Boeing awarded $32.8M for 53 tactical missiles, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $32,841,739 ($32.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2018-09-26

End Date: 2028-12-31

Contract Duration: 3,749 days

Daily Burn Rate: $8.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HII+ TACTICAL MISSILE PRODUCTION BASE QTY OF 53

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $32.8 million to THE BOEING COMPANY for work described as: HII+ TACTICAL MISSILE PRODUCTION BASE QTY OF 53 Key points: 1. Contract awarded to a single, established prime contractor, raising questions about competitive pricing. 2. The contract spans nearly a decade, indicating a long-term need for these specific missile systems. 3. Fixed-price contract type suggests cost risks are primarily borne by the contractor. 4. The award is a delivery order against an existing contract, implying prior vetting of the contractor and product. 5. Missile production is a high-stakes sector with significant barriers to entry. 6. Geographic location of performance is Missouri.

Value Assessment

Rating: fair

Benchmarking the value of this specific missile production is challenging without detailed cost breakdowns and comparisons to similar sole-source awards. The fixed-price nature shifts cost risk to Boeing, which is a positive for the government. However, the lack of competition inherently limits the government's ability to secure the lowest possible price. The duration of the contract and the quantity ordered suggest a substantial investment, making price scrutiny critical.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating that the Department of the Navy likely determined that only The Boeing Company could fulfill this requirement. Sole-source awards can occur for various reasons, including proprietary technology, unique capabilities, or the need for compatibility with existing systems. The absence of a competitive bidding process means that price discovery through market forces was bypassed.

Taxpayer Impact: Sole-source awards can potentially lead to higher prices for taxpayers compared to competitively bid contracts, as the government does not benefit from the downward pressure that multiple bidders typically exert.

Public Impact

The U.S. Navy benefits from the acquisition of critical tactical missile capabilities. This contract supports the production of 53 tactical missiles, enhancing defense readiness. The geographic impact is primarily in Missouri, where the production is expected to occur. Workforce implications include skilled manufacturing and engineering jobs within Boeing's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing for taxpayers.
Long contract duration could mask inefficiencies or price increases over time.
Dependence on a single supplier for critical defense assets poses a strategic risk.

Positive Signals

Fixed-price contract type limits government exposure to cost overruns.
Award to an established prime contractor suggests a degree of confidence in their production capabilities.
Delivery order against an existing contract implies prior technical and performance evaluation.

Sector Analysis

The defense sector, particularly missile manufacturing, is characterized by high barriers to entry due to complex technology, stringent quality control, and significant capital investment. This contract fits within the broader defense procurement landscape, where long-term production contracts are common for strategic weapon systems. Comparable spending benchmarks are difficult to ascertain publicly due to the classified nature of many defense programs, but multi-million dollar awards for missile systems are typical.

Small Business Impact

This contract does not appear to have a small business set-aside component. As a sole-source award to a large prime contractor, the primary focus is on the prime's ability to deliver. Subcontracting opportunities for small businesses may exist within Boeing's supply chain, but these are not explicitly mandated or detailed in the provided data. The impact on the broader small business ecosystem is indirect, relying on the prime contractor's procurement practices.

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 fixed-price contract terms and delivery schedules. Transparency is limited due to the sole-source nature and the defense sector context. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Tactical Missile Production
Naval Weapon Systems
Defense Manufacturing Contracts
Sole-Source Defense Procurement

Risk Flags

Sole-source award limits price competition.
Long contract duration increases potential for price changes.
Dependence on a single supplier for critical defense assets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.8 million to THE BOEING COMPANY. HII+ TACTICAL MISSILE PRODUCTION BASE QTY OF 53

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 $32.8 million.

What is the period of performance?

Start: 2018-09-26. End: 2028-12-31.

What is the historical spending pattern for this specific type of tactical missile with The Boeing Company?

Analyzing historical spending requires access to prior contract awards for the same or similar missile systems to The Boeing Company or other manufacturers. Without specific contract numbers or program names, it's difficult to pinpoint exact historical figures. However, the current award of $32.8 million for 53 units suggests a per-unit cost in the hundreds of thousands of dollars. Defense spending on tactical missiles is a consistent, multi-billion dollar category annually, driven by modernization efforts and operational readiness requirements. The Navy, in particular, procures a wide array of missile systems, and Boeing is a major supplier across several categories. A deeper dive would involve searching contract databases for 'Boeing' and 'tactical missile' or specific missile designations.

How does the per-unit cost of these missiles compare to market rates or similar government contracts?

Determining the precise per-unit cost requires dividing the total award amount by the quantity: $32,841,738.96 / 53 units = approximately $619,655 per missile. Benchmarking this figure against market rates or similar government contracts is challenging without more specific information about the missile's capabilities, technology, and intended use. Missile costs vary dramatically based on complexity, range, guidance systems, and warhead. Sole-source contracts, by their nature, do not provide a competitive benchmark. To assess value, one would need to compare this to other Navy missile procurements (e.g., Tomahawk, Harpoon if applicable) or similar systems procured by other branches or allies, ideally through competitive processes, to understand if this price is within an expected range for comparable capabilities.

What are the primary risks associated with this sole-source contract for the Department of Defense?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may not be achieving the best possible value for its investment. Another significant risk is supplier dependency; the Navy becomes reliant on Boeing for the production and sustainment of these specific missiles. Any disruption in Boeing's production capabilities, supply chain issues, or changes in their business strategy could impact the Navy's readiness. Furthermore, the long duration of the contract (ending in 2028) increases the risk of price escalation over time if not adequately managed through contract clauses, and it limits flexibility should alternative technologies emerge.

What is the expected program effectiveness or performance outcome based on this contract?

The contract data itself does not detail specific performance metrics or expected outcomes beyond the delivery of 53 tactical missiles. Program effectiveness is tied to the missile's operational capabilities, reliability, and its contribution to the Navy's mission objectives. As a sole-source award to an established prime, there's an implicit expectation that Boeing can meet the required technical specifications and quality standards. However, true performance assessment would come from post-delivery testing, operational deployment data, and mission success rates, which are not provided here. The long contract duration suggests these missiles are intended for sustained use in the Navy's arsenal.

Are there any known issues or concerns with The Boeing Company's track record on similar defense contracts?

The Boeing Company is a major defense contractor with a long history of producing complex military aircraft and weapon systems. While generally considered capable, like any large manufacturer, Boeing has faced scrutiny and challenges on various programs over the years, including production delays, cost overruns on some fixed-price contracts, and quality control issues in specific divisions (notably highlighted in their commercial aviation sector). For defense contracts, specific issues would typically be detailed in program management reviews, Government Accountability Office (GAO) reports, or Inspector General findings. Without referencing specific missile programs awarded to Boeing, it's difficult to cite concrete past performance issues directly relevant to this contract. However, the DoD's continued awarding of sole-source contracts implies a level of acceptable performance and capability.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $33,200,050

Exercised Options: $32,841,739

Current Obligation: $32,841,739

Subaward Activity

Number of Subawards: 24

Total Subaward Amount: $11,176,458

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001916G0001

IDV Type: BOA

Timeline