DoD Awards Raytheon $82.5M for SDB II Crypto Mod, Extending to 2025

Contract Overview

Contract Amount: $82,506,962 ($82.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-09-27

End Date: 2025-06-30

Contract Duration: 2,833 days

Daily Burn Rate: $29.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SMALL DIAMETER BOMB INCREMENT II (SDB II) - CRYPTO MOD

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $82.5 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB INCREMENT II (SDB II) - CRYPTO MOD Key points: 1. Significant contract value for specialized munitions. 2. Raytheon is the sole provider for this specific modification. 3. Potential risk associated with sole-source, cost-plus contracts. 4. Defense sector spending on advanced weaponry.

Value Assessment

Rating: questionable

The contract type is Cost Plus Incentive Fee (CPIF), which can lead to cost overruns if not managed carefully. The total award value is substantial, but without a clear benchmark for this specific crypto modification, assessing its value is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award likely due to proprietary technology or specialized expertise held by Raytheon. This limits price discovery and potentially increases costs for the government.

Taxpayer Impact: The lack of competition and CPIF structure may result in higher taxpayer costs compared to a competitively bid contract.

Public Impact

Ensures continued modernization of critical air-to-ground munitions. Supports advanced cryptographic capabilities for the Small Diameter Bomb II. Impacts Air Force's operational readiness and technological superiority. Potential for cost increases due to sole-source nature.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long contract duration

Positive Signals

Essential defense capability
Experienced contractor

Sector Analysis

This contract falls within the defense sector, specifically focusing on ammunition manufacturing. Spending in this area is driven by national security needs and technological advancements in weaponry. Benchmarks for specialized crypto modifications are often proprietary or difficult to ascertain.

Small Business Impact

This contract does not appear to involve small business participation, as indicated by the 'sb' field being false. The prime contractor, Raytheon Company, is a large aerospace and defense firm.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure cost control and adherence to contract terms. The Department of the Air Force is responsible for monitoring performance and expenditures.

Related Government Programs

Ammunition (except Small Arms) Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competition and price discovery.
Cost-plus contract type carries risk of cost overruns.
Long contract duration increases exposure to changing requirements and costs.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.5 million to RAYTHEON COMPANY. SMALL DIAMETER BOMB INCREMENT II (SDB II) - CRYPTO MOD

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 $82.5 million.

What is the period of performance?

Start: 2017-09-27. End: 2025-06-30.

What is the specific technical necessity driving the sole-source award for this crypto modification, and have alternatives been thoroughly explored?

The necessity likely stems from the unique and proprietary nature of the cryptographic modules integrated into the SDB II system, potentially developed or exclusively maintained by Raytheon. While alternatives are typically explored, the specialized requirements for secure and compatible upgrades may limit viable options, necessitating a sole-source approach to maintain system integrity and operational effectiveness.

How will the government ensure cost-effectiveness and prevent potential overruns under the Cost Plus Incentive Fee (CPIF) structure for this sole-source contract?

Effective oversight will involve rigorous monitoring of incurred costs, performance metrics, and incentive fee triggers. The Air Force must establish clear, achievable performance targets and closely scrutinize cost submissions. Regular audits and negotiations focused on aligning contractor profit with demonstrated value and efficiency are crucial to mitigate overrun risks inherent in CPIF contracts.

What is the long-term strategic impact of relying on a single contractor for critical cryptographic modernization of advanced munitions like the SDB II?

Long-term reliance on a sole source can create vendor lock-in, potentially stifle innovation from other companies, and increase vulnerability if the sole provider faces financial or operational issues. It also removes competitive pressure that typically drives down costs and improves service over time. Strategic planning should consider pathways for future competition or technology insertion.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $82,506,962

Exercised Options: $82,506,962

Current Obligation: $82,506,962

Actual Outlays: $3,356,489

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $36,594,123

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA867217D0004

IDV Type: IDC

Timeline