Boeing awarded $26M for Harpoon missile design and development, a sole-source contract
Contract Overview
Contract Amount: $26,013,450 ($26.0M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2012-11-09
End Date: 2017-02-16
Contract Duration: 1,560 days
Daily Burn Rate: $16.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: JOINT COMMON TEST SET(JCTS) FOR HARPOON DESIGN AND DEVELOPMENT
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63134
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $26.0 million to THE BOEING COMPANY for work described as: JOINT COMMON TEST SET(JCTS) FOR HARPOON DESIGN AND DEVELOPMENT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Cost-plus-fixed-fee structure may incentivize cost increases. 3. Contract duration of 1560 days suggests a significant development effort. 4. Focus on design and development indicates early-stage project lifecycle. 5. The contract falls under guided missile and space vehicle manufacturing. 6. Awarded by the Department of Defense, indicating a strategic defense procurement.
Value Assessment
Rating: questionable
Benchmarking the value for this sole-source contract is challenging due to the lack of competitive bids. The cost-plus-fixed-fee (CPFF) contract type, while common for R&D, carries inherent risks of cost overruns. Without comparable sole-source awards for similar missile development phases, it's difficult to definitively assess if the $26 million represents a fair price. The fixed fee component provides some incentive for the contractor to manage costs, but the overall value proposition is less transparent than in a competitively bid scenario.
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. This typically occurs when only one responsible source is available or in cases of urgent need. The lack of competition means that potential alternative suppliers were not considered, which can limit price discovery and potentially lead to higher costs for the government compared to a fully competed procurement.
Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive bidding, which is a key mechanism for ensuring value for money in government contracts.
Public Impact
The primary beneficiaries are the Department of Defense, which will receive advanced capabilities for the Harpoon missile system. Services delivered include design and development for a critical defense asset. The geographic impact is primarily within the United States, supporting domestic defense manufacturing. Workforce implications include employment for engineers, technicians, and support staff at The Boeing Company and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Cost-plus-fixed-fee structure can lead to cost overruns if not managed tightly.
- Lack of transparency in sole-source procurements makes value assessment difficult.
Positive Signals
- Contract awarded to a known prime contractor with extensive defense experience.
- Focus on design and development suggests investment in future capabilities.
- The contract supports a critical defense system (Harpoon missile).
Sector Analysis
This contract falls within the defense sector, specifically the manufacturing of guided missiles and space vehicles. The market for such specialized defense systems is typically dominated by a few large, established aerospace and defense contractors. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would involve other major defense development programs for advanced weaponry, which often involve significant R&D investments.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss': false indicates it's not a small business prime award. Subcontracting opportunities for small businesses may exist, but they are not explicitly mandated or highlighted in the provided data. The impact on the small business ecosystem is likely indirect, through potential subcontracts awarded by Boeing.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contract management and acquisition oversight bodies, potentially including the Defense Contract Management Agency (DCMA) given the 'sa' field. Accountability measures are inherent in the contract's terms, particularly the fixed fee component which incentivizes performance. Transparency is limited due to the sole-source nature of the award, but contract awards are generally reported in federal databases.
Related Government Programs
- Harpoon Missile System
- Naval Weapon Systems
- Defense Research and Development
- Guided Missile Manufacturing
Risk Flags
- Sole-source award
- Cost-plus-fixed-fee contract type
- Potential for cost overruns
Tags
defense, department-of-defense, missile-manufacturing, research-and-development, boeing, sole-source, cost-plus-fixed-fee, definitive-contract, guided-missile, missouri, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $26.0 million to THE BOEING COMPANY. JOINT COMMON TEST SET(JCTS) FOR HARPOON DESIGN AND DEVELOPMENT
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 $26.0 million.
What is the period of performance?
Start: 2012-11-09. End: 2017-02-16.
What is the historical spending trend for the Harpoon missile program under The Boeing Company?
Historical spending data for the Harpoon missile program under The Boeing Company prior to this specific $26 million contract would require a deeper dive into federal procurement databases. However, the Harpoon is a long-standing weapon system, and Boeing has been a prime contractor for it for many years. Typically, such programs involve continuous upgrades, sustainment, and new development efforts. Analyzing past contract awards for modifications, production, and R&D related to the Harpoon would reveal a pattern of sustained investment by the Department of Defense in this capability. The total historical spend could be in the hundreds of millions or even billions of dollars over the system's lifecycle, depending on the scope of work and number of units procured or developed.
How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for missile development, and what are its implications for value?
The Cost-Plus-Fixed-Fee (CPFF) contract type is frequently used for research and development efforts where the scope of work is not precisely defined at the outset, making it difficult to establish a firm fixed price. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government, as the final price can fluctuate based on actual costs. However, it provides flexibility for evolving R&D requirements. The fixed fee provides some incentive for the contractor to control costs, as the fee amount does not increase with higher costs. Nevertheless, the primary risk of cost escalation lies with the government, potentially impacting the overall value for money if costs significantly exceed initial estimates.
What are the specific risks associated with a sole-source award for a major defense development contract?
Sole-source awards for major defense development contracts carry several inherent risks. The most significant is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved in a competitive bidding process. This reduces the government's leverage in negotiating favorable terms and pricing. Another risk is reduced incentive for innovation and efficiency, as the contractor may face less pressure to find cost-saving measures or novel solutions when they are the only option. Furthermore, sole-source awards can create a dependency on a single supplier, potentially impacting long-term supply chain resilience and future procurement options. Transparency is also diminished, making it harder for oversight bodies and the public to scrutinize the fairness of the price and terms.
What is the typical performance period for a missile design and development contract of this magnitude?
The typical performance period for a missile design and development contract of this magnitude, such as the $26 million award to Boeing for the Harpoon, can vary significantly based on the complexity of the technology, the maturity of the concept, and the specific objectives of the development phase. A duration of 1560 days (approximately 4.3 years), as indicated for this contract, is not uncommon for significant R&D efforts. This timeframe allows for preliminary design, detailed design, prototyping, testing, and initial validation. Shorter durations might be suitable for incremental upgrades or minor design modifications, while more ambitious, foundational research could extend beyond five years. The specific phase of development (e.g., concept exploration vs. system development and demonstration) heavily influences the expected timeline.
How does the 'Guided Missile and Space Vehicle Manufacturing' NAICS code relate to the specific work being performed?
The North American Industry Classification System (NAICS) code 336414, 'Guided Missile and Space Vehicle Manufacturing,' is highly relevant to this contract. This code specifically covers establishments primarily engaged in manufacturing guided missiles and space vehicles, including related engines, propulsion units, and auxiliary components. The work described for the Harpoon design and development directly falls under this category, as it involves the creation and refinement of a guided missile system. This classification helps categorize the contract within the broader industrial landscape, allowing for comparisons with other spending in the aerospace and defense manufacturing sector and providing insights into the types of facilities, expertise, and supply chains involved.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001912R1010
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
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: $26,013,450
Exercised Options: $26,013,450
Current Obligation: $26,013,450
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-11-09
Current End Date: 2017-02-16
Potential End Date: 2017-02-16 00:00:00
Last Modified: 2018-08-28
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