Boeing awarded $82.8M for JDAM FMS production, raising questions about competition and value

Contract Overview

Contract Amount: $82,799,889 ($82.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2023-09-15

End Date: 2023-09-15

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JOINT DIRECT ATTACK MUNITION FOREIGN MILITARY SALES LOT 25 PRODUCTION

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $82.8 million to THE BOEING COMPANY for work described as: JOINT DIRECT ATTACK MUNITION FOREIGN MILITARY SALES LOT 25 PRODUCTION Key points: 1. Contract awarded via sole-source justification, limiting price discovery and potentially increasing costs. 2. Lack of competition suggests potential for higher-than-market pricing and reduced contractor innovation. 3. Performance risk appears low given the nature of munitions production, but supply chain vulnerabilities exist. 4. This contract supports foreign military sales, impacting international relations and defense cooperation. 5. The contract falls within the ammunition manufacturing sector, a critical component of defense logistics. 6. Limited transparency due to sole-source award makes detailed value-for-money assessment challenging.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the pricing for this specific lot of Joint Direct Attack Munitions against market rates or alternative suppliers. The sole-source nature of the award prevents a direct comparison of value-for-money. While Boeing is a known producer of JDAMs, the absence of competition means taxpayers cannot be assured they are receiving the best possible price. Further analysis would require access to cost breakdowns or historical pricing data for similar FMS lots.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one bidder, The Boeing Company, was solicited. This approach bypasses the standard competitive procurement process. The lack of competition means there were no other companies vying for the contract, which can limit price negotiation and potentially lead to higher costs for the government and allied nations.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the lowest possible prices, potentially resulting in less efficient use of taxpayer funds for this critical defense materiel.

Public Impact

Foreign military allies benefit from the continued supply of Joint Direct Attack Munitions, enhancing their defense capabilities. The contract ensures the production and delivery of essential munitions for international partners. Geographic impact is primarily on Boeing's production facilities, likely in Missouri, but the end-users are international. Workforce implications are positive for The Boeing Company's employees involved in the production of these munitions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in pricing due to sole-source justification hinders value assessment.
Dependence on a single supplier for critical munitions could pose supply chain risks.
Foreign military sales contracts can be subject to geopolitical shifts affecting demand and delivery.

Positive Signals

Boeing is an established and experienced manufacturer of JDAMs, suggesting reliable production.
Contract supports critical defense needs for allied nations, fostering international security partnerships.
Fixed-price contract structure provides some cost certainty for the government, assuming accurate initial pricing.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on the production of precision-guided munitions. The market for such systems is dominated by a few large defense contractors. The total addressable market for munitions is substantial, driven by both domestic defense needs and foreign military sales. Benchmarking this contract's value is challenging without competitive data, but it represents a significant investment in maintaining and supplying advanced ordnance capabilities.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded directly to The Boeing Company. There is no explicit information regarding subcontracting opportunities for small businesses within this award notice. The focus is on prime contractor production, and the impact on the broader small business ecosystem is likely indirect, related to Boeing's overall supply chain needs.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. As a sole-source award, scrutiny may be heightened to ensure the justification is sound and pricing is fair. Transparency is limited by the procurement method, but reporting requirements for foreign military sales may provide some level of accountability. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

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
Lack of competition
Limited price transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.8 million to THE BOEING COMPANY. JOINT DIRECT ATTACK MUNITION FOREIGN MILITARY SALES LOT 25 PRODUCTION

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 $82.8 million.

What is the period of performance?

Start: 2023-09-15. End: 2023-09-15.

What is the historical spending trend for JDAM FMS production by The Boeing Company?

Analyzing historical spending for JDAM FMS production by The Boeing Company requires access to detailed contract databases and FMS case files. Generally, the demand for JDAMs fluctuates based on global security needs and the modernization priorities of allied nations. Significant FMS sales often occur during periods of heightened geopolitical tension or when specific regional conflicts necessitate advanced munitions. Without specific data on prior FMS lots for JDAMs awarded to Boeing, it's difficult to establish a precise spending trend. However, it is reasonable to assume that consistent demand from multiple international partners would lead to recurring, substantial contract awards over time, reflecting the ongoing need for these capabilities in the global defense market.

How does the unit cost of these JDAMs compare to domestically procured JDAMs?

Directly comparing the unit cost of JDAMs under this FMS contract to domestically procured JDAMs is challenging without specific pricing details for both. Foreign Military Sales often include additional costs related to program management, unique country requirements, and specific support services, which can inflate the per-unit price compared to standard domestic procurements. Furthermore, the 'not competed' status of this FMS lot means there's no direct competitive benchmark. Historically, FMS procurements can sometimes be more expensive due to these factors, but they also allow allies to acquire U.S. defense articles. A thorough comparison would necessitate accessing detailed pricing breakdowns for both domestic and FMS contracts, considering quantity variations and any specific modifications.

What are the specific risks associated with a sole-source award for munitions production?

A sole-source award for munitions production carries several risks. Primarily, it eliminates competitive pressure, which can lead to inflated prices as the sole contractor faces no incentive to offer the most cost-effective solution. This lack of competition can also stifle innovation, as the contractor may not feel compelled to invest in process improvements or new technologies. Dependence on a single supplier creates a significant supply chain vulnerability; any disruption at the contractor's facility or within their supply chain could halt production, impacting both U.S. readiness and allied capabilities. Furthermore, without competitive proposals, it is harder for the government to validate the fairness and reasonableness of the price, increasing the risk of paying more than necessary for critical defense articles.

What is the track record of The Boeing Company in delivering JDAM systems under FMS contracts?

The Boeing Company has a long-standing and established track record as the primary manufacturer of the Joint Direct Attack Munition (JDAM) system. They have consistently delivered JDAM kits and related services to the U.S. military and numerous foreign partners through the Foreign Military Sales program. Boeing's experience encompasses large-scale production, integration, and sustainment of these munitions. While specific performance metrics for every FMS contract are not publicly detailed, Boeing's continued role as the principal supplier suggests a generally reliable performance history in meeting production schedules and quality standards required for these critical defense articles. Their deep familiarity with the JDAM system and established production lines contribute to their capacity to fulfill FMS orders.

Are there alternative munitions available that could fulfill similar roles at a lower cost?

The availability of alternative munitions that could fulfill similar roles at a lower cost depends heavily on the specific mission requirements and the capabilities of the JDAM system. JDAMs provide precision-guided strike capabilities using GPS and inertial navigation, making them effective against a wide range of targets in various weather conditions. While other guided munitions exist, such as laser-guided bombs or different types of stand-off weapons, they may offer different ranges, guidance methods, or target sets. The cost-effectiveness of alternatives would need to be assessed against the JDAM's specific performance advantages and the operational context. For certain applications, simpler or older munitions might be cheaper but less effective or precise. The FMS context also implies that allied nations specifically requested JDAMs, suggesting a perceived need for their particular capabilities over potentially cheaper alternatives.

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: $82,799,889

Exercised Options: $82,799,889

Current Obligation: $82,799,889

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $55,837,841

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