Boeing awarded $2.06B for SLAM ER missile obsolescence redesign and production

Contract Overview

Contract Amount: $2,058,655,011 ($2.1B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-05-13

End Date: 2029-06-29

Contract Duration: 3,334 days

Daily Burn Rate: $617.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SLAM ER OBSOLESCENCE REDESIGN - NRE AND PRODUCTION OF SLAM ER MISSILES

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $2.06 billion to THE BOEING COMPANY for work described as: SLAM ER OBSOLESCENCE REDESIGN - NRE AND PRODUCTION OF SLAM ER MISSILES Key points: 1. Contract addresses critical missile system obsolescence, ensuring continued operational capability. 2. Sole-source award raises questions about price discovery and potential for cost efficiencies. 3. Long contract duration (approx. 9 years) requires sustained oversight for performance and budget adherence. 4. Focus on redesign and production indicates a significant investment in modernizing existing defense assets. 5. The contract's value places it among substantial procurements within the guided missile sector.

Value Assessment

Rating: fair

The total contract value of $2.06 billion over approximately nine years represents a significant investment. Benchmarking this specific redesign and production effort is challenging due to its specialized nature. However, the absence of competition in a sole-source award suggests a potential for higher costs than if multiple vendors had vied for the contract. The fixed-price nature provides some cost certainty, but the extensive duration necessitates careful monitoring of cost overruns and value realization.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may result in higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive bidding, potentially leading to higher prices for the goods and services procured.

Public Impact

The U.S. Navy benefits from the modernization and continued availability of the SLAM ER missile system. Services delivered include the redesign of obsolete components and the production of new missile units. The primary geographic impact is on the Department of the Navy's operational readiness and strategic capabilities. Workforce implications include specialized engineering, manufacturing, and logistics roles at Boeing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Long contract duration increases risk of cost escalation and performance drift without diligent oversight.
Obsolescence redesign complexity could lead to unforeseen technical challenges and schedule delays.

Positive Signals

Addresses critical obsolescence, ensuring continued operational capability of a key defense asset.
Firm Fixed Price contract provides cost certainty for the government, assuming scope is well-defined.
Boeing's established expertise in missile systems suggests a high likelihood of successful technical execution.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the defense industrial base. The market is characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors capable of producing complex weapon systems. Spending in this sector is driven by national security requirements and the need to maintain technological superiority. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of missile redesign and production, but large-scale defense contracts often run into billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Boeing, as the prime contractor, may engage small businesses as subcontractors. However, the analysis of subcontracting plans and their impact on the small business ecosystem would require further detailed examination of the contract's specific provisions and Boeing's subcontracting practices.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which shifts some risk to the contractor. Transparency may be limited due to the sole-source nature and defense-related classification of the program. Inspector General jurisdiction would apply to allegations of fraud, waste, or abuse.

Related Government Programs

SLAM ER Missile Program
Naval Air Systems Command (NAVAIR) Contracts
Missile Production Contracts
Defense Obsolescence Management

Risk Flags

Sole-source award may limit cost competitiveness.
Long contract duration increases oversight burden.
Complexity of obsolescence redesign poses technical risks.
Potential for supply chain disruptions impacting production timelines.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.06 billion to THE BOEING COMPANY. SLAM ER OBSOLESCENCE REDESIGN - NRE AND PRODUCTION OF SLAM ER MISSILES

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 $2.06 billion.

What is the period of performance?

Start: 2020-05-13. End: 2029-06-29.

What is the historical spending trend for the SLAM ER missile program?

Historical spending data for the SLAM ER missile program prior to this award is not explicitly detailed in the provided data. However, the current award of over $2 billion for redesign and production suggests a significant and ongoing investment in this platform. To understand the historical trend, one would need to access contract databases for previous awards related to the SLAM ER, including R&D, initial production, and sustainment efforts. This would reveal the lifecycle cost and the evolution of spending patterns for this specific weapon system over time, helping to contextualize the current large-scale investment.

How does the per-unit cost of the SLAM ER missile compare to similar systems?

A direct per-unit cost comparison for the SLAM ER missile is not feasible with the provided data, as it represents a total contract value for redesign and production, not a unit price. Furthermore, the specific nature of obsolescence redesign can significantly influence costs. To make such a comparison, detailed unit cost data for the SLAM ER and comparable missile systems (e.g., other air-launched cruise missiles or anti-ship missiles) would be required. Benchmarking would also need to account for factors like range, payload, guidance systems, and technological sophistication. Given the sole-source nature of this award, obtaining a precise, publicly available per-unit cost benchmark is unlikely.

What are the key performance indicators (KPIs) for this contract, and how will they be measured?

The provided data does not specify the key performance indicators (KPIs) for this SLAM ER obsolescence redesign and production contract. Typically, for such defense contracts, KPIs would focus on aspects like on-time delivery of redesigned components and produced missiles, adherence to quality standards (e.g., defect rates), achievement of technical performance specifications (e.g., range, accuracy), and potentially cost control within the fixed-price framework. Measurement would likely involve regular progress reviews, acceptance testing of delivered units, and audits by the government's quality assurance representatives. The specific KPIs and their measurement methodologies would be detailed in the contract's statement of work and performance clauses.

What is Boeing's track record with similar large-scale missile production and redesign contracts?

The Boeing Company has a long and extensive track record in the defense sector, including the design, development, and production of numerous missile systems for the U.S. military and international partners. They have been involved in programs such as the Harpoon, Sidewinder, and various strategic missile systems. Their experience encompasses complex engineering, manufacturing processes, and program management for large-value, long-duration defense contracts. While specific details of past performance on similar obsolescence redesign efforts are not provided here, Boeing's established position as a major defense contractor suggests a substantial capability and history in managing such complex and critical programs.

What are the potential risks associated with the obsolescence redesign aspect of this contract?

The obsolescence redesign aspect of this contract carries several potential risks. Firstly, identifying and sourcing suitable replacements for obsolete parts can be technically challenging and may require significant engineering effort, potentially leading to schedule delays and cost overruns if unforeseen issues arise. Secondly, integrating new components into an existing missile system requires rigorous testing to ensure compatibility and maintain overall system performance and reliability. Thirdly, the long lead times for specialized components or manufacturing processes could be disrupted by supply chain issues. Finally, the knowledge transfer and documentation of the redesign are critical to ensure future maintainability and supportability, and failure in this area could create long-term sustainment challenges.

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

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: $2,058,655,011

Exercised Options: $2,058,655,011

Current Obligation: $2,058,655,011

Subaward Activity

Number of Subawards: 314

Total Subaward Amount: $672,791,481

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline