Boeing awarded $35.3M for JDAM production, highlighting limited competition for critical munitions

Contract Overview

Contract Amount: $35,274,750 ($35.3M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-03-31

End Date: 2022-03-31

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JOINT DIRECT ATTACK MUNITION LOT 24 PRODUCTION BUY

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $35.3 million to THE BOEING COMPANY for work described as: JOINT DIRECT ATTACK MUNITION LOT 24 PRODUCTION BUY Key points: 1. The contract represents a significant investment in essential defense capabilities. 2. Limited competition raises questions about potential price inflation and value for money. 3. Reliance on a single contractor may pose supply chain risks. 4. The firm fixed-price structure aims to control costs, but initial pricing needs scrutiny. 5. This award fits within the broader context of ongoing munitions procurement to support military readiness.

Value Assessment

Rating: fair

The award of $35.3 million for Joint Direct Attack Munition (JDAM) production to The Boeing Company requires careful benchmarking. Without specific unit costs or historical data for this lot, it's challenging to definitively assess value for money. However, given the nature of advanced munitions, costs can be substantial. Comparing this to previous JDAM buys or similar advanced munition contracts would be necessary to determine if the pricing is competitive or inflated, especially considering the lack of a competitive bidding process for this specific award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning The Boeing Company was the only bidder considered. This approach is often used when a specific contractor possesses unique capabilities or intellectual property, or in situations where urgency or national security dictates a direct award. However, the absence of competition means there was no opportunity for other manufacturers to offer potentially lower prices or innovative solutions, which can lead to higher costs for the government.

Taxpayer Impact: Sole-source awards can result in taxpayers paying a premium, as the government lacks the leverage that multiple bids provide to negotiate the best possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force and other branches of the Department of Defense, ensuring they have a supply of critical JDAMs. The services delivered include the production and delivery of advanced munition components, enhancing the combat effectiveness of air assets. The geographic impact is primarily national, supporting defense industrial base capabilities, with production likely concentrated in areas where Boeing operates. Workforce implications include maintaining skilled manufacturing jobs within the aerospace and defense sector, particularly at Boeing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Reliance on a single supplier could create vulnerabilities in the supply chain for critical munitions.
Lack of competition may stifle innovation from other potential defense contractors.

Positive Signals

Ensures continued production of a vital munition system for national defense.
Firm fixed-price contract provides cost certainty for this specific procurement.
Boeing is an established defense contractor with a proven track record in munition manufacturing.

Sector Analysis

The defense industrial base for munitions is a critical sector, characterized by high barriers to entry, significant R&D investment, and often long production cycles. The market for advanced munitions like JDAMs is typically dominated by a few large, established defense contractors. Spending in this area is driven by geopolitical factors, military readiness requirements, and ongoing operational needs. Comparable spending benchmarks would involve analyzing other large-scale munition procurement contracts, both within the U.S. and among allied nations, to assess cost-effectiveness.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large prime contractor, the potential for small business subcontracting opportunities exists but is not explicitly mandated or detailed in the provided data. The impact on the small business ecosystem would depend on Boeing's subcontracting strategy, which is not detailed here. Without specific subcontracting goals, it's difficult to assess the direct benefit to small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, which hold the contractor responsible for delivering the specified munitions at the agreed-upon price. Transparency is limited due to the sole-source nature of the award and the typical classification of defense procurement details. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Joint Direct Attack Munition (JDAM) Program
Air Force Munitions Procurement
Department of Defense Ammunition Manufacturing
Precision Guided Munitions Production

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.3 million to THE BOEING COMPANY. JOINT DIRECT ATTACK MUNITION LOT 24 PRODUCTION BUY

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 $35.3 million.

What is the period of performance?

Start: 2022-03-31. End: 2022-03-31.

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

Analyzing historical spending on JDAM production reveals a consistent and significant investment by the Department of Defense over several years. While specific lot buy figures fluctuate based on demand, production schedules, and technological updates, the overall trend indicates a sustained commitment to maintaining and replenishing this critical munition. For instance, previous years have seen multi-million dollar awards for JDAM components and full systems. Understanding these historical patterns is crucial for contextualizing the current $35.3 million award, allowing for comparisons of unit costs, quantities procured, and the overall budgetary allocation towards JDAMs. This historical data helps identify any anomalies in pricing or procurement volume that might warrant further investigation into efficiency or necessity.

How does the unit cost of JDAMs in this award compare to previous procurements or industry benchmarks?

Determining the precise unit cost for JDAMs within this $35.3 million award is challenging without the quantity of munitions procured. However, the absence of a competitive bidding process for this sole-source award raises concerns about potential deviations from historical unit costs or industry benchmarks. Typically, competitive solicitations drive prices down. If previous JDAM procurements, especially those that were competed, show significantly lower unit costs, it would suggest that this sole-source award may be less cost-effective for the government. Industry benchmarks for similar precision-guided munitions can also provide a reference point. A substantial increase in unit cost compared to prior buys or market rates, particularly without a clear justification like enhanced capabilities or inflation, would be a red flag indicating potential value-for-money issues.

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

Relying on a sole-source contractor, such as The Boeing Company for this JDAM production buy, presents several significant risks. Firstly, it eliminates competitive pressure, potentially leading to higher prices and reduced incentives for efficiency and innovation. The government has less leverage to negotiate favorable terms. Secondly, it creates a single point of failure in the supply chain. Any disruption at the sole contractor's facility—whether due to production issues, labor disputes, geopolitical events, or financial instability—could halt the supply of critical munitions, impacting military readiness. Thirdly, it can foster complacency, as the contractor may face less pressure to invest in process improvements or cost-saving measures when competition is absent. This dependence can also make it difficult to onboard alternative suppliers in the future should the need arise.

What is Boeing's track record in producing JDAMs and other similar munitions?

The Boeing Company has a well-established and extensive track record in the production of Joint Direct Attack Munitions (JDAMs) and a wide array of other aerospace and defense systems. As a major defense contractor, Boeing has been a key supplier of JDAM kits and related components for the U.S. military for many years. Their experience encompasses large-scale production, integration with various aircraft platforms, and adherence to stringent military specifications. While specific performance metrics for individual contracts are often proprietary, Boeing's sustained role as a primary provider of JDAMs suggests a generally reliable capability in manufacturing these complex weapons systems. However, like any large-scale manufacturing operation, past performance reviews, defect rates, and on-time delivery metrics for specific contracts would be necessary for a comprehensive assessment.

Are there any alternative munitions or technologies that could fulfill the same mission requirements as JDAMs, and why was this specific contract pursued?

The Joint Direct Attack Munition (JDAM) is a widely deployed and mature system, but the defense landscape is constantly evolving with alternative munitions and technologies. While JDAMs provide a cost-effective precision-strike capability, other options exist, including newer generations of guided bombs, stand-off weapons, and potentially directed energy systems in the future. The decision to pursue a JDAM production buy, especially on a sole-source basis, typically stems from factors such as existing infrastructure, established training protocols, interoperability with current platforms, and proven reliability. The $35.3 million award likely reflects a need to replenish stocks of a known, effective munition rather than investing in entirely new, unproven systems. The specific rationale for a sole-source award might include urgent operational needs, unique integration requirements, or the limited number of qualified manufacturers capable of producing JDAMs to the required specifications at scale.

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: $35,274,750

Exercised Options: $35,274,750

Current Obligation: $35,274,750

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $352,468,885

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