Boeing awarded $25.4M for DSU-38A/B Precision Laser Guidance Sets by the Department of Defense

Contract Overview

Contract Amount: $25,371,984 ($25.4M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2021-09-29

End Date: 2023-12-31

Contract Duration: 823 days

Daily Burn Rate: $30.8K/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 $25.4 million to THE BOEING COMPANY for work described as: DSU-38A/B PRECISION LASER GUIDANCE SET Key points: 1. The contract value represents a significant investment in advanced targeting technology. 2. Sole-source award suggests limited market alternatives or specific contractor capabilities. 3. The contract duration of over two years indicates a substantial operational requirement. 4. Fixed-price contract type aims to control costs for the government. 5. The award falls under the 'Small Arms, Ordnance, and Ordnance Accessories Manufacturing' NAICS code, highlighting its specialized nature. 6. Geographic location of performance in Missouri may have local economic implications.

Value Assessment

Rating: fair

The total award of $25.4 million for DSU-38A/B Precision Laser Guidance Sets is difficult to benchmark without more specific cost breakdowns or comparisons to similar systems. As a sole-source award, the government may have limited leverage to negotiate pricing against competing offers. The firm fixed-price structure is a positive indicator for cost control, but the absence of competitive bidding makes a direct value-for-money assessment challenging. Further analysis would require understanding the system's technical specifications and its unique capabilities compared to potential alternatives.

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 typically occurs when a product or service is unique, proprietary, or when there are no other responsible sources capable of meeting the government's requirements. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bids had been received.

Taxpayer Impact: For taxpayers, a sole-source award means that the price is determined through negotiation with a single entity, rather than through competitive bidding. This can result in less certainty about whether the government is obtaining the best possible price for the goods or services.

Public Impact

The Department of Defense is the primary beneficiary, receiving advanced laser guidance sets. These guidance sets are crucial for precision targeting in military operations. The contract supports the modernization of the U.S. military's ordnance capabilities. Performance in Missouri could lead to job creation or sustainment within the local aerospace and defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases cost to taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Dependence on a single contractor for critical defense components.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Award to a major defense contractor like Boeing suggests a high level of technical capability and reliability.
The specific nature of the DSU-38A/B guidance set indicates a focus on advanced, potentially critical, military technology.

Sector Analysis

The defense industry, particularly the segment focused on ordnance and targeting systems, is characterized by high technological sophistication and significant government investment. Contracts like this are vital for maintaining a technological edge. The market for precision-guided munitions components is often dominated by a few large, specialized contractors due to the high barriers to entry, including R&D costs, stringent quality control, and security clearances. Benchmarking spending in this area is challenging due to the proprietary nature of many technologies and the unique specifications of each system.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Boeing voluntarily engages small businesses for specific components or services not detailed here. Further investigation into Boeing's subcontracting plans would be needed to assess any indirect benefits to small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, as well as the Defense Contract Management Agency (DCMA) for contract administration. The firm fixed-price nature of the contract provides a degree of cost accountability. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Precision Guided Munitions
Ordnance Manufacturing
Defense Targeting Systems
Aerospace and Defense Contracting

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for cost overruns not borne by contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.4 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 $25.4 million.

What is the period of performance?

Start: 2021-09-29. End: 2023-12-31.

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

The DSU-38A/B Precision Laser Guidance Set is a component designed to enhance the accuracy of munitions by providing laser designation capabilities. While specific technical details are often classified or proprietary, these sets typically enable 'fire-and-forget' or laser-guided targeting, allowing munitions to home in on a designated target illuminated by a laser designator. This significantly increases the probability of a direct hit and reduces collateral damage compared to unguided ordnance. The 'DSU' designation often refers to specific types of guidance units within the U.S. military's inventory, and the '38A/B' likely denotes a particular model or variant within a series, suggesting ongoing development and upgrades to meet evolving battlefield requirements.

How does the $25.4 million contract value compare to historical spending on similar laser guidance systems?

Direct comparison of the $25.4 million award for the DSU-38A/B Precision Laser Guidance Set to historical spending on similar systems is challenging without access to detailed procurement histories and specific system performance metrics. However, the value suggests a significant procurement of a sophisticated technology. Historically, advanced guidance systems can range from hundreds of thousands to millions of dollars per unit, depending on complexity, integration, and quantity. Given this is a sole-source award for a specific model, the price reflects negotiated terms rather than market competition. To provide a robust comparison, one would need to identify comparable systems procured competitively or through similar sole-source actions, analyze unit costs, and consider inflation and technological advancements over time.

What are the primary risks associated with a sole-source award for critical defense components like laser guidance sets?

The primary risks associated with a sole-source award for critical defense components like laser guidance sets include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a heightened risk of supply chain disruption if the sole provider faces production issues or goes out of business. Furthermore, it can limit the government's flexibility in adopting newer technologies if they are not offered by the incumbent sole-source provider. This dependence can also create strategic vulnerabilities. While sole-source awards are sometimes necessary for unique or highly specialized items, they necessitate rigorous negotiation and oversight to mitigate these inherent risks and ensure the government secures the best possible value and maintains operational readiness.

What is The Boeing Company's track record in manufacturing precision guidance systems for the Department of Defense?

The Boeing Company has a long and extensive track record in developing and manufacturing a wide array of defense systems for the Department of Defense, including sophisticated guidance and targeting technologies. Boeing is a major prime contractor for numerous aircraft, missile, and space systems, many of which incorporate advanced navigation, guidance, and control (GNC) systems. Their involvement spans decades, encompassing both offensive and defensive capabilities. While specific details on the DSU-38A/B might be proprietary, Boeing's general expertise in complex aerospace manufacturing, systems integration, and precision engineering suggests a strong capability to produce such components. Their history includes delivering numerous complex systems on time and to specification, although like any large defense contractor, they have also faced scrutiny on specific programs regarding cost and schedule.

How does the firm fixed-price contract type mitigate financial risks for the government in this specific award?

The firm fixed-price (FFP) contract type is designed to shift most of the financial risk from the government to the contractor. Under an FFP agreement, the price is set and not subject to adjustment based on the contractor's cost experience. This means that The Boeing Company bears the responsibility for any cost overruns incurred during the performance of the contract. For the Department of Defense, this provides a high degree of cost certainty, allowing for more predictable budgeting and financial planning. The government knows the total amount it will pay, assuming the contractor meets all contract requirements. This structure incentivizes the contractor to manage its costs efficiently to maximize profit, as any savings achieved below the fixed price directly benefit the contractor.

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: $25,371,984

Exercised Options: $25,371,984

Current Obligation: $25,371,984

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $17,059,915

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