Boeing awarded $143M for Joint Direct Attack Munition (JDAM) production, a sole-source contract

Contract Overview

Contract Amount: $143,249,181 ($143.2M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2012-12-21

End Date: 2015-04-30

Contract Duration: 860 days

Daily Burn Rate: $166.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: JOINT DIRECT ATTACK MUNITION (JDAM) PROD LOT 17, OPTION EXERCISED

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 $143.2 million to THE BOEING COMPANY for work described as: JOINT DIRECT ATTACK MUNITION (JDAM) PROD LOT 17, OPTION EXERCISED Key points: 1. Contract awarded to a single supplier suggests potential for higher costs and limited innovation. 2. The duration of the contract (860 days) indicates a sustained need for these munitions. 3. The 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code points to a specialized defense sector. 4. The contract type 'COST NO FEE' (Cost Plus Fixed Fee) can shift cost risks to the government. 5. The absence of small business set-asides or subcontracting requirements may limit broader economic participation. 6. This contract represents a significant portion of spending within its specific defense sub-category.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive data. The 'COST NO FEE' contract type, while common in R&D or uncertain environments, places cost risk on the government. Without comparable bids, it's difficult to definitively assess if the pricing reflects optimal value for money. The government relies heavily on contractor cost proposals and internal estimates to ensure fairness in such arrangements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one responsible source can provide the required supplies or services, or when there's a compelling justification for avoiding competition. The lack of multiple bidders means there was no opportunity for price discovery through a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government's ability to negotiate favorable terms is diminished without alternative suppliers.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, receiving critical munitions. The services delivered include the production of Joint Direct Attack Munitions (JDAMs), essential for precision-guided aerial warfare. The geographic impact is national, supporting military readiness, with production likely concentrated in Missouri where Boeing has facilities. Workforce implications include employment for skilled manufacturing and engineering personnel at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost-plus contract type shifts cost overrun risks to the government.
Lack of small business participation may reduce economic benefits for smaller enterprises.

Positive Signals

Ensures supply of critical munitions for national defense.
Award to established contractor (Boeing) suggests reliability and existing expertise.
Contract addresses a specific, identified military requirement.

Sector Analysis

The defense industrial base relies on specialized manufacturers like Boeing for advanced munitions. The market for precision-guided munitions is characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this sector is driven by military modernization efforts and geopolitical demands. Comparable spending benchmarks would involve other large-scale defense procurement contracts for similar weapon systems.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, nor are there explicit indications of subcontracting goals for small businesses. The award to a large prime contractor like Boeing suggests that the primary focus is on direct production. This could limit opportunities for small businesses to participate in the supply chain for this specific contract, potentially impacting their ability to gain experience with large defense programs.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures would involve performance monitoring, quality assurance, and financial audits, particularly given the cost-plus contract type. Transparency is often limited for sole-source defense contracts due to national security considerations, though contract award details are generally made public.

Related Government Programs

Precision-Guided Munitions Procurement
Air Force Munitions Contracts
Boeing Defense Contracts
Joint Direct Attack Munition (JDAM) Program
Department of Defense Weapon Systems Acquisition

Risk Flags

Sole-source award
Cost-plus contract type
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $143.2 million to THE BOEING COMPANY. JOINT DIRECT ATTACK MUNITION (JDAM) PROD LOT 17, OPTION EXERCISED

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 $143.2 million.

What is the period of performance?

Start: 2012-12-21. End: 2015-04-30.

What is the historical spending trend for JDAM production by the Department of Defense?

Historical spending on JDAM production has varied year over year, influenced by operational tempo, inventory needs, and budget allocations. The Joint Direct Attack Munition (JDAM) program has seen significant investment over the past two decades as it became a cornerstone of precision strike capabilities. While Lot 17 represents a specific award amount, broader program spending encompasses multiple lots, upgrades, and sustainment activities. Analyzing annual defense appropriations and contract awards related to JDAM reveals a consistent, albeit fluctuating, demand. For instance, earlier production lots may have involved higher unit costs due to initial development and scaling, while later lots, like this one, focus on continued production and potentially incorporate lessons learned or minor improvements. The total lifecycle cost of the JDAM program is substantial, reflecting its widespread deployment and strategic importance.

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

Directly comparing the unit cost for JDAMs in Lot 17 is difficult without access to the detailed pricing structure and the specific configuration of the munitions produced under this contract. As a sole-source, cost-plus contract, the final unit cost is determined after the fact and can be influenced by actual costs incurred. However, historical data suggests that the unit cost of JDAM kits has generally decreased over time due to economies of scale, increased competition in earlier phases, and mature production processes. If this contract involves standard JDAM kits, one would expect the cost to be in line with or potentially lower than earlier, less mature production runs, assuming no significant inflation or material cost increases. However, without specific unit cost data or a competitive benchmark, a definitive comparison is not possible. The 'COST NO FEE' structure also means the government bears the direct cost plus a fee, making precise value assessment challenging.

What are the specific risks associated with a sole-source, cost-plus contract for munitions production?

Sole-source, cost-plus contracts for munitions production carry inherent risks. The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for the contractor to innovate or operate efficiently. The government may end up paying more than it would in a competitive environment. The 'cost-plus' nature of the contract (specifically 'COST NO FEE' in this case, which is a variation of cost-plus fixed fee where the fee is zero or nominal) shifts significant financial risk to the government. If the contractor's costs exceed estimates, the government is obligated to cover those costs, plus a fee (if applicable). This can lead to budget overruns and unpredictability. Furthermore, without competition, there's less impetus for the contractor to proactively identify cost-saving measures or explore alternative, more efficient production methods. Oversight becomes critical to ensure costs are reasonable and allocable.

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

The Boeing Company has a long and established track record as a major defense contractor, including significant experience in producing Joint Direct Attack Munitions (JDAMs). Boeing has been a key player in the JDAM program for many years, supplying these guidance kits that convert unguided bombs into all-weather precision-guided munitions. Their expertise extends to various other aerospace and defense systems, including aircraft, missiles, and space technology. The company's history with the JDAM program suggests a deep understanding of the system's requirements, production processes, and quality control necessary for military applications. While specific performance metrics for every contract are not publicly detailed, Boeing's continued role as a primary supplier for critical defense systems like the JDAM indicates a generally satisfactory performance history in meeting the Department of Defense's needs.

How does this contract align with the Department of Defense's overall strategy for munitions procurement and readiness?

This contract for JDAM production aligns with the Department of Defense's (DoD) ongoing strategy to maintain and modernize its inventory of precision-guided munitions. JDAMs are a foundational capability for air power, enabling precise strikes against a wide range of targets while minimizing collateral damage. Ensuring a steady supply of these munitions is crucial for maintaining combat readiness and supporting ongoing military operations globally. The DoD's strategy often involves a mix of competitive procurements for new systems and sole-source or limited competition contracts for sustainment, upgrades, or continued production of proven systems like the JDAM, especially when a single supplier possesses unique capabilities or existing production lines. This contract likely supports the DoD's objective of having sufficient quantities of reliable, effective munitions available for current and future contingencies.

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: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

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: $143,249,181

Exercised Options: $143,249,181

Current Obligation: $143,249,181

Contract Characteristics

Cost or Pricing Data: NO

Timeline