Boeing awarded $231.6M for JDAM production, a sole-source contract for guidance kits

Contract Overview

Contract Amount: $231,593,397 ($231.6M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2009-10-26

End Date: 2012-06-30

Contract Duration: 978 days

Daily Burn Rate: $236.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LOT 14 JDAM PRODUCTION, OPTION EXERCISE

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $231.6 million to THE BOEING COMPANY for work described as: LOT 14 JDAM PRODUCTION, OPTION EXERCISE Key points: 1. Contract awarded to a single supplier suggests limited market competition. 2. Fixed-price contract type shifts cost risk to the contractor. 3. Long contract duration may indicate a need for sustained supply. 4. This award is part of a larger program for precision-guided munitions. 5. The contract's value is significant within the defense sector.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without detailed cost breakdowns or comparable sole-source awards. However, the total award amount of over $231 million for JDAM production indicates a substantial investment. Given the nature of sole-source procurements, there's a higher risk of the government not achieving the best possible price compared to a competitive process. Further analysis would require access to historical pricing data for JDAM units and comparisons to similar guidance kit procurements.

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 potential suppliers. This approach is typically used when only one source is capable of meeting the government's needs, often due to proprietary technology or unique capabilities. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding, as the government did not leverage market dynamics to secure the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the military, receiving essential components for precision-guided munitions. The services delivered include the production and supply of Joint Direct Attack Munition (JDAM) guidance kits. The geographic impact is primarily within the United States, with production likely occurring at Boeing facilities. Workforce implications include jobs at Boeing and its subcontractors involved in the manufacturing and assembly of these components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in sole-source negotiations can obscure true value.
Long-term reliance on a single supplier can create dependency.
Potential for cost overruns if not rigorously managed.

Positive Signals

Ensures a consistent supply of critical defense equipment.
Leverages established manufacturing capabilities of a known contractor.
Fixed-price contract provides cost certainty for the government.

Sector Analysis

The defense industrial base relies heavily on specialized manufacturers for advanced weapon systems. The JDAM program falls under the broader category of aerospace and defense manufacturing, specifically focusing on guidance and navigation systems. The market for such specialized components is often concentrated among a few key players due to high barriers to entry, including technological expertise, stringent quality control, and significant R&D investment. This contract represents a significant portion of spending within this niche sector.

Small Business Impact

This contract does not appear to have a small business set-aside component. As a sole-source award to a large prime contractor, the primary focus is on the prime's capabilities. Subcontracting opportunities for small businesses would depend on Boeing's internal procurement practices and its ability to flow down work to smaller suppliers within its supply chain for components and services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver the specified goods within the agreed-upon price. Transparency may be limited due to the sole-source nature of the award, but contract performance reviews and audits by the Defense Contract Management Agency (DCMA) would provide oversight.

Related Government Programs

Joint Direct Attack Munition (JDAM) Program
Precision-Guided Munitions
Air Force Munitions Procurement
Defense Industrial Base Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price escalation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $231.6 million to THE BOEING COMPANY. LOT 14 JDAM PRODUCTION, OPTION EXERCISE

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 $231.6 million.

What is the period of performance?

Start: 2009-10-26. End: 2012-06-30.

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

Analyzing historical spending for JDAM production by The Boeing Company requires access to detailed contract databases. However, the award of $231.6 million in 2009 for Lot 14 indicates a significant, ongoing investment in this capability. JDAM production has been a continuous effort for the Department of Defense over many years, with various contract awards for different lots and configurations. Without specific historical data points for prior lots or subsequent awards, it's difficult to establish a precise trend. However, the sustained nature of JDAM procurement suggests a consistent demand and a long-term commitment to this munition type, implying substantial cumulative spending over time.

How does the per-unit cost of JDAM guidance kits compare to similar systems or previous production lots?

Determining the precise per-unit cost for JDAM guidance kits under this contract is not feasible with the provided data, as the total award amount covers a production lot, not individual units. Furthermore, sole-source contracts often lack the transparency needed for direct per-unit cost comparisons. Generally, per-unit costs can fluctuate based on production volume, technological updates, material costs, and the specific configuration of the kit. Without access to detailed cost breakdowns, historical per-unit pricing for this specific lot, or data from competitive procurements of similar systems, a reliable benchmark cannot be established. Comparisons would ideally be made against previous lots awarded to Boeing or against guidance kits from other manufacturers if they serve a similar purpose and have undergone competitive bidding.

What are the key performance indicators (KPIs) used to assess the success of this JDAM production contract?

Key performance indicators for a defense production contract like this typically revolve around delivery schedule adherence, quality control, and cost management. For the JDAM production, the Air Force would likely monitor the contractor's ability to meet delivery timelines for the specified number of guidance kits. Quality assurance would involve rigorous testing and inspection to ensure the kits meet stringent military specifications for reliability and accuracy. While this is a firm-fixed-price contract, which provides cost certainty, oversight would still focus on ensuring the contractor manages its costs effectively to deliver the product without unexpected overruns that could impact future pricing or availability. Meeting technical performance requirements for the guidance kits themselves is paramount.

What is The Boeing Company's track record with producing JDAMs and similar defense systems?

The Boeing Company has a long-standing and extensive track record in producing Joint Direct Attack Munitions (JDAMs) and a wide array of other defense systems. They are a primary contractor for the JDAM program, responsible for manufacturing the tail kits that convert unguided bombs into precision-guided munitions. Boeing's experience in aerospace and defense manufacturing is substantial, encompassing aircraft, missiles, and related systems. Their history with JDAMs specifically indicates a deep understanding of the program's requirements, production processes, and quality standards. This established relationship and proven capability are likely factors contributing to the sole-source nature of some of their JDAM-related contracts, as they possess the necessary expertise and infrastructure.

Are there any identified risks associated with the sole-source nature of this contract?

Yes, the sole-source nature of this contract presents several risks. The primary risk is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible value for its investment. Another risk is contractor dependency; the government becomes reliant on a single supplier, which can create vulnerabilities in the supply chain and limit flexibility. Furthermore, sole-source procurements can sometimes lack the transparency of competitive processes, making it harder to scrutinize costs and ensure optimal efficiency. There's also a risk that innovation might be stifled, as the incumbent contractor may have less incentive to pursue cost-saving improvements if competition is absent.

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, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $231,593,397

Exercised Options: $231,593,397

Current Obligation: $231,593,397

Contract Characteristics

Cost or Pricing Data: NO

Timeline