexities are underestimated.
Reliance on a single prime contractor for a critical defense capability.
Long-term sustainment and upgrade costs for JDAMs are not detailed in this award.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Full and open competition suggests potential for competitive pricing.
Award to a major defense contractor with established production capabilities.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on guided munitions. The market for such systems is characterized by high technological barriers to entry, significant R&D investment, and a primary customer base of government defense agencies. Comparable spending benchmarks would involve other large-scale defense procurement contracts for advanced weapon systems.

Small Business Impact

While this contract is awarded to a large prime contractor, it's important to assess subcontracting opportunities for small businesses. Defense contracts of this magnitude often involve complex supply chains where small businesses can play a vital role in providing components or specialized services. The extent of small business participation and set-asides would need further investigation to understand the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified goods. Transparency is generally maintained through contract award announcements, though detailed production metrics may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Air-to-Ground Munitions
Precision Guided Munitions
Defense Production Act Investments
Aerospace Manufacturing Contracts
Department of Defense Procurement

Risk Flags

Potential for supply chain disruptions
Long-term sustainment costs not detailed
Reliance on established, but complex, manufacturing processes

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $329.3 million to THE BOEING COMPANY. JDAM PRODUCTION LOT 11

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 $329.3 million.

What is the period of performance?

Start: 2006-11-14. End: 2010-01-31.

What is the historical spending trend for JDAM production contracts awarded to The Boeing Company?

Analyzing historical spending on JDAM production for The Boeing Company reveals a consistent and significant investment over several years. Prior to this $329 million Lot 11 award, numerous preceding lots and related contracts have been issued, reflecting the ongoing need for these munitions. For instance, Lot 10 was awarded for a substantial sum, and earlier lots also represented multi-million dollar procurements. This pattern indicates a sustained demand and a long-term commitment by the Department of Defense to maintain and expand its JDAM inventory. The cumulative spending across all JDAM production lots awarded to Boeing would likely run into billions of dollars, underscoring the program's importance and the contractor's established role in its execution. This historical context suggests a stable, albeit substantial, financial commitment to this specific defense capability.

How does the unit cost of JDAMs in this contract compare to previous production lots or similar munitions?

Determining the precise unit cost comparison for JDAMs in this Lot 11 contract is challenging without access to detailed pricing breakdowns and the exact number of units procured. However, the firm-fixed-price nature of the contract suggests that Boeing committed to a specific price per unit or for the total lot. Historically, the unit cost of JDAMs has seen fluctuations due to factors like production volume, technological upgrades, and raw material costs. While specific figures for Lot 11 are not public, industry analysis often shows that larger production runs can lead to economies of scale, potentially lowering per-unit costs. Conversely, inflation and the incorporation of new technologies or materials can drive costs up. Benchmarking against other precision-guided munitions from different manufacturers would also provide context, but direct comparisons are often difficult due to varying capabilities and specifications.

What are the key performance metrics and delivery schedules associated with this JDAM production contract?

The key performance metrics for this JDAM production contract (Lot 11) would primarily revolve around the successful manufacturing and timely delivery of the specified guidance kits according to the contract's technical specifications. While the exact metrics are not publicly detailed, they would typically include adherence to quality standards, defect rates, and on-time delivery schedules. The contract duration of 1174 days (approximately 3.2 years) from award to estimated completion suggests a phased delivery approach. Performance would be monitored by the Air Force, with potential penalties or incentives tied to meeting or exceeding these metrics. Failure to meet critical performance requirements could lead to contract modifications, deductions, or even termination, depending on the severity.

What is the risk profile associated with The Boeing Company as the contractor for this JDAM production?

The risk profile associated with The Boeing Company for this JDAM production contract is generally considered moderate to low, given their extensive experience and established position in the defense industry. Boeing is a major aerospace manufacturer with a long history of producing complex weapon systems, including JDAMs for many years. Their established infrastructure, supply chain management, and technical expertise mitigate many production risks. However, like any large-scale manufacturing program, potential risks include supply chain disruptions (e.g., component shortages), labor issues, unforeseen technical challenges during production, and potential cost increases if market conditions change significantly. The firm-fixed-price contract structure shifts some of the cost risk to the contractor. Government oversight and Boeing's own internal quality control processes are designed to manage these risks.

How does this contract fit into the broader strategic objectives of the U.S. Air Force and Department of Defense regarding air power and munitions?

This $329 million contract for JDAM production Lot 11 directly supports the U.S. Air Force and Department of Defense's strategic objectives related to maintaining and enhancing air power capabilities. JDAMs are a cornerstone of precision-guided munitions, enabling aircraft to deliver accurate strikes against a wide range of targets, thereby minimizing collateral damage and increasing mission effectiveness. Ensuring a robust supply of JDAMs is critical for ongoing military operations, training exercises, and strategic deterrence. This contract contributes to the modernization and sustainment of the U.S. munition stockpile, ensuring that air assets remain equipped with reliable and effective weapons systems. It aligns with broader defense strategies focused on maintaining technological superiority and readiness across all domains of warfare.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $329,288,539

Exercised Options: $329,288,539

Current Obligation: $329,288,539

Contract Characteristics

Cost or Pricing Data: NO

Timeline