Boeing awarded $61.9M for DSU-38A/B Precision Laser Guidance Sets, a sole-source contract

Contract Overview

Contract Amount: $61,934,845 ($61.9M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2020-03-02

End Date: 2022-11-30

Contract Duration: 1,003 days

Daily Burn Rate: $61.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DSU-38A/B PRECISION LASER GUIDANCE SET

Place of Performance

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

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $61.9 million to THE BOEING COMPANY for work described as: DSU-38A/B PRECISION LASER GUIDANCE SET Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract duration of 1003 days suggests a long-term need for these guidance sets. 3. Fixed-price contract type aims to control costs, but the lack of competition limits benchmarking. 4. The DSU-38A/B Precision Laser Guidance Set is critical for specific defense applications. 5. Awarded by the Department of Defense, indicating a focus on military readiness and technological advancement. 6. The contract was awarded via a Delivery Order, suggesting it's part of a larger indefinite-delivery contract vehicle.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the absence of competitive bids. The total award of $61.9 million over approximately 33 months (March 2020 to November 2022) requires careful scrutiny. Without comparable contract data or market analysis, it's difficult to definitively assess if the pricing represents fair market value. The lack of competition inherently limits the government's ability to secure the best possible price.

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 approach is typically used when a unique capability is required, or when only one source can fulfill the requirement. The absence of competition means there were no other bidders to compare against, potentially leading to higher prices than if the contract had been competed.

Taxpayer Impact: Sole-source awards limit taxpayer value by removing the downward pressure on pricing that competition provides. This can result in higher overall spending for the government.

Public Impact

The primary beneficiaries are the U.S. military forces requiring advanced precision laser guidance systems for their platforms. The contract delivers critical components for enhancing the accuracy and effectiveness of munitions. The geographic impact is primarily within the defense supply chain and operational theaters where these systems are deployed. Workforce implications include specialized manufacturing and engineering roles within The Boeing Company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source nature limits transparency in pricing and value assessment.
Potential for vendor lock-in if alternative solutions are not explored.

Positive Signals

Firm Fixed Price contract type helps to cap costs once negotiated.
Awarded to a major defense contractor with a proven track record.
Delivery Order mechanism suggests integration into existing procurement strategies.

Sector Analysis

The defense sector relies heavily on specialized components like precision laser guidance sets to maintain technological superiority. The market for such advanced systems is often concentrated among a few key players due to high R&D costs and stringent performance requirements. Spending in this sub-sector is driven by modernization efforts and the need for enhanced battlefield accuracy. Comparable spending benchmarks are difficult to establish without competitive data, but significant investments are typical for advanced targeting and guidance technologies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded sole-source to The Boeing Company. There is no explicit information regarding subcontracting plans for small businesses within this award. The lack of set-aside or clear subcontracting goals may limit opportunities for small businesses in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Precision Guidance Kits
Air-to-Ground Munitions
Targeting Pods
Avionics Systems
Defense Electronics Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns due to lack of benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.9 million to THE BOEING COMPANY. DSU-38A/B PRECISION LASER GUIDANCE SET

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 $61.9 million.

What is the period of performance?

Start: 2020-03-02. End: 2022-11-30.

What is the specific function and importance of the DSU-38A/B Precision Laser Guidance Set?

The DSU-38A/B Precision Laser Guidance Set is a critical component designed to enhance the accuracy of munitions by providing laser-guided targeting capabilities. These sets are essential for enabling 'smart bombs' and other guided projectiles to precisely strike designated targets, thereby increasing mission effectiveness and reducing collateral damage. Their importance lies in providing warfighters with a reliable means to engage targets with high precision, which is crucial in modern asymmetric warfare and complex operational environments. The technology allows for standoff engagement, increasing platform survivability.

How does the sole-source nature of this contract impact potential cost savings for the government?

A sole-source award inherently limits the government's ability to achieve cost savings through competitive bidding. When only one vendor is solicited, there is no direct price comparison with other potential suppliers. This can lead to higher prices than might be achieved in a competitive environment where vendors vie for the contract by offering lower bids. While the government may negotiate terms, the absence of competing offers means the negotiating leverage is reduced. This can result in taxpayers potentially paying a premium for the goods or services procured.

What are the risks associated with relying on a single supplier for critical defense components like the DSU-38A/B?

Relying on a single supplier, as in this sole-source contract, presents several risks. Firstly, there's a risk of price escalation over time if the sole supplier increases their prices, with limited recourse for the government. Secondly, supply chain disruptions affecting the sole supplier can lead to significant delays or shortages, impacting military readiness. Thirdly, there's a risk of technological stagnation if the sole supplier does not invest in innovation or if alternative, superior technologies are not explored. Finally, dependence on one supplier can create vendor lock-in, making it difficult and costly to switch providers in the future.

Can the government benchmark the performance or cost-effectiveness of the DSU-38A/B against similar systems?

Benchmarking the performance or cost-effectiveness of the DSU-38A/B against similar systems is challenging without access to competitive data or detailed performance metrics from alternative sources. As this was a sole-source award, direct comparisons with bids from other manufacturers are unavailable. While the Department of Defense likely has internal metrics for evaluating the effectiveness of its systems, public-facing data for direct comparison with other laser guidance sets, especially those from different manufacturers or for different platforms, is limited. This lack of comparative data makes it difficult for external analysts to assess value for money comprehensively.

What is The Boeing Company's general track record in supplying similar defense electronics or guidance systems?

The Boeing Company has a long and extensive track record as a major global aerospace and defense contractor, with significant experience in developing and manufacturing a wide array of complex systems, including avionics, guidance, navigation, and control (GNC) systems, and integrated weapon systems. They are a primary supplier for numerous U.S. military platforms and have consistently delivered sophisticated electronic and mechanical components. Their history includes numerous large-scale contracts for both military and commercial aircraft, as well as defense systems, indicating a strong capability in producing high-technology defense products. However, like any large contractor, they have also faced scrutiny on specific contracts regarding cost and performance.

What does the contract type (Firm Fixed Price) imply about risk allocation between the government and the contractor?

A Firm Fixed Price (FFP) contract type signifies that the price is set and not subject to adjustment based on the contractor's cost experience in performing the work. This contract type places the majority of the cost risk on the contractor. If Boeing's costs to produce the DSU-38A/B exceed their estimates, they absorb those additional costs. Conversely, if their costs are lower than anticipated, they retain the profit. This allocation of risk is generally favorable to the government, as it provides cost certainty and incentivizes the contractor to manage its expenses efficiently to maximize profit.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001914R0044

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: $61,934,845

Exercised Options: $61,934,845

Current Obligation: $61,934,845

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $10,470,060

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001916D1002

IDV Type: IDC

Timeline