Boeing awarded $68M for Joint Direct Attack Munition production, with no competition

Contract Overview

Contract Amount: $67,972,272 ($68.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-06-21

End Date: 2021-06-21

Contract Duration: 731 days

Daily Burn Rate: $93.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JOINT DIRECT ATTACK MUNITION PRODUCTION LOT 23 VARIOUS FOREIGN MILITARY SALES COUNTRIES

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $68.0 million to THE BOEING COMPANY for work described as: JOINT DIRECT ATTACK MUNITION PRODUCTION LOT 23 VARIOUS FOREIGN MILITARY SALES COUNTRIES Key points: 1. The contract value represents a significant investment in critical munitions. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. The fixed-price contract type aims to control costs, but without competition, its effectiveness is limited. 4. This award is part of ongoing foreign military sales, indicating international reliance on U.S. defense capabilities. 5. The duration of the contract suggests a sustained need for these munitions. 6. The specific lot number indicates this is part of a larger, ongoing production effort.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. The $68 million award for Joint Direct Attack Munition (JDAM) production, while substantial, cannot be definitively assessed for value for money without comparative pricing from other potential suppliers. The firm fixed-price structure is intended to cap costs, but the absence of competition means the government may not be achieving the lowest possible price. Without market data from competing offers, it's difficult to determine if this price is reasonable compared to industry standards or previous similar awards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was considered. This approach bypasses the standard competitive bidding process, which typically involves soliciting proposals from multiple qualified companies. The justification for a sole-source award often relates to unique capabilities, urgent needs, or the unavailability of other sources. However, the lack of competition limits the government's ability to leverage market forces to secure the best possible pricing and terms.

Taxpayer Impact: Taxpayers may be paying a premium for these munitions due to the absence of competitive pressure. Without multiple bids, there is less incentive for the contractor to offer the lowest possible price, potentially leading to higher overall government expenditure.

Public Impact

Foreign military sales countries benefit from the acquisition of advanced munitions, enhancing their defense capabilities. The U.S. Department of Defense receives critical ordnance for its own inventory and for transfer to allies. The contract supports jobs within The Boeing Company's defense manufacturing sector. The production of these munitions contributes to the readiness of allied forces, potentially enhancing global security.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher unit costs than a competitive procurement.
Sole-source awards can reduce transparency in pricing and potentially limit innovation.
Dependence on a single supplier for critical munitions poses a long-term supply chain risk.

Positive Signals

The firm fixed-price contract type provides cost certainty for the government.
The contract supports the production of essential defense materiel for U.S. allies.
The award is associated with established foreign military sales programs, indicating a structured demand.

Sector Analysis

The defense manufacturing sector, particularly for munitions, is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. The Joint Direct Attack Munition (JDAM) is a widely used guidance kit that converts unguided bombs into 'smart' munitions. Spending in this category is driven by military readiness requirements, modernization efforts, and international security assistance. Comparable spending benchmarks are difficult to ascertain without competitive data, but the scale of this award suggests a significant production run for a key weapon system.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by the 'sb' field being false. The prime contractor, The Boeing Company, is a large aerospace and defense firm. While large prime contractors are often required to subcontract portions of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without further information on subcontracting goals, it's difficult to assess the direct benefit to small businesses from this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management systems. The Air Force, as the servicing agency, would be responsible for monitoring performance, ensuring compliance with contract terms, and managing payments. Inspector General (IG) investigations could be initiated if any irregularities, fraud, or waste are suspected. Transparency is generally limited in sole-source procurements, but contract awards are publicly reported, providing some level of visibility.

Related Government Programs

Joint Direct Attack Munition (JDAM) Program
Foreign Military Sales (FMS) Program
Ammunition Production Contracts
Department of Defense Procurement

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns without competitive pressure.
Supply chain risk due to single-source dependency.
Limited transparency in contract value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.0 million to THE BOEING COMPANY. JOINT DIRECT ATTACK MUNITION PRODUCTION LOT 23 VARIOUS FOREIGN MILITARY SALES COUNTRIES

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 $68.0 million.

What is the period of performance?

Start: 2019-06-21. End: 2021-06-21.

What is the historical spending trend for Joint Direct Attack Munition (JDAM) production by The Boeing Company?

Analyzing historical spending for JDAM production by The Boeing Company requires access to a broader dataset of past contracts. The provided data only details one specific award for Lot 23. To understand spending trends, one would need to examine previous production lots, other JDAM-related contracts (e.g., upgrades, sustainment), and potentially contracts awarded to other JDAM component manufacturers or integrators. A trend analysis would look at the total dollar value awarded over time, the number of contracts, and whether spending has increased, decreased, or remained stable. Factors influencing trends could include changes in military requirements, geopolitical events, and budget allocations. Without this historical context, it's impossible to determine if the $68 million award is representative of typical spending or an outlier.

How does the unit cost of JDAMs under this contract compare to publicly available benchmarks or previous contracts?

Determining the unit cost for JDAMs under this $68 million contract is not straightforward without knowing the exact quantity of munitions produced. The contract is for 'production lot 23,' which implies a certain number of units, but this quantity is not specified. If the quantity were known, the average unit cost could be calculated by dividing the total contract value by the number of units. Comparing this to benchmarks is difficult because JDAM unit costs can vary based on the specific variant, quantity ordered, and year of production. Furthermore, as this was a sole-source award, direct comparison to competitive bids is impossible. Publicly available data on JDAM unit costs is often aggregated or may pertain to different configurations or contract types, making a precise comparison challenging without more detailed contract specifics.

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 significant risks. Firstly, there is a risk of price escalation, as the government lacks the leverage of competitive bidding to ensure the lowest possible cost. The sole provider may increase prices over time, knowing that alternatives are not readily available. Secondly, there's a risk to supply chain stability and surge capacity. If the sole provider experiences production issues, capacity constraints, or faces geopolitical challenges, the supply of these essential munitions could be jeopardized, impacting military readiness. Thirdly, a lack of competition can stifle innovation. Without the pressure to compete, the sole provider may have less incentive to invest in improving production processes, developing new variants, or enhancing the munition's capabilities. Finally, there's a potential for vendor lock-in, making it difficult and costly to transition to a different supplier or technology in the future.

What is the strategic importance of JDAMs for the U.S. and its allies, and how does this contract contribute to that?

Joint Direct Attack Munitions (JDAMs) are strategically vital because they transform unguided bombs into precision-guided munitions, significantly enhancing accuracy and reducing collateral damage. This capability is crucial for minimizing civilian casualties while effectively neutralizing targets. For the U.S. military, JDAMs are a cornerstone of air-to-ground operations, providing a versatile and reliable weapon system across various platforms. For allies through Foreign Military Sales (FMS), JDAMs bolster their defense capabilities, enabling them to operate more effectively alongside U.S. forces and address regional security threats. This $68 million contract for JDAM production directly contributes to maintaining and replenishing the stockpiles of these essential munitions for both U.S. forces and allied nations, thereby supporting ongoing military operations, readiness, and international security cooperation.

What oversight mechanisms are in place to ensure the quality and timely delivery of munitions under this contract?

Oversight for defense contracts like this JDAM production award typically involves multiple layers. The contracting agency, in this case, the Department of the Air Force, assigns contracting officers and contract specialists who are responsible for monitoring the contractor's performance against the contract terms. This includes ensuring adherence to specifications, quality standards, and delivery schedules. Quality assurance representatives (QARs) from the Defense Contract Management Agency (DCMA) are often embedded with the contractor to oversee production processes and inspect the final product. Performance metrics and reporting requirements are usually stipulated in the contract, allowing the government to track progress. Furthermore, the Department of Defense's Inspector General (IG) provides an independent layer of oversight, conducting audits and investigations to detect fraud, waste, and abuse, and to ensure program effectiveness and accountability.

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: $67,972,272

Exercised Options: $67,972,272

Current Obligation: $67,972,272

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $48,274,004

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