Boeing awarded $26.8M for Small Diameter Bomb I Lot 17, with no competition

Contract Overview

Contract Amount: $26,826,506 ($26.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-11-05

End Date: 2025-09-30

Contract Duration: 1,425 days

Daily Burn Rate: $18.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: SMALL DIAMETER BOMB I LOT 17 ALL UP ROUND.

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $26.8 million to THE BOEING COMPANY for work described as: SMALL DIAMETER BOMB I LOT 17 ALL UP ROUND. Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The fixed-price incentive contract type suggests shared risk between the government and contractor, but requires careful monitoring. 3. Delivery order for ammunition manufacturing indicates a need for critical munitions, but the lack of competition limits market signals. 4. The contract duration of 1425 days suggests a long-term requirement for these munitions. 5. The award to a single, large defense contractor highlights the concentration within the defense industrial base. 6. Performance period extends into late 2025, indicating ongoing production and delivery requirements.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The fixed-price incentive structure aims to control costs, but the absence of competing offers means there's no external validation of the pricing. Comparisons to similar ammunition contracts would be necessary to assess if the negotiated price is reasonable, but such data is not readily available in this context. The total value of $26.8 million for this lot of munitions requires scrutiny to ensure taxpayer funds are used efficiently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not solicit bids from multiple potential suppliers. This approach is typically used when only one source is capable of meeting the requirement, or in situations where urgency or national security dictates a direct award. The lack of competition means that the government did not benefit from the price reductions and innovation that typically arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. This limits the government's ability to secure the best possible value for its investment in munitions.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other branches of the U.S. military requiring advanced munitions. The contract delivers Small Diameter Bomb I (SDB I) All Up Rounds, a key component for air-to-ground precision strikes. Geographic impact is primarily related to the manufacturing location in Missouri and the eventual deployment of munitions to operational theaters. Workforce implications include continued employment at The Boeing Company's facilities involved in the production of these munitions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for the government.
Fixed-price incentive contract requires careful monitoring to ensure contractor performance aligns with cost objectives.
Concentration of critical munitions production with a single large contractor could pose supply chain risks.
Lack of transparency in the procurement process due to sole-source nature.

Positive Signals

Award to a known, established defense contractor with experience in producing similar munitions.
Contract type (fixed-price incentive) aims to balance risk and reward, encouraging efficiency.
Long-term contract duration suggests a sustained need for these capabilities, potentially leading to production efficiencies over time.
Delivery order mechanism allows for phased funding and delivery, aligning with operational needs.

Sector Analysis

The defense sector for munitions manufacturing is highly specialized, with a limited number of prime contractors capable of producing advanced weapon systems like the Small Diameter Bomb I. The market is characterized by long development cycles, high R&D costs, and significant government investment. Spending in this area is driven by military modernization efforts and operational requirements. Comparable spending benchmarks are difficult to establish without access to detailed cost breakdowns and competitive bid data for similar systems.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded directly to The Boeing Company, a large defense contractor. There is no explicit indication of subcontracting plans for small businesses within the provided data. The focus is on prime contract performance, and the impact on the broader small business ecosystem is likely indirect, related to potential supply chain opportunities if Boeing chooses to engage small businesses for components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The fixed-price incentive structure necessitates performance monitoring to ensure the contractor meets delivery schedules and quality standards while managing costs. Transparency is limited due to the sole-source nature of the award. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Small Diameter Bomb II
Joint Direct Attack Munition (JDAM)
Advanced Medium-Range Air-to-Air Missile (AMRAAM)
Tactical Missiles
Air-to-Ground Munitions

Risk Flags

Sole-source award lacks competitive justification.
Potential for cost overruns due to lack of competition.
Reliance on a single contractor for critical munitions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.8 million to THE BOEING COMPANY. SMALL DIAMETER BOMB I LOT 17 ALL UP ROUND.

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 $26.8 million.

What is the period of performance?

Start: 2021-11-05. End: 2025-09-30.

What is the historical spending trend for Small Diameter Bomb I (SDB I) munitions awarded to The Boeing Company?

Analyzing historical spending for SDB I munitions awarded to The Boeing Company requires aggregating data across multiple contract awards over several fiscal years. While this specific award is for Lot 17 valued at $26.8 million, previous lots and related contracts would provide a broader picture. Factors influencing spending trends include production rates, technological upgrades, inventory replenishment needs, and evolving operational requirements. A comprehensive review would involve examining contract databases for all SDB I awards to Boeing, noting the year, value, contract type, and any associated modifications. This analysis would reveal whether spending has been consistent, increasing, or decreasing, and help identify any significant shifts in procurement volume or investment over time. Without access to a complete historical dataset, it's challenging to provide precise figures, but the ongoing nature of these awards suggests a sustained demand for this capability.

How does the unit cost of the SDB I All Up Rounds in this contract compare to previous lots or similar munitions?

Determining the precise unit cost for the SDB I All Up Rounds in this $26.8 million contract is difficult without knowing the exact quantity procured. The contract type is Fixed Price Incentive (FPI), which includes target costs, target profits, and ceiling prices, making direct unit cost comparisons complex. However, if the quantity were known, we could calculate an average unit price. To benchmark this, one would compare this calculated unit price against historical unit prices for previous lots of SDB I awarded to Boeing, or against unit prices of comparable munitions from other manufacturers, if available through competitive procurements. The absence of competition in this sole-source award inherently limits the ability to perform a robust value-for-money assessment based on unit cost comparisons. Any analysis would rely on internal government cost estimates or historical data, which may not reflect current market conditions.

What are the specific performance metrics and Key Performance Indicators (KPIs) associated with this contract?

The provided data does not detail the specific performance metrics or Key Performance Indicators (KPIs) for this contract. However, for a Fixed Price Incentive (FPI) contract, performance is typically measured against agreed-upon targets related to cost, schedule, and quality. For munitions production, KPIs would likely include adherence to production schedules, meeting stringent quality control standards (e.g., defect rates, reliability), and potentially delivery timelines. The 'incentive' aspect suggests that Boeing could earn additional profit if performance exceeds certain targets, or incur penalties if it falls short, particularly concerning cost and delivery. The government's contracting officer and program managers are responsible for monitoring these metrics throughout the contract's duration and ensuring compliance with the contract terms.

What is the risk assessment associated with The Boeing Company's ability to deliver on this contract, considering its track record?

The Boeing Company is a major defense contractor with extensive experience in producing complex aerospace and defense systems, including munitions. Its track record for delivering large-scale programs is generally robust, although like any large corporation, it has faced challenges and scrutiny on specific projects. For this particular contract, the risks would be assessed based on factors such as production capacity, supply chain stability for components, workforce expertise, and historical performance on similar contracts. Given Boeing's established position and expertise in munitions manufacturing, the inherent risks of non-performance are likely considered moderate. However, the sole-source nature means the government is heavily reliant on Boeing's capability and commitment to fulfill this requirement effectively and efficiently.

Are there any known issues or concerns regarding the Small Diameter Bomb I (SDB I) system itself that might impact this contract?

The Small Diameter Bomb I (SDB I) system has been operational for several years and is a key component in the U.S. Air Force's precision strike capabilities. While generally considered effective, like any advanced weapon system, it may have undergone various upgrades, modifications, or addressed operational feedback since its initial fielding. Potential issues could relate to sustainment, integration with newer aircraft platforms, or evolving threat environments requiring system enhancements. However, the award of this contract, even on a sole-source basis, suggests that the SDB I system continues to be a required capability. Specific issues impacting this particular Lot 17 award would likely be internal to the program management and require access to program office assessments or classified operational data.

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: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JAMES S 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: $26,826,506

Exercised Options: $26,826,506

Current Obligation: $26,826,506

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA867220D0001

IDV Type: IDC

Timeline