Boeing awarded $206M for JDAM Lot 15, a sole-source contract for guidance kits

Contract Overview

Contract Amount: $206,331,531 ($206.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2011-01-15

End Date: 2013-07-31

Contract Duration: 928 days

Daily Burn Rate: $222.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JDAM LOT 15

Place of Performance

Location: SAINT LOUIS, ST. LOUIS County, MISSOURI, 63134, UNITED STATES OF AMERICA

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $206.3 million to THE BOEING COMPANY for work described as: JDAM LOT 15 Key points: 1. Contract awarded to a single, established supplier, raising questions about price competitiveness. 2. The contract type is firm fixed price, which shifts cost risk to the contractor. 3. Performance period spans over two years, indicating a need for sustained supply. 4. The product is critical for air-to-ground munitions, highlighting its strategic importance. 5. The award was not competed, suggesting potential limitations in market exploration. 6. The contract value is substantial, reflecting the scale of the defense requirement.

Value Assessment

Rating: fair

The contract value of $206 million for JDAM Lot 15 appears significant. Without specific benchmarks for JDAM guidance kits or comparable sole-source awards, a precise value-for-money assessment is challenging. However, the lack of competition inherently limits the government's ability to secure the best possible pricing. The firm fixed-price structure provides cost certainty but may not reflect the most economical outcome achievable through a competitive process. Further analysis would require comparing this award to historical JDAM procurement costs or similar guidance system contracts.

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 responsible source is available or when the need is so specialized that competition is not feasible. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a bidding process, potentially leading to higher costs than if multiple firms had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to lower prices. The government's negotiating position is also weakened without alternative suppliers.

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 guidance kits for Joint Direct Attack Munitions (JDAMs), enhancing precision strike capabilities. The geographic impact is national, supporting the readiness and operational effectiveness of U.S. air power. Workforce implications are likely concentrated at The Boeing Company's facilities, supporting specialized manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Reliance on a single supplier could create long-term dependency and reduce future negotiation leverage.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Award to an established prime contractor with a track record in defense systems.
Ensures continued availability of a critical component for air force operations.

Sector Analysis

The defense industry, particularly the segment focused on aerospace and munitions, is characterized by high barriers to entry, significant R&D investment, and long-standing relationships between prime contractors and the government. Contracts for advanced guidance systems like JDAMs are typically awarded to a limited number of specialized manufacturers. The market size for such components is substantial, driven by ongoing military modernization and operational requirements. This contract fits within the strategic weapons systems category, where sole-source or limited competition awards are not uncommon due to technological complexity and existing production lines.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to The Boeing Company, a large aerospace manufacturer. There is no explicit information provided regarding subcontracting plans for small businesses. Without a competitive bidding process, the opportunities for small businesses to participate as subcontractors may be limited to those already integrated into Boeing's supply chain for this specific program. Further investigation into Boeing's subcontracting practices would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Air Force, as the procuring agency, would be responsible for monitoring performance, ensuring compliance with contract terms, and managing payments. Inspector General (IG) oversight is standard for defense contracts, providing an independent review of waste, fraud, and abuse. Transparency is generally limited for sole-source awards, but contract awards and basic details are publicly available through federal procurement databases.

Related Government Programs

Joint Direct Attack Munition (JDAM) Program
Air Force Munitions Procurement
Precision Guided Munitions
Aerospace and Defense Manufacturing Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for higher costs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $206.3 million to THE BOEING COMPANY. JDAM LOT 15

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 $206.3 million.

What is the period of performance?

Start: 2011-01-15. End: 2013-07-31.

What is the historical spending trend for JDAM guidance kits?

Analyzing historical spending on JDAM guidance kits requires access to detailed procurement data over multiple fiscal years. Typically, the U.S. Air Force and other branches procure these kits in large lots. Spending can fluctuate based on operational tempo, inventory levels, and the introduction of new technologies or upgrades. For instance, periods of heightened conflict often see increased demand and, consequently, higher spending. Conversely, budget constraints or shifts in strategic priorities might lead to reduced procurement. Without specific historical data for JDAM Lot 15 and preceding lots, it's difficult to establish a precise trend, but consistent, substantial annual spending is expected given the system's widespread use and importance in the U.S. military's arsenal.

How does the unit cost of these JDAM kits compare to similar systems or previous lots?

A direct comparison of the unit cost for JDAM Lot 15 is challenging without knowing the exact quantity procured under this award and the specific configuration of the guidance kits. However, sole-source contracts often result in higher unit costs compared to competitively procured items due to the absence of price pressure from multiple bidders. If previous lots were competitively sourced or if similar guidance kits from other manufacturers exist, a comparison could reveal potential cost inefficiencies. Benchmarking against industry standards for precision-guided munitions components would also be informative. Generally, inflation, material costs, and any technological advancements incorporated into the kits can influence unit cost variations between contract lots.

What are the key performance indicators (KPIs) for this contract, and how is Boeing's performance being measured?

Key performance indicators (KPIs) for a contract like JDAM Lot 15 typically revolve around delivery schedules, quality standards, and technical performance. For guidance kits, this would include ensuring a high percentage of kits meet specified accuracy and reliability metrics (e.g., circular error probable - CEP). Delivery KPIs would focus on meeting contractually obligated delivery dates for the specified quantities. Quality assurance would involve rigorous testing and inspection to ensure no defects. Boeing's performance is likely measured against these KPIs through regular reporting, government acceptance testing of delivered units, and potentially performance metrics tied to delivery timeliness and defect rates. Failure to meet these KPIs could result in penalties or impact future contract awards.

What is Boeing's track record with the JDAM program and similar defense contracts?

The Boeing Company has a long and established track record as a prime contractor for the U.S. Department of Defense, including significant involvement with the JDAM program. Boeing has been a key supplier of JDAM components and related systems for many years. Their experience encompasses large-scale production, integration, and sustainment of complex defense hardware. Historically, Boeing has generally met its contractual obligations, although like any major defense contractor, they have faced scrutiny and performance challenges on various programs. Their extensive experience with JDAM suggests a deep understanding of the system's requirements and production capabilities, which likely contributed to their selection for this sole-source award.

Are there any identified risks associated with this sole-source award, such as supply chain vulnerabilities or technological obsolescence?

Yes, sole-source awards inherently carry risks. A primary risk is the potential for inflated pricing due to the lack of competitive bidding, which can lead to less value for taxpayer money. Supply chain vulnerabilities are also a concern; reliance on a single supplier like Boeing for critical JDAM components could be problematic if Boeing experiences production disruptions (e.g., due to labor issues, natural disasters, or financial instability). Furthermore, while JDAMs are a proven technology, the defense landscape evolves rapidly. There's a risk that the technology procured under this contract could become less relevant or be superseded by newer systems, although JDAMs have undergone continuous upgrades. The government's negotiating leverage is also diminished in sole-source situations.

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, 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: $206,331,531

Exercised Options: $206,331,531

Current Obligation: $206,331,531

Contract Characteristics

Cost or Pricing Data: NO

Timeline