Raytheon Company awarded $76M for AGM-88B HARM missile refurbishment, a sole-source contract

Contract Overview

Contract Amount: $76,074,315 ($76.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-05-23

End Date: 2024-05-24

Contract Duration: 1,828 days

Daily Burn Rate: $41.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AGM-88B HIGH SPEED ANTI-RADIATION MISSILE (HARM) REFURBISHMENT FOR ACCRUING REPLACEMENT/EXCHANGE-IN KIND (REIK)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $76.1 million to RAYTHEON COMPANY for work described as: AGM-88B HIGH SPEED ANTI-RADIATION MISSILE (HARM) REFURBISHMENT FOR ACCRUING REPLACEMENT/EXCHANGE-IN KIND (REIK) Key points: 1. Contract awarded to Raytheon Company for refurbishment of AGM-88B missiles. 2. This contract is a sole-source award, indicating limited competition. 3. The contract duration is 5 years, from May 2019 to May 2024. 4. The total value of the contract is $76,074,315. 5. The contract is for the Department of the Air Force, supporting missile readiness. 6. The North American Industry Classification System (NAICS) code is 336419, for missile parts manufacturing.

Value Assessment

Rating: fair

Benchmarking the value for this sole-source contract is challenging due to the lack of competitive bids. The firm fixed-price structure provides some cost certainty. However, without comparison to other refurbishment providers or alternative missile systems, assessing optimal value for money is difficult. The price appears to be in line with specialized defense contracting, but a lack of transparency limits a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Raytheon Company, was solicited. This approach is often used when a specific contractor possesses unique capabilities, intellectual property, or when urgency dictates a rapid award without a full competition. The lack of competition limits price discovery and may result in higher costs for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding, as the government did not benefit from price reductions typically achieved through a competitive process.

Public Impact

The primary beneficiaries are the U.S. Air Force, ensuring the operational readiness of the AGM-88B HARM missile system. The services delivered include the refurbishment of existing missile systems, extending their service life and maintaining their effectiveness. The geographic impact is primarily within the United States, supporting defense manufacturing and maintenance operations. Workforce implications include the employment of skilled technicians and engineers involved in the missile refurbishment process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in the sole-source justification process.
Potential for cost overruns if not closely monitored due to lack of competition.

Positive Signals

Firm fixed-price contract provides cost predictability.
Contract awarded to a known defense contractor with established expertise.
Refurbishment extends the life of existing assets, potentially saving costs compared to new procurement.

Sector Analysis

The defense sector, specifically guided missile and space vehicle parts manufacturing, is characterized by high barriers to entry, specialized technology, and significant government reliance on a few key contractors. This contract fits within the broader category of defense sustainment and modernization, ensuring the continued operational capability of critical weapon systems. Comparable spending benchmarks are difficult to establish publicly for sole-source refurbishment contracts of this nature.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded sole-source to Raytheon Company. There is no explicit information regarding subcontracting plans for small businesses within this award. The focus on a large, sole-source prime contractor may limit opportunities for small businesses to participate directly in this specific refurbishment effort.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting oversight mechanisms, including contract administration by the relevant Air Force contracting office. Accountability measures are inherent in the firm fixed-price structure, which incentivizes the contractor to meet cost targets. Transparency is limited due to the sole-source nature of the award, but contract performance would be monitored against established milestones and specifications.

Related Government Programs

AGM-88 HARM Missile System
Air-to-Ground Munitions
Defense Logistics Agency (DLA) Support Contracts
Missile Maintenance and Repair Services

Risk Flags

Sole-source award may lead to higher costs.
Limited public information on competition justification.
Contract duration extends over multiple fiscal years.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $76.1 million to RAYTHEON COMPANY. AGM-88B HIGH SPEED ANTI-RADIATION MISSILE (HARM) REFURBISHMENT FOR ACCRUING REPLACEMENT/EXCHANGE-IN KIND (REIK)

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 $76.1 million.

What is the period of performance?

Start: 2019-05-23. End: 2024-05-24.

What is Raytheon Company's track record with similar missile refurbishment contracts?

Raytheon Company, now RTX, has a long and extensive history of manufacturing and supporting various missile systems for the U.S. military, including the AGM-88 family. Their track record includes numerous contracts for production, upgrades, and sustainment of advanced weapon systems. While specific details on prior HARM refurbishment contracts awarded solely to Raytheon are not publicly detailed in this data, their established role as the prime contractor for the AGM-88 system suggests a deep understanding of its technical requirements and refurbishment needs. The company's extensive experience in defense contracting generally indicates a capacity to perform complex maintenance and refurbishment tasks, though the value and efficiency of such contracts can vary based on specific terms and oversight.

How does the $76 million refurbishment cost compare to the original acquisition cost or replacement cost of AGM-88B missiles?

Direct comparison of the $76 million refurbishment cost to original acquisition or replacement costs for AGM-88B missiles is challenging without specific data on the number of missiles being refurbished under this contract and their original unit prices. However, refurbishment is generally intended to be more cost-effective than procuring entirely new systems. If this contract covers a significant quantity of missiles, the per-unit refurbishment cost would need to be analyzed against the cost of a new missile or an upgraded variant to determine if it represents good value. The firm fixed-price nature suggests the government has a defined cost ceiling for the scope of work, but the overall value proposition hinges on the quantity and condition of the missiles addressed.

What are the primary risks associated with a sole-source award for missile refurbishment?

The primary risks associated with a sole-source award for missile refurbishment include potential for inflated pricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the justification for sole-sourcing. Taxpayers may bear a higher cost than if the contract were competed. Additionally, there's a risk of vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future options or flexibility. Effective oversight and robust negotiation are crucial to mitigate these risks, ensuring the government receives fair value and the required quality of service despite the absence of competition.

How does the performance of refurbished AGM-88B missiles compare to newly manufactured ones?

Refurbished AGM-88B missiles are intended to meet or exceed the performance specifications of newly manufactured ones, at least for the duration of their extended service life. The refurbishment process typically involves inspection, repair, replacement of worn components, and recalibration to ensure the missile systems function as designed. The goal is to restore the missiles to a condition equivalent to their original operational capabilities. However, the ultimate performance and reliability can depend on the thoroughness of the refurbishment process, the quality of replacement parts used, and the specific maintenance protocols followed. Ongoing monitoring and testing are essential to confirm that refurbished units perform comparably to new ones.

What has been the historical spending trend for AGM-88B HARM missile refurbishment or sustainment by the Department of Defense?

Historical spending data for AGM-88B HARM missile refurbishment or sustainment by the Department of Defense is not detailed within the provided data snippet. However, the AGM-88 HARM missile has been a critical component of the U.S. Air Force and Navy's inventory for decades, suggesting consistent investment in its sustainment and modernization. Given its age and continued operational relevance, periodic refurbishment contracts are expected. The $76 million awarded in 2019 indicates a significant, multi-year investment. To understand the trend, one would need to examine historical contract awards for HARM sustainment over several fiscal years, looking for patterns in contract values, award types (competed vs. sole-source), and the specific services provided (e.g., depot maintenance, component repair, system upgrades).

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $100,589,183

Exercised Options: $100,589,183

Current Obligation: $76,074,315

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $90,120

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852019D0002

IDV Type: IDC

Timeline