Raytheon Company awarded $57.4M for bomb conversion kits, highlighting defense manufacturing needs

Contract Overview

Contract Amount: $57,415,283 ($57.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-12-21

End Date: 2012-04-30

Contract Duration: 861 days

Daily Burn Rate: $66.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CONVERSION KIT, BOMB

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $57.4 million to RAYTHEON COMPANY for work described as: CONVERSION KIT, BOMB Key points: 1. Contract value represents a significant investment in specialized defense equipment. 2. Sole-source award suggests limited market availability or specific technical requirements. 3. Long-term contract duration may indicate ongoing demand for these conversion capabilities. 4. Fixed-price contract structure shifts cost risk to the contractor. 5. Geographic location of performance in Arizona may point to specific manufacturing hubs. 6. The nature of the product suggests a critical role in military operations.

Value Assessment

Rating: fair

Benchmarking the value of this specific bomb conversion kit is challenging due to its specialized nature and the lack of publicly available comparable contract data. The contract's fixed-price structure is generally favorable for the government, but without more information on the unit costs or the number of kits procured, a precise value-for-money assessment is difficult. The award amount of over $57 million indicates a substantial procurement, but its efficiency relative to alternative solutions or previous procurements is not readily apparent from the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one vendor, Raytheon Company, was deemed capable of fulfilling the requirement. This typically occurs when there are unique technical specifications, proprietary technology, or a lack of alternative suppliers in the market. The absence of a competitive bidding process means that price discovery through market forces was limited, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: A sole-source award limits opportunities for competitive pricing, potentially resulting in less favorable terms for taxpayers compared to a fully competed contract.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the Department of Defense requiring advanced ordnance capabilities. The contract delivers essential conversion kits for bombs, enhancing their effectiveness and potentially extending their utility. Performance is located in Arizona, supporting regional employment and the defense industrial base in that state. This contract supports specialized manufacturing jobs within Raytheon Company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of detailed performance metrics makes assessing effectiveness challenging.
Specialized nature of the product may limit broader market competition in the future.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor.
Award to a major defense contractor suggests established capabilities.
Contract duration implies sustained operational need for the product.

Sector Analysis

The defense manufacturing sector is characterized by high technological barriers to entry, significant R&D investment, and long product development cycles. Contracts for specialized ordnance, such as bomb conversion kits, are critical components of this sector, directly supporting military readiness. The market is often dominated by a few large prime contractors like Raytheon, who possess the necessary expertise and infrastructure. Spending in this area is driven by geopolitical factors and the need for advanced military capabilities, with contracts often being sole-source due to the unique nature of the products.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, Raytheon Company, is a large defense corporation. While large prime contractors are often required to subcontract portions of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means that small businesses were not specifically targeted for this prime contract award, though they may participate indirectly through subcontracting opportunities.

Oversight & Accountability

Oversight for this Department of Defense contract would typically fall under the purview of the relevant Air Force contracting command and potentially the Department of Defense Inspector General. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver the specified goods within the agreed-upon price. Transparency is limited by the sole-source nature of the award and the classified or sensitive aspects of defense procurement, but contract award data is generally made public through federal procurement databases.

Related Government Programs

Ordnance Manufacturing
Ammunition Manufacturing
Defense Procurement
Air Force Contracts
Bomb Components

Risk Flags

Sole-source award may limit competitive pricing.
Lack of detailed performance metrics.
Potential for vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.4 million to RAYTHEON COMPANY. CONVERSION KIT, BOMB

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $57.4 million.

What is the period of performance?

Start: 2009-12-21. End: 2012-04-30.

What is the specific type of bomb conversion kit being procured, and what are its intended operational benefits?

The provided data identifies the item as 'CONVERSION KIT, BOMB' under the PSC code 332993 (Ammunition (except Small Arms) Manufacturing). While the exact technical specifications and intended operational benefits are not detailed in this summary, bomb conversion kits generally allow for the modification of existing general-purpose bombs into more advanced munitions. This can include adding guidance systems for precision strikes, extending range, or enabling different detonation modes. The primary benefit is typically to enhance the effectiveness and versatility of the existing munition stockpile, providing warfighters with more capable weapons without needing to procure entirely new bomb casings.

How does the awarded amount of $57.4 million compare to historical spending on similar bomb conversion kits by the Department of Defense?

Direct historical comparisons for this specific 'CONVERSION KIT, BOMB' are difficult without more granular data on the exact model and capabilities being procured. However, the $57.4 million award for a single contract suggests a significant investment. The Department of Defense procures a wide array of ordnance and related components, with spending fluctuating based on operational needs, technological advancements, and strategic priorities. Larger, more complex conversion kits or those for widely used bomb types could command higher prices. Without access to historical contract databases filtered by precise product descriptions and quantities, a definitive benchmark against past spending is not feasible from the provided data alone.

What are the key risks associated with a sole-source award for defense equipment like bomb conversion kits?

The primary risk associated with a sole-source award is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may pay more than it would in a competitive environment. Another risk is vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future flexibility and negotiation power. Furthermore, sole-source awards can sometimes indicate a lack of robust market research or a failure to identify potential alternative suppliers, which could represent a missed opportunity for innovation or cost savings. Ensuring adequate oversight and negotiation is crucial to mitigate these risks.

What is Raytheon Company's track record in manufacturing defense-related conversion kits and ordnance?

Raytheon Company (now RTX) is a major defense contractor with extensive experience in developing and manufacturing a wide range of defense systems, including missiles, munitions, and related technologies. They have a long history of producing ordnance for various U.S. military branches. While specific details on their 'bomb conversion kit' production history are not provided here, their established presence in the defense sector suggests they possess the technical capabilities and manufacturing infrastructure required for such products. Their track record generally includes delivering complex systems under challenging requirements, though like any large contractor, they have also faced scrutiny on pricing and performance in specific instances.

What are the implications of the contract's fixed-price nature on cost control and potential overruns?

A Firm Fixed Price (FFP) contract, as indicated by 'pt': 'FIRM FIXED PRICE', places the primary responsibility for cost control and managing potential overruns on the contractor, Raytheon Company. This contract type is generally favored by the government for its predictability in cost. If the contractor's costs exceed the agreed-upon price, they absorb the loss. Conversely, if their costs are lower than anticipated, they retain the profit. This structure incentivizes the contractor to be efficient and manage their resources effectively. However, it can also lead to the contractor cutting corners on quality if not adequately monitored, or to higher initial pricing to account for potential unforeseen costs.

How does the geographic location of performance (Arizona) influence the defense industrial base and supply chain for this contract?

Performance in Arizona (st: 'AZ', sn: 'ARIZONA') suggests that Raytheon Company utilizes or has facilities in that state for the manufacturing or assembly of these bomb conversion kits. Arizona has a notable presence in the aerospace and defense sector, with several large companies and a network of suppliers. Having performance located within the U.S. generally supports domestic jobs and the national defense industrial base. It can also streamline logistics and communication compared to overseas manufacturing. The specific impact on the Arizona industrial base would depend on the scale of operations, the number of local employees involved, and the extent to which local suppliers are utilized in the production process.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $57,415,283

Exercised Options: $57,415,283

Current Obligation: $57,415,283

Contract Characteristics

Cost or Pricing Data: YES

Timeline