Boeing awarded $33M for LASER JDAM, a sole-source contract for guidance systems

Contract Overview

Contract Amount: $32,951,131 ($33.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2007-05-18

End Date: 2010-09-30

Contract Duration: 1,231 days

Daily Burn Rate: $26.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LASER JDAM

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $33.0 million to THE BOEING COMPANY for work described as: LASER JDAM Key points: 1. Contract awarded for a critical defense system, indicating a need for specialized manufacturing capabilities. 2. Sole-source award suggests limited market alternatives or a strategic decision to use a specific supplier. 3. The contract duration of over 3 years points to a significant, ongoing requirement. 4. Fixed-price contract type aims to control costs for the government. 5. The award falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code, highlighting its technical nature.

Value Assessment

Rating: fair

The contract value of $33 million for LASER JDAM guidance systems is difficult to benchmark without comparable sole-source awards. As a sole-source procurement, the government may not have achieved the best possible pricing through competitive bidding. The fixed-price nature of the contract provides some cost certainty, but the absence of competition raises questions about whether the price reflects true market value. Further analysis would require access to historical pricing data for similar systems or components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when only one responsible source can provide the required goods or services, or when there is a compelling justification for not seeking competition. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, the government had less leverage to negotiate the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the military requiring advanced guidance systems for munitions. The contract delivers critical components for the LASER JDAM, enhancing precision strike capabilities. The geographic impact is primarily national, supporting defense readiness, with manufacturing likely concentrated in Missouri where Boeing has facilities. Workforce implications include skilled manufacturing and engineering jobs at Boeing and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in pricing due to non-competitive nature.
Dependence on a single contractor for a critical defense component.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Award to a major defense contractor with established capabilities.
Contract supports a critical defense system (LASER JDAM).

Sector Analysis

The defense industry is characterized by long-term contracts, high technological barriers to entry, and significant government spending. This contract for LASER JDAM guidance systems fits within the aerospace and defense manufacturing sector, specifically focusing on guidance and navigation instruments. The market for such specialized components is often dominated by a few large, established players like Boeing due to the complexity and security requirements. Comparable spending benchmarks are difficult to establish for sole-source awards, but the overall defense budget for similar systems runs into billions annually.

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 firm. While Boeing may utilize small businesses for subcontracting, the primary award is not directed towards small businesses. The absence of a set-aside means that opportunities for small businesses to directly compete for this specific contract are limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and auditing agencies, including the Defense Contract Management Agency (DCMA) and potentially the Department of Defense Office of Inspector General (DoD OIG). The fixed-price contract type provides a degree of accountability by capping the government's financial liability. Transparency is limited due to the sole-source nature of the award, making public scrutiny of pricing and justification more challenging.

Related Government Programs

Joint Direct Attack Munition (JDAM) Program
Precision Guided Munitions
Aerospace and Defense Manufacturing
Guidance and Navigation Systems

Risk Flags

Sole-source award may result in higher costs.
Lack of competitive bidding limits price discovery.
Potential for contractor dependency on a critical system.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.0 million to THE BOEING COMPANY. LASER JDAM

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 $33.0 million.

What is the period of performance?

Start: 2007-05-18. End: 2010-09-30.

What is the specific role of the LASER JDAM guidance system in military operations?

The LASER JDAM (Joint Direct Attack Munition) guidance system is a crucial component that enhances the precision of unguided bombs. It typically consists of a tail kit that adds a GPS/INS (Inertial Navigation System) guidance package and, in the case of LASER JDAM, a seeker that allows the munition to home in on laser-designated targets. This significantly increases accuracy, enabling warfighters to strike targets with greater effectiveness while reducing the risk of collateral damage. The system allows for 'fire-and-forget' capability against moving targets once designated by a laser designator.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For advanced defense systems like the LASER JDAM guidance system, this could be due to proprietary technology, unique manufacturing capabilities, existing integration with current platforms, or national security considerations that limit the pool of eligible contractors. The government must provide a justification for not seeking full and open competition, which is then reviewed. In this case, The Boeing Company likely possesses unique expertise or intellectual property related to this specific guidance system that made them the only viable option at the time of the award.

How does the fixed-price contract type benefit the government in this scenario?

A Firm Fixed Price (FFP) contract, like the one awarded here, establishes a price that is not subject to adjustment based on the contractor's cost experience in performing the work. This benefits the government by providing cost certainty and predictability. The contractor assumes the risk of cost overruns, incentivizing them to manage their expenses efficiently. For the government, it means the total expenditure is known upfront, simplifying budgeting and financial planning. This is particularly advantageous for well-defined requirements where the scope of work is clear.

What is the historical spending trend for LASER JDAM or similar guidance systems?

Historical spending on JDAM variants and related guidance systems has been substantial, reflecting their importance in modern air warfare. While specific figures for LASER JDAM alone are not readily available without deeper database access, the broader JDAM program has seen billions in funding over the years across various contracts for production, upgrades, and sustainment. Spending tends to fluctuate based on operational tempo, modernization efforts, and strategic priorities. Sole-source awards for such critical components can contribute to sustained, albeit potentially higher, spending levels compared to competitive procurements.

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

The primary risk of a sole-source award for a critical defense component like the LASER JDAM guidance system is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may not achieve the best possible value. Another risk is contractor dependency; the military becomes reliant on a single supplier, which can create vulnerabilities if that supplier faces production issues, financial instability, or decides to discontinue the product line. Furthermore, the lack of competitive pressure can sometimes lead to complacency in innovation or quality improvement compared to a market with multiple active players.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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

Financial Breakdown

Contract Ceiling: $95,888,789

Exercised Options: $51,388,789

Current Obligation: $32,951,131

Contract Characteristics

Cost or Pricing Data: YES

Timeline