Navy awards $1.56B for Harpoon Coastal Defense Systems, with Boeing as sole contractor

Contract Overview

Contract Amount: $1,553,797,869 ($1.6B)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2022-03-02

End Date: 2029-03-31

Contract Duration: 2,586 days

Daily Burn Rate: $600.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HARPOON COASTAL DEFENSE SYSTEM FOR LAUNCHER TRANSPORTER UNITS (LTUS), RADAR UNITS (RUS) AND TRAINING EQUIPMENT.

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $1.55 billion to THE BOEING COMPANY for work described as: HARPOON COASTAL DEFENSE SYSTEM FOR LAUNCHER TRANSPORTER UNITS (LTUS), RADAR UNITS (RUS) AND TRAINING EQUIPMENT. Key points: 1. Contract awarded to a single, established prime contractor with a history in defense systems. 2. The contract covers a critical component of coastal defense, indicating strategic importance. 3. Long performance period suggests a sustained need for these systems. 4. Fixed-price contract type aims to control costs, but requires careful monitoring of scope. 5. Sole-source award necessitates justification regarding market availability and technical requirements. 6. Potential for follow-on work or sustainment contracts exists given the system's lifecycle.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source award is challenging without competitive data. The total value of $1.56 billion over approximately 7 years suggests significant investment in a specialized defense system. Without comparable contracts or detailed cost breakdowns, it's difficult to definitively assess if the pricing represents excellent value. However, the firm fixed-price nature provides some cost certainty for the government, assuming no significant scope changes.

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 solicited. This typically occurs when a specific system is required, and only one entity possesses the necessary technology, expertise, or existing production line. The lack of competition means the government did not benefit from price discovery through multiple bids, potentially leading to higher costs than a competed procurement.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The justification for sole-source procurement needs to be robust to ensure funds are used efficiently.

Public Impact

The U.S. Navy benefits from enhanced coastal defense capabilities, protecting strategic assets and shorelines. This contract delivers Harpoon Coastal Defense Systems, including launchers, radar units, and training equipment. The geographic impact is primarily within U.S. naval installations and operational areas requiring coastal protection. Workforce implications include sustainment and potential future upgrades for the delivered systems, supporting specialized engineering and manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and may result in higher costs for taxpayers.
Long contract duration increases the risk of cost overruns if not managed effectively.
Reliance on a single contractor for critical defense systems poses supply chain and strategic risks.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Award to an experienced contractor like Boeing suggests a lower risk of technical failure.
The contract addresses a critical national security need for coastal defense.

Sector Analysis

The defense sector, particularly missile systems and integrated defense platforms, represents a significant portion of federal spending. This contract for the Harpoon Coastal Defense System fits within the broader category of strategic weapon systems procurement. The market for such specialized defense equipment is often concentrated among a few large, established aerospace and defense contractors. Benchmarking spending is difficult due to the unique nature of weapon systems, but investments in missile defense and coastal security are consistently high.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, The Boeing Company, is a large aerospace firm. While Boeing may utilize small businesses in its supply chain, the direct award does not prioritize small business participation. This means opportunities for direct subcontracting with small businesses under this specific contract are not explicitly mandated.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which incentivizes the contractor to meet cost targets. Transparency may be limited due to the sole-source nature and the classified aspects often associated with defense systems. Inspector General jurisdiction would apply to allegations of fraud, waste, or abuse.

Related Government Programs

Naval Surface Warfare
Missile Defense Systems
Coastal Surveillance and Security
Strategic Weapon Systems Procurement
Aerospace and Defense Manufacturing

Risk Flags

Sole-source award
Long contract duration
Potential for cost overruns
Dependency on single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.55 billion to THE BOEING COMPANY. HARPOON COASTAL DEFENSE SYSTEM FOR LAUNCHER TRANSPORTER UNITS (LTUS), RADAR UNITS (RUS) AND TRAINING EQUIPMENT.

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 $1.55 billion.

What is the period of performance?

Start: 2022-03-02. End: 2029-03-31.

What is the historical spending trend for Harpoon Coastal Defense Systems or similar coastal defense platforms by the Department of the Navy?

Historical spending data for specific weapon systems like the Harpoon Coastal Defense System is often aggregated within broader categories such as 'Missile Systems' or 'Naval Weapons Systems.' The Department of the Navy consistently allocates substantial funds to maintain and modernize its arsenal. Over the past decade, spending on such systems has fluctuated based on geopolitical threats, strategic reviews, and modernization priorities. While exact figures for the Harpoon system's prior procurement are not readily available in the public domain, the Navy's overall budget for strategic systems runs into billions annually. This $1.56 billion award represents a significant, multi-year investment, suggesting a renewed or sustained focus on this particular capability, potentially replacing or augmenting older systems or expanding coverage.

How does the per-unit cost of the Harpoon Coastal Defense System components compare to market rates or similar systems?

Determining a precise per-unit cost for the Harpoon Coastal Defense System is challenging due to the contract's structure and the inclusion of various components (launchers, radar, training equipment) in a single award. Furthermore, as a sole-source procurement, there is no direct competitive benchmark. Generally, advanced military hardware, especially integrated systems like this, commands premium pricing due to extensive research and development, specialized manufacturing, and stringent quality control. Without access to detailed cost breakdowns or data on comparable systems procured competitively, a direct market rate comparison is not feasible. However, the significant total value suggests that each unit, when amortized, represents a substantial investment.

What are the primary risks associated with a sole-source award for critical defense equipment like the Harpoon system?

The primary risks associated with a sole-source award for critical defense equipment are twofold: cost and dependency. Without competition, the government lacks the leverage to negotiate the lowest possible price, potentially leading to higher expenditures than if multiple bidders were involved. This can result in taxpayers bearing a premium for the equipment. Secondly, relying on a single contractor creates a dependency. If the contractor faces production issues, financial instability, or decides to discontinue the product line, the government could face significant challenges in securing sustainment, spare parts, or future upgrades, potentially impacting operational readiness. This necessitates robust contract management and contingency planning.

What is The Boeing Company's track record with the Harpoon missile system and similar defense contracts?

The Boeing Company has a long and established history with the Harpoon missile system, having been the prime contractor for its development and production for decades. They are a major defense contractor with extensive experience in producing a wide array of aerospace and defense products, including aircraft, missiles, and integrated defense systems for the U.S. military and international allies. Their track record includes numerous large-scale, complex defense contracts, demonstrating significant manufacturing capabilities, program management expertise, and technological proficiency. While specific performance metrics for all past contracts are not publicly detailed, Boeing's continued role as a prime contractor for critical defense systems indicates a generally positive performance history and a trusted relationship with the Department of Defense.

What are the potential performance implications or effectiveness concerns for the Harpoon Coastal Defense System?

The Harpoon Coastal Defense System is designed to provide anti-ship missile capabilities for shore-based defense, complementing naval assets. Its effectiveness relies on factors such as target acquisition range (via radar), missile accuracy, warhead effectiveness, and the system's ability to operate in various environmental conditions. Concerns could arise regarding the system's ability to counter evolving threats, such as hypersonic missiles or advanced electronic warfare capabilities employed by adversaries. Furthermore, the integration of the launcher, radar, and command and control elements must be seamless for optimal performance. While the Harpoon has a proven operational history, continuous upgrades and adaptation are crucial to maintain its effectiveness against modern naval threats.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts 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 JAMES S 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: $1,586,280,808

Exercised Options: $1,572,749,791

Current Obligation: $1,553,797,869

Subaward Activity

Number of Subawards: 211

Total Subaward Amount: $1,080,041,697

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001921G0006

IDV Type: BOA

Timeline