Boeing awarded $181.9M for Harpoon/SLAM-ER missile production, a sole-source definitive contract

Contract Overview

Contract Amount: $181,949,576 ($181.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2012-06-29

End Date: 2016-06-29

Contract Duration: 1,461 days

Daily Burn Rate: $124.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LOT 87 HARPOON/SLAM-ER PRODUCTION CONTRACT

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $181.9 million to THE BOEING COMPANY for work described as: LOT 87 HARPOON/SLAM-ER PRODUCTION CONTRACT Key points: 1. This contract represents a significant investment in strategic missile capabilities. 2. The firm-fixed-price structure aims to control costs for the government. 3. A single award suggests limited market alternatives or specific contractor expertise. 4. The duration of the contract indicates a long-term production requirement. 5. The geographic location of performance is in Missouri. 6. This award falls under the Guided Missile and Space Vehicle Manufacturing NAICS code.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns or comparisons to similar sole-source awards for advanced missile systems. The firm-fixed-price (FFP) type is generally favorable for cost control, but the absence of competition limits the government's ability to ensure the lowest possible price. The total award amount of $181.9 million over four years suggests a substantial per-unit cost, which would require further analysis against production volumes and technological complexity to assess true value for money.

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 suppliers. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole producer of a critical component or system. The lack of competition means the government did not benefit from price reductions or innovation that often arise from a competitive bidding process. This approach may be justified if Boeing is the only entity capable of producing these specific missile systems.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure to drive down prices. This can potentially lead to higher costs compared to a competed contract, as the government relies on the contractor's proposed pricing without alternative bids to validate it.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, which receives advanced missile systems essential for national security. The contract ensures the continued production and availability of Harpoon and SLAM-ER missiles, critical for naval and air defense capabilities. The geographic impact is concentrated in Missouri, where The Boeing Company's facility will perform the work, potentially supporting local employment and the aerospace supply chain. Workforce implications include the employment of skilled engineers, technicians, and manufacturing personnel involved in the complex production of guided missiles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in sole-source justifications can obscure true value for money.
Long contract duration may reduce flexibility to adapt to evolving threats or technologies.
Reliance on a single supplier for critical defense assets poses supply chain risks.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award ensures continued availability of vital defense capabilities.
Boeing's established expertise in missile manufacturing suggests a high likelihood of successful delivery.
Contract supports domestic manufacturing and specialized aerospace jobs.

Sector Analysis

The defense sector, specifically guided missile manufacturing, is characterized by high technological complexity, significant R&D investment, and stringent quality requirements. Contracts in this area are often awarded to a limited number of specialized firms due to the proprietary nature of the technology and the high barriers to entry. The market size for such advanced weapon systems is substantial, driven by national defense budgets and international arms sales. This contract fits within the broader category of strategic weapons procurement, where long-term production runs and sustainment are common.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the 'ss' (small business subcontracting) is also false, suggesting that there is no explicit requirement for the prime contractor, The Boeing Company, to subcontract a portion of this work to small businesses. This means that opportunities for small businesses within the supply chain for this specific contract may be limited, and their participation would likely be at the discretion of the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. The contract type (firm-fixed-price) provides a degree of cost accountability. Transparency regarding the justification for the sole-source award and detailed cost breakdowns would enhance accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Harpoon Missile System
SLAM-ER Missile System
Naval Air Systems Command (NAVAIR) Contracts
Air Force Life Cycle Management Center (AFLCMC) Contracts
Guided Missile Production Contracts

Risk Flags

Sole-source award limits competitive pricing.
Potential for higher costs due to lack of competition.
Supply chain risk associated with single-source provider.
Limited transparency in sole-source justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $181.9 million to THE BOEING COMPANY. LOT 87 HARPOON/SLAM-ER PRODUCTION CONTRACT

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 $181.9 million.

What is the period of performance?

Start: 2012-06-29. End: 2016-06-29.

What is the historical spending trend for Harpoon and SLAM-ER missile production by the Department of Defense?

Analyzing historical spending on the Harpoon and SLAM-ER missile programs requires accessing detailed contract databases and budget reports over several years. Typically, such advanced missile systems involve multi-year production contracts with significant annual outlays. The Department of Defense often awards these contracts through competitive processes or sole-source justifications when specific capabilities are required. Fluctuations in spending can be attributed to production rates, modernization efforts, foreign military sales, and evolving threat assessments. Without specific historical data for these two missile types, it's difficult to provide precise figures, but it's reasonable to assume consistent, substantial investment given their strategic importance.

How does the firm-fixed-price (FFP) contract type compare to other pricing structures in terms of value for money for missile production?

Firm-fixed-price (FFP) contracts are generally favored by the government for procurements where the scope of work is well-defined and risks are manageable. In missile production, FFP provides cost certainty, meaning the contractor bears the risk of cost overruns. This can lead to better value for money if the contractor is efficient and the initial price is competitive. However, if the contract is sole-source, the absence of competition can negate some of the FFP benefits, as the government may not achieve the lowest possible price. Other contract types, like cost-plus-incentive-fee (CPIF), might be used for R&D-intensive projects where costs are less predictable, but FFP is often preferred for established production runs like this one.

What are the key performance indicators (KPIs) typically used to assess the success of a missile production contract?

Key performance indicators (KPIs) for missile production contracts usually revolve around schedule adherence, quality control, cost management, and technical performance. For this contract, KPIs would likely include on-time delivery of missiles, meeting stringent quality standards (e.g., defect rates, reliability testing), adherence to the firm-fixed-price budget, and ensuring the missiles meet all specified technical and performance requirements. The Defense Contract Management Agency (DCMA) would monitor these KPIs. Success is often measured by the contractor's ability to consistently meet or exceed these metrics throughout the contract duration, ensuring the warfighter receives reliable and effective weapon systems.

What are the potential risks associated with a sole-source award for critical defense systems like the Harpoon and SLAM-ER missiles?

A primary risk of sole-source awards for critical defense systems is the lack of competitive pressure, which can lead to higher prices and reduced incentives for innovation and efficiency. Taxpayers may end up paying more than necessary. Another significant risk is supply chain vulnerability; reliance on a single supplier makes the program susceptible to disruptions caused by that supplier's financial instability, production issues, or geopolitical factors. Furthermore, without competition, there's less opportunity for alternative technologies or improved designs to emerge. The government also has less leverage in negotiating terms and conditions compared to a competitive scenario.

How does the geographic location of performance (Missouri) impact the contract's execution and oversight?

The geographic location of performance in Missouri means that oversight activities, such as inspections, audits, and progress reviews, will be conducted by personnel from the relevant Defense Contract Management Agency (DCMA) office serving that region. This proximity can facilitate more direct and frequent communication between the government and the contractor, potentially leading to quicker issue resolution. However, it also means that the contract's success is tied to the specific industrial base and workforce capabilities within Missouri. Any regional economic factors or labor conditions in Missouri could indirectly influence contract execution.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001911R0106

Offers Received: 1

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: $181,949,576

Exercised Options: $181,949,576

Current Obligation: $181,949,576

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline