Navy awards $210M for missile production, with Boeing securing the contract

Contract Overview

Contract Amount: $210,457,480 ($210.5M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2007-03-30

End Date: 2015-09-30

Contract Duration: 3,106 days

Daily Burn Rate: $67.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SLAM-ER PRODUCTION FOR TURKEY AND HARPOON LOT 83

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $210.5 million to THE BOEING COMPANY for work described as: SLAM-ER PRODUCTION FOR TURKEY AND HARPOON LOT 83 Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract is for a significant duration, spanning over 8 years. 3. The fixed-price nature of the contract shifts cost risk to the contractor. 4. The specific missile systems procured are critical for defense capabilities. 5. The award was made by the Department of the Navy, indicating a focus on naval defense assets.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contract data. The total award amount of $210.4 million over approximately 8 years suggests a substantial investment in missile production. However, without details on the number of units procured or the specific capabilities of the missiles, a precise value-for-money assessment is difficult. The firm fixed-price contract type generally aims for cost efficiency by placing risk on the contractor, but the ultimate value depends on the execution and delivery quality.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The number of bidders is not specified, but this procurement method generally fosters price discovery and allows the government to select the best value offer. The competitive nature should theoretically lead to more favorable pricing compared to sole-source awards.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and the assurance that the contract was awarded through a transparent process, maximizing the opportunity to obtain goods at a reasonable cost.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially allied forces (Turkey is mentioned in the data) through the acquisition of advanced missile systems. The contract delivers guided missiles and space vehicles, crucial for national defense and power projection. The geographic impact is primarily within the United States for production, with the end-use being military operations. Workforce implications include employment opportunities within The Boeing Company and its supply chain, particularly in manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to potential cost overruns if not managed effectively.
Reliance on a single large contractor (Boeing) for production might limit future flexibility or innovation.
The specific missile systems are advanced, implying complex technology that could be subject to development or production challenges.

Positive Signals

Awarded through full and open competition, suggesting a robust and fair bidding process.
Firm fixed-price contract type helps control costs and manage budget predictability.
The contract supports critical defense capabilities, aligning with national security objectives.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized area of the aerospace and defense industry. This sector is characterized by high technological barriers to entry, significant R&D investment, and stringent quality control requirements. Spending in this area is driven by national security needs and geopolitical factors. Comparable spending benchmarks would involve other large-scale defense procurement contracts for advanced weaponry.

Small Business Impact

The data indicates that small business participation was not a primary set-aside consideration for this contract (sb: false). While Boeing may engage small businesses as subcontractors, there is no explicit requirement or focus on small business set-asides evident in the provided information. The impact on the small business ecosystem would depend on Boeing's subcontracting strategy, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract, requiring Boeing to deliver specified goods within the agreed price. Transparency is facilitated by the contract's full and open competition award. The Inspector General of the Department of Defense would have jurisdiction for audits and investigations into fraud, waste, or abuse.

Related Government Programs

Guided Missile Production
Naval Weapon Systems
Aerospace Manufacturing
Defense Procurement
Foreign Military Sales (potential, given Turkey mention)

Risk Flags

Long contract duration
Potential for cost growth over time
Technological obsolescence risk
Sole-source supplier dependency (Boeing)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $210.5 million to THE BOEING COMPANY. SLAM-ER PRODUCTION FOR TURKEY AND HARPOON LOT 83

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 Navy).

What is the total obligated amount?

The obligated amount is $210.5 million.

What is the period of performance?

Start: 2007-03-30. End: 2015-09-30.

What is the historical spending pattern for similar missile production contracts awarded by the Department of the Navy?

Analyzing historical spending for similar missile production contracts by the Department of the Navy requires access to extensive procurement databases. Generally, such contracts are awarded through competitive processes, with values fluctuating based on technological advancements, geopolitical needs, and the specific weapon systems involved. Contracts for advanced missile systems often represent significant multi-year investments, ranging from tens to hundreds of millions of dollars. Factors influencing historical spending include the quantity of missiles ordered, the complexity of their guidance and warhead systems, and the production run length. The trend often shows increasing costs due to inflation and technological upgrades, but competitive bidding aims to mitigate excessive price increases. Without specific contract identifiers or dates for comparison, a precise historical trend is difficult to establish, but large-scale missile production is a consistent component of naval defense budgets.

How does the per-unit cost of the missiles procured under this contract compare to market rates or similar government contracts?

Determining the per-unit cost for the missiles procured under this contract is not possible with the provided data, as the total award amount and contract duration are given, but the number of units is not specified. To perform a per-unit cost comparison, one would need to divide the total contract value ($210,457,480) by the number of missiles (SLAM-ER and Harpoon Lot 83) delivered. Furthermore, comparing this to market rates or similar government contracts would require access to classified or proprietary pricing information for comparable missile systems. Government contracts for advanced defense systems are often subject to specific pricing regulations and negotiation strategies, making direct external comparisons challenging. The firm fixed-price nature suggests an effort to establish a definitive cost, but the actual value derived per unit is contingent on the negotiated price and the specific capabilities of the missiles.

What is The Boeing Company's track record in delivering complex defense systems, particularly missile technology?

The Boeing Company has a long and extensive track record in developing and producing complex defense systems, including a wide array of missile technologies. They are a major prime contractor for numerous U.S. military programs across all branches of service. Boeing has been involved in the production of air-to-air, air-to-ground, and strategic missiles, as well as related systems like launch platforms and targeting pods. Their experience spans decades, encompassing both developmental and sustainment contracts for critical defense assets. While specific performance details for every contract are not publicly available, Boeing's continued role as a primary defense contractor indicates a generally reliable capability in delivering sophisticated military hardware, including missile systems, though like any large defense manufacturer, they may have faced challenges or delays on specific programs over their history.

What are the potential risks associated with the long duration (over 8 years) of this missile production contract?

The primary risks associated with a long-duration contract like this (over 8 years) include potential cost escalation due to inflation or unforeseen material price increases, even within a fixed-price structure, if contingency planning is inadequate. There's also the risk of technological obsolescence; missile technology evolves rapidly, and a system procured over an extended period might become less advanced compared to emerging threats or capabilities by the end of its production run. Programmatic risks include potential delays in production schedules due to supply chain disruptions, labor issues, or manufacturing complexities. Furthermore, extended contracts can sometimes lead to reduced contractor focus or efficiency over time if not actively managed and incentivized. The government also faces the risk of being locked into a specific system or supplier for an extended period, potentially limiting flexibility in adapting to changing strategic requirements.

How does the 'full and open competition' award mechanism impact the overall cost-effectiveness for taxpayers on this contract?

The 'full and open competition' award mechanism is designed to enhance cost-effectiveness for taxpayers by fostering a competitive environment among potential suppliers. By allowing all responsible sources to submit bids, the government increases the likelihood of receiving multiple proposals, which drives down prices through market forces. This process encourages contractors to offer their best pricing and value propositions to win the contract. It also provides a benchmark against which the winning bid can be assessed, ensuring that the government is not overpaying. While the initial bidding process might require more administrative effort, the long-term savings realized through competitive pricing and the selection of the best overall value are generally considered beneficial for taxpayer funds, especially for large-scale procurements like missile production.

What is the strategic importance of procuring SLAM-ER and Harpoon missiles, and how does this contract contribute to it?

The SLAM-ER (Standoff Land Attack Missile - Expanded Response) and Harpoon missiles are crucial components of naval and air power projection. The SLAM-ER is a long-range, precision-guided missile designed for attacking high-value targets from standoff ranges, enhancing survivability for aircrews. The Harpoon is a versatile anti-ship missile used by various platforms (air, surface, and subsurface) to counter enemy naval vessels. Procuring these missiles under this contract ensures the replenishment and modernization of U.S. and potentially allied (Turkey) inventories, maintaining a critical capability to deter aggression and respond to threats in maritime and land environments. This contract directly contributes to strategic readiness by ensuring these vital weapon systems are available for deployment when needed.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001907R0004

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6200 JS MCDONNELL BLVD, SAINT LOUIS, MO, 90

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

Financial Breakdown

Contract Ceiling: $211,095,175

Exercised Options: $211,095,175

Current Obligation: $210,457,480

Contract Characteristics

Cost or Pricing Data: NO

Timeline