DoD awards $62.7M for Joint Direct Attack Munition Lot 22 Foreign Military Sales to Boeing, a sole-source contract

Contract Overview

Contract Amount: $62,685,620 ($62.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-03-30

End Date: 2020-02-29

Contract Duration: 701 days

Daily Burn Rate: $89.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JOINT DIRECT ATTACK MUNITION LOT 22 FOREIGN MILITARY SALES

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $62.7 million to THE BOEING COMPANY for work described as: JOINT DIRECT ATTACK MUNITION LOT 22 FOREIGN MILITARY SALES Key points: 1. Contract awarded to a single, established provider, raising questions about potential price efficiencies. 2. The contract's duration of 701 days suggests a sustained need for these munitions. 3. Foreign Military Sales indicate international partnerships and potential geopolitical implications. 4. The firm fixed-price contract type aims to transfer risk to the contractor. 5. No small business set-aside was included, suggesting a focus on large prime contractors. 6. The contract is for ammunition manufacturing, a critical component of defense capabilities.

Value Assessment

Rating: fair

The contract value of $62.7 million for Joint Direct Attack Munition Lot 22 Foreign Military Sales is significant. Without specific benchmarks for this particular lot or comparable foreign military sales of similar munitions, a precise value-for-money assessment is challenging. The firm fixed-price contract type is generally favorable for cost control, but the sole-source nature means there was no competitive pressure to drive down prices. Further analysis would require benchmarking against historical pricing for JDAMs or similar systems sold to allied nations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was solicited. This approach is typically used when a specific capability is required that only one contractor can provide, or in cases of urgent need. The lack of competition means that taxpayers did not benefit from the price discovery that typically occurs in a competitive bidding process, potentially leading to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: The absence of competition for this $62.7 million contract means taxpayers may have paid a premium. Without competitive bids, there is less assurance that the price reflects the lowest possible cost for these munitions.

Public Impact

Foreign military allies benefit from the acquisition of advanced Joint Direct Attack Munitions. The contract supports the production and delivery of critical munitions for defense purposes. The geographic impact is primarily on the contractor's facilities in Missouri, but the end-users are international. The contract sustains jobs within The Boeing Company's defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in the sole-source justification could obscure potential alternatives.
Reliance on a single supplier for critical munitions can create supply chain vulnerabilities.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Award to a major defense contractor like Boeing suggests a proven capability.
Foreign Military Sales indicate strong international alliances and interoperability.

Sector Analysis

The defense sector, particularly the munitions manufacturing sub-sector, is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. Contracts like this, for advanced munitions, are crucial for maintaining military readiness and supporting allied defense capabilities. The market is heavily influenced by government procurement policies, geopolitical events, and technological advancements. Comparable spending benchmarks would typically involve looking at other large-scale foreign military sales of similar ordnance or domestic procurement of JDAM variants.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award to a large prime contractor like The Boeing Company suggests that subcontracting opportunities may exist for small businesses within Boeing's supply chain. However, the primary contract value is not directly flowing to small businesses. The impact on the small business ecosystem will depend on Boeing's subcontracting strategy and the availability of qualified small businesses capable of fulfilling specific component or service needs.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, likely involving the Defense Contract Management Agency (DCMA) given the 'sa' field. Accountability measures are embedded in the firm fixed-price contract terms, which hold the contractor responsible for performance and cost within the agreed-upon price. Transparency is limited due to the sole-source nature of the award, but contract award details are typically made public through federal procurement databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Joint Direct Attack Munition (JDAM) Program
Foreign Military Sales Program
Ordnance and Ammunition Procurement
Department of Defense Major Defense Acquisition Programs

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Dependency on a single supplier for critical munitions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $62.7 million to THE BOEING COMPANY. JOINT DIRECT ATTACK MUNITION LOT 22 FOREIGN MILITARY SALES

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $62.7 million.

What is the period of performance?

Start: 2018-03-30. End: 2020-02-29.

What is the historical spending trend for Joint Direct Attack Munitions (JDAMs) by the Department of Defense?

Historical spending on JDAMs has been substantial, reflecting their widespread use and importance in modern air warfare. While specific lot-by-lot figures can vary, the program has seen consistent investment over many years. For instance, prior to this Lot 22 award, there would have been numerous previous lots and contract actions for JDAM production and upgrades. Analyzing aggregated spending data from sources like the Federal Procurement Data System (FPDS) or agency budget justifications would reveal multi-billion dollar cumulative investments. This sustained spending underscores the perceived value and ongoing operational requirement for JDAM technology, though it also highlights the significant financial commitment required to maintain such capabilities.

How does the unit cost of these JDAMs compare to previous lots or similar munitions sold to other allies?

Determining the precise unit cost and comparing it is challenging without access to detailed pricing breakdowns and specific lot information. The $62.7 million award for Lot 22, with an unspecified number of units, prevents a direct per-unit calculation. Furthermore, Foreign Military Sales (FMS) pricing can be influenced by factors beyond the base manufacturing cost, including program management, training, support, and specific country requirements. Generally, sole-source contracts, like this one awarded to Boeing, tend to have less transparent pricing and potentially higher unit costs compared to competitively procured items. Benchmarking would require access to classified FMS pricing agreements or detailed cost analyses of previous JDAM procurements, which are not publicly available.

What are the specific risks associated with relying on a sole-source provider for critical munitions like JDAMs?

Relying on a sole-source provider for critical munitions like JDAMs presents several risks. Firstly, it eliminates competitive pressure, which can lead to higher prices and reduced incentives for the contractor to innovate or improve efficiency. Secondly, it creates a single point of failure in the supply chain; any disruption at the sole provider's facility (e.g., production issues, labor strikes, natural disasters, or financial instability) could halt the supply of essential munitions. Thirdly, it can reduce the government's leverage in negotiations, making it harder to secure favorable terms or respond to changing requirements. Lastly, it may stifle the development of alternative technologies or competing suppliers in the long run, potentially limiting future options and increasing long-term dependency.

What is The Boeing Company's track record in delivering large defense contracts, particularly for munitions?

The Boeing Company has a long and extensive track record of delivering large defense contracts, including significant work on munitions programs. As one of the world's largest aerospace and defense contractors, Boeing has been a key player in developing, manufacturing, and supplying a wide array of military hardware for decades. They are a primary contractor for the JDAM program, indicating a deep understanding of the system's requirements and production processes. While specific performance metrics for every contract are not always public, Boeing's continued success in securing major defense awards suggests a generally reliable performance history. However, like any large contractor, they have faced scrutiny and challenges on specific programs related to cost, schedule, and technical performance over the years.

How does this contract fit into the broader context of US foreign military sales and international defense cooperation?

This contract for Joint Direct Attack Munitions (JDAMs) under Foreign Military Sales (FMS) is a significant component of US foreign policy and international defense cooperation. FMS enables US allies to purchase defense articles and services, enhancing their capabilities while promoting interoperability with US forces and strengthening security partnerships. JDAMs are a widely sought-after precision-guided munition, and their sale to allies bolsters their air-to-ground strike capabilities, contributing to regional stability and collective security efforts. The FMS program also generates revenue for the US defense industrial base and reinforces US influence among partner nations. This specific award signifies continued demand for advanced US munitions from key allies.

What are the potential long-term implications of this sole-source award on the market for precision-guided munitions?

The long-term implications of this sole-source award on the market for precision-guided munitions could be mixed. On one hand, it reinforces Boeing's dominant position in the JDAM market, potentially discouraging new entrants or competitors from developing similar capabilities, especially for FMS customers who often prefer established systems. This could lead to a less dynamic market with fewer choices and potentially higher prices in the future. On the other hand, if Boeing leverages this contract to drive down internal costs through efficiency gains or technological advancements, it could indirectly benefit the market. However, the lack of competition inherent in a sole-source award generally trends towards market consolidation and reduced long-term competitive pressure.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $62,685,620

Exercised Options: $62,685,620

Current Obligation: $62,685,620

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $53,673,156

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA821315D0002

IDV Type: IDC

Timeline