DoD awards $150M for missile systems, with Boeing as sole contractor

Contract Overview

Contract Amount: $94,723,521 ($94.7M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2003-12-17

End Date: 2012-01-18

Contract Duration: 2,954 days

Daily Burn Rate: $32.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200407!000001!1700!AT715 !NAVAL AIR SYSTEMS COMMAND !N0001903C0081 !A!N! !N! ! !20031217!20051231!149879157!006265946!009256819!N!MCDONNELL DOUGLAS CORPORATION !J S MCDONNELL BLVD !SAINT LOUIS !MO!63166!64082!183!29!ST. CHARLES !ST. CHARLES !MISSOURI !+000069505558!N!N!000077321500!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !CAA !MDA SUPPORT !336415!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1A!A!Y!F! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! !N00019!0001! !

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $94.7 million to THE BOEING COMPANY for work described as: 200407!000001!1700!AT715 !NAVAL AIR SYSTEMS COMMAND !N0001903C0081 !A!N! !N! ! !20031217!20051231!149879157!006265946!009256819!N!MCDONNELL DOUGLAS CORPORATION !J S MCDONNELL BLVD !SAINT LOUIS !MO!63166!64082!183!29!ST. CHARLES !ST. … Key points: 1. Contract awarded to a single, large business prime contractor. 2. Significant portion of contract value allocated to a single, large business. 3. Contract duration exceeds two years, indicating a long-term need. 4. The contract is for guided missiles and related systems, a critical defense area. 5. The contract was not competed, raising questions about price discovery. 6. The contract is firm fixed price, which can shift risk to the government if costs escalate.

Value Assessment

Rating: questionable

The contract value of $149,879,157.12 for guided missile support appears substantial. Without comparable contract data for similar services or specific line items, it is difficult to benchmark the value for money. The firm fixed-price structure, while providing cost certainty for the government, could lead to overpayment if the contractor's actual costs are significantly lower than anticipated. The lack of competition further complicates a precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The absence of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a lack of available alternatives.

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

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense requiring missile systems. The contract supports the development, production, or sustainment of guided missiles and related space systems. The geographic impact is primarily centered around the contractor's facilities in St. Louis, Missouri, and potentially other defense installations where these systems are deployed. The contract supports a significant workforce within the aerospace and defense sector, particularly at McDonnell Douglas Corporation (now part of Boeing).

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices for taxpayers.
Sole-source award limits opportunities for other businesses to compete for this work.
Firm fixed-price contract could result in the government bearing the risk of cost overruns if not managed carefully.

Positive Signals

Contract awarded to a major defense contractor with established capabilities.
Firm fixed-price contract provides budget certainty for the government.
Contract duration suggests a sustained need for these critical defense capabilities.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on missile and space systems manufacturing. This is a highly specialized and capital-intensive industry dominated by a few large prime contractors. The market size for such systems is substantial, driven by national security requirements and ongoing technological advancements. This contract represents a significant award within this niche, likely contributing to the sustainment or advancement of U.S. missile defense capabilities.

Small Business Impact

This contract was awarded to a large business prime contractor and does not appear to have a small business set-aside component. There is no explicit information regarding subcontracting plans for small businesses. The sole-source nature of the award limits opportunities for small businesses to participate directly as prime contractors on this specific contract, though they may be involved as subcontractors to the prime.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which ensures compliance with contract terms and quality standards. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified goods or services at an agreed-upon price. Transparency is limited due to the sole-source nature of the award, with details of the negotiation process not publicly available.

Related Government Programs

Guided Missile Production
Aerospace Manufacturing
Defense Systems Procurement
Naval Air Systems Command Contracts
Missile and Space Systems

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns under FFP
Reliance on a single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.7 million to THE BOEING COMPANY. 200407!000001!1700!AT715 !NAVAL AIR SYSTEMS COMMAND !N0001903C0081 !A!N! !N! ! !20031217!20051231!149879157!006265946!009256819!N!MCDONNELL DOUGLAS CORPORATION !J S MCDONNELL BLVD !SAINT LOUIS !MO!63166!64082!183!29!ST. CHARLES !ST. CHARLES !MISSOURI !+000069505558!N!N!000077321500!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !CAA !MDA SUPPORT !336415!E! !3! ! ! ! ! !999

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 $94.7 million.

What is the period of performance?

Start: 2003-12-17. End: 2012-01-18.

What is the historical spending pattern for similar guided missile contracts awarded by the Department of Defense?

Analyzing historical spending on similar guided missile contracts is crucial for benchmarking. While this specific contract is valued at approximately $150 million, a broader review of DoD's spending on missile systems over the past decade would reveal trends in contract values, types (e.g., R&D, production, sustainment), and competition levels. For instance, major missile programs often involve multi-year, multi-billion dollar awards. Understanding the average price per unit for comparable missile components or systems, and how these prices have evolved, would provide context for the current award's value. Furthermore, examining the historical success rates and performance metrics of contractors in this space can inform risk assessments.

What specific missile systems or components does this contract cover, and what is their strategic importance?

This contract, NAICS code 336415 (Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing), specifically relates to propulsion units and their parts for guided missiles and space vehicles. The strategic importance of reliable and advanced propulsion systems cannot be overstated; they are fundamental to the performance, range, and effectiveness of any missile system. These systems are critical for national defense, enabling deterrence, power projection, and threat neutralization. The specific type of missile system (e.g., air-to-air, surface-to-air, intercontinental ballistic missile) would dictate its precise role in military strategy, but the underlying propulsion technology is a core enabler.

What are the potential risks associated with a sole-source, firm-fixed-price contract for missile systems?

A sole-source, firm-fixed-price (FFP) contract for missile systems presents several potential risks. Firstly, the lack of competition means the government may not be achieving the best possible price, as there's no market pressure to drive down costs. The contractor has significant pricing power. Secondly, with FFP, the contractor is incentivized to control costs, but if unforeseen technical challenges or material cost increases arise, the government might end up paying more than anticipated if contract modifications are necessary, or the contractor could cut corners on quality to maintain profit margins. The government bears the risk of cost overruns if the scope of work expands or if initial cost estimates were inaccurate. Finally, reliance on a single source can create supply chain vulnerabilities and reduce flexibility in adapting to new technologies or requirements.

What is the track record of McDonnell Douglas Corporation (now Boeing) in delivering missile propulsion systems?

McDonnell Douglas Corporation, now integrated into The Boeing Company, has a long and significant history in aerospace and defense, including extensive experience with missile systems. Boeing is a major global aerospace company and a key defense contractor for the U.S. government. Their track record includes the development and production of numerous missile platforms and associated technologies. Specifically concerning propulsion, Boeing has been involved in various programs requiring advanced rocket motors and engine components. While specific performance data for this exact contract isn't detailed here, Boeing's overall standing as a prime contractor suggests a substantial capacity and established expertise in delivering complex defense systems, including those requiring sophisticated propulsion solutions.

How does this contract's value compare to the overall defense budget allocated to missile systems?

This contract's value of approximately $150 million, while substantial for a single award, represents a relatively small fraction of the Department of Defense's overall budget for missile systems. The DoD's annual budget typically runs into hundreds of billions of dollars, with significant allocations for research, development, procurement, and sustainment of various missile programs, including strategic, tactical, and defensive systems. For example, major programs like the Ground-Based Strategic Deterrent (GBSD) or various fighter/bomber-launched missiles involve procurement costs that can run into billions of dollars over their lifecycle. Therefore, this $150 million contract is likely focused on a specific component, subsystem, or a limited production run within a larger missile program.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: J S MCDONNELL BLVD, SAINT LOUIS, MO, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline