DoD awards $61M Raytheon contract for guided missiles, raising concerns about competition and value

Contract Overview

Contract Amount: $61,027,713 ($61.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-12-17

End Date: 2021-01-31

Contract Duration: 776 days

Daily Burn Rate: $78.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GRIFFIN AUR PROCUREMENT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $61.0 million to RAYTHEON COMPANY for work described as: GRIFFIN AUR PROCUREMENT Key points: 1. Significant contract value awarded to a single large defense contractor. 2. Lack of competition raises questions about price discovery and potential overpayment. 3. Long contract duration (776 days) may indicate complex requirements or extended need. 4. Focus on guided missile manufacturing places this within the defense sector's high-value procurement.

Value Assessment

Rating: questionable

The contract value of $61M for guided missiles is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to similar missile system procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The lack of competition for a $61M contract means taxpayers may have paid a premium, as the government did not leverage market forces to secure the lowest possible price.

Public Impact

Taxpayers may be overpaying for critical defense equipment due to the absence of competitive bidding. The long-term award suggests a sustained need for these guided missiles, impacting future defense budgets. This procurement highlights potential vulnerabilities in the defense supply chain when relying on single-source providers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for overpayment
Sole-source award

Positive Signals

Awarded to a major defense contractor
Supports critical defense capabilities

Sector Analysis

This contract falls within the defense sector, specifically guided missile manufacturing. Spending in this area is typically high-value and often involves complex, specialized technologies where competition can be limited.

Small Business Impact

The awardee, Raytheon Company, is a large defense contractor. There is no indication that small businesses were involved in this specific procurement, which is common for large, sole-source defense contracts.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny. Oversight should focus on ensuring the price is fair and reasonable, and exploring opportunities for future competition or alternative sourcing.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits price competition.
Potential for inflated costs due to lack of market pressure.
Long contract duration may obscure cost efficiencies.
Lack of transparency regarding price justification.
No small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.0 million to RAYTHEON COMPANY. GRIFFIN AUR PROCUREMENT

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 $61.0 million.

What is the period of performance?

Start: 2018-12-17. End: 2021-01-31.

What is the justification for the sole-source award, and how was the price determined to be fair and reasonable without competition?

The justification for a sole-source award typically involves factors like unique capabilities, urgent need, or lack of viable alternatives. The price is usually determined through cost analysis, historical pricing, or comparison to similar, albeit not identical, systems. Without detailed documentation, it's hard to verify the fairness of the price.

What are the risks associated with relying on a single supplier for guided missiles, especially given the contract's duration?

The primary risks include supply chain disruptions if the sole supplier faces issues, potential price escalation over time due to lack of competition, and reduced innovation. A long-term reliance can also make it difficult to switch to newer technologies or alternative providers if they emerge.

How does this $61M contract contribute to the overall effectiveness and readiness of the Department of the Air Force?

This contract directly supports the operational capabilities of the Air Force by providing essential guided missiles. The effectiveness hinges on the quality and reliability of these munitions. However, the procurement method raises questions about whether the funds allocated could have secured a greater quantity or more advanced capabilities through competition.

Industry Classification

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

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: $61,027,713

Exercised Options: $61,027,713

Current Obligation: $61,027,713

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $15,371,931

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA865617D0005

IDV Type: IDC

Timeline