Boeing awarded $221M for Harpoon missile sustainment, with limited competition impacting price discovery

Contract Overview

Contract Amount: $220,969,895 ($221.0M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2015-11-06

End Date: 2027-03-07

Contract Duration: 4,139 days

Daily Burn Rate: $53.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HARPOON BLOCK II AIR LAUNCH MISSILE

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $221.0 million to THE BOEING COMPANY for work described as: HARPOON BLOCK II AIR LAUNCH MISSILE Key points: 1. Contract value of $221M over 5 years suggests significant investment in missile sustainment. 2. Sole-source nature of the award raises concerns about potential overpricing and lack of competitive pressure. 3. Long contract duration (4139 days) indicates a need for sustained support for critical defense assets. 4. The contract falls under Guided Missile and Space Vehicle Manufacturing, a specialized defense sector. 5. Awarded by the Department of the Navy, highlighting its importance for naval aviation capabilities.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized product. Without competitive bids, it's difficult to ascertain if the $221 million price represents fair market value. The firm-fixed-price structure aims to control costs, but the lack of competition limits the government's ability to negotiate the best possible terms. Further analysis would require access to historical pricing data for similar sustainment contracts or internal cost estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, The Boeing Company, was considered. This approach is typically used when a specific product or service is only available from a single source, or in cases of urgent need. The lack of competition means the government did not benefit from a bidding process that could drive down prices and encourage innovation from multiple vendors.

Taxpayer Impact: Taxpayers may be paying a premium for this missile sustainment due to the absence of competitive bidding. The government's negotiating power is diminished, potentially leading to higher overall costs compared to a competed contract.

Public Impact

The U.S. Navy benefits from the continued operational readiness of its Harpoon missile systems. This contract ensures the sustainment and maintenance of a critical air-launched anti-ship missile. The geographic impact is primarily within the United States, supporting defense manufacturing and maintenance operations. Workforce implications include employment for engineers, technicians, and support staff involved in missile sustainment at Boeing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration could mask inefficiencies if not closely monitored.
Lack of transparency in the sole-source justification process.

Positive Signals

Ensures continued availability of a critical defense asset for the Navy.
Firm-fixed-price contract provides cost certainty for the government.
Boeing's established expertise in Harpoon missile production and sustainment.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical component of the defense industrial base. This contract for the Harpoon missile sustainment fits within this niche, focusing on maintaining the readiness and effectiveness of existing weapon systems. The market is characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors capable of producing and supporting such advanced ordnance. Comparable spending benchmarks are difficult to establish due to the unique nature of missile systems and their sustainment requirements.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited. However, Boeing may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data. The absence of a set-aside suggests that opportunities for small businesses to directly compete for this specific contract are minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specific outcomes within the agreed-upon price. Transparency is a concern given the sole-source nature; the justification for this award should be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Harpoon Missile System
Naval Air Systems Command (NAVAIR)
Air-to-Surface Missiles
Defense Logistics Agency (DLA) Missile Maintenance

Risk Flags

Sole-source award
Long contract duration
Potential for cost overruns due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $221.0 million to THE BOEING COMPANY. HARPOON BLOCK II AIR LAUNCH MISSILE

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 $221.0 million.

What is the period of performance?

Start: 2015-11-06. End: 2027-03-07.

What is the historical spending trend for the Harpoon Block II missile sustainment program?

Analyzing historical spending for the Harpoon Block II missile sustainment requires access to detailed contract databases beyond the provided summary. However, the current award of approximately $221 million over a period of roughly 5 years (from November 2015 to March 2027, though the duration is listed as 4139 days, which is over 11 years) suggests a significant and ongoing investment. If this is a sole-source contract, it implies that previous sustainment efforts may also have been sole-sourced or competed infrequently. Without prior contract data, it's difficult to establish a precise trend, but the substantial value of this single award indicates consistent, high-level funding for maintaining the Harpoon's operational capability. Future spending will likely depend on the Navy's strategic needs, the missile's lifecycle, and potential upgrades or replacements.

How does the per-unit cost of the Harpoon missile compare to similar air-launched missiles?

Determining the per-unit cost of the Harpoon missile within this sustainment contract is not feasible with the provided data. The contract value of $221 million covers sustainment activities, which include maintenance, repair, logistics, and potentially upgrades, rather than the procurement of new missiles. Per-unit costs are typically associated with the initial acquisition phase. Furthermore, sustainment costs are often bundled and do not break down neatly into individual missile units. To compare with similar air-launched missiles, one would need data on the acquisition cost per unit for missiles like the Sidewinder, AMRAAM, or JASSM, which are different classes of weapons with distinct technological complexities and production volumes. This sustainment contract focuses on keeping existing Harpoons functional, not on their initial manufacturing cost.

What are the key performance indicators (KPIs) used to measure the success of this Harpoon missile sustainment contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this Harpoon Block II missile sustainment contract. However, typical KPIs for such defense sustainment contracts often include metrics related to readiness rates, Mean Time Between Failures (MTBF), Mean Time To Repair (MTTR), supply chain responsiveness, and adherence to delivery schedules for parts and services. For a missile system, ensuring a high percentage of operational readiness and minimizing downtime are paramount. The firm-fixed-price nature of the contract implies that meeting defined performance standards within the budget is a primary objective. The Department of the Navy would likely have specific technical and logistical performance metrics outlined in the contract's statement of work that are used to evaluate Boeing's performance.

What is the track record of The Boeing Company in delivering complex missile sustainment services?

The Boeing Company has a long and extensive track record in the aerospace and defense industry, including the development, production, and sustainment of complex missile systems. They are the original manufacturer of the Harpoon missile, which provides them with intimate knowledge of its design, capabilities, and maintenance requirements. Boeing has consistently been awarded major defense contracts for various aircraft, weapons systems, and space exploration programs. Their experience includes managing large-scale, long-term sustainment programs for the U.S. military and international partners. While specific performance metrics for every contract are not always public, Boeing's continued role as a primary defense contractor suggests a generally reliable performance history in delivering complex defense solutions, including missile sustainment.

Are there any known risks associated with the long-term sustainment of the Harpoon missile system?

Yes, there are several potential risks associated with the long-term sustainment of any complex weapon system like the Harpoon missile. One significant risk is obsolescence; as technology advances, components and subsystems within the missile may become outdated or difficult to source, requiring costly redesigns or replacements. Another risk is the degradation of materials over time, especially for systems stored for extended periods, which can impact reliability. Dependence on a single contractor (in this case, Boeing, due to the sole-source award) can also be a risk, potentially leading to price increases or reduced innovation if not managed carefully. Furthermore, geopolitical shifts or changes in military strategy could alter the perceived value or operational requirements for the Harpoon, potentially impacting future sustainment funding or necessitating costly upgrades.

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: N0001914R0038

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: $220,969,895

Exercised Options: $220,969,895

Current Obligation: $220,969,895

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline