DoD's $88.7M Small Diameter Bomb II Contract with Raytheon Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $88,734,458 ($88.7M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2018-02-27
End Date: 2025-01-31
Contract Duration: 2,530 days
Daily Burn Rate: $35.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: SMALL DIAMETER BOMB INCREMENT II
Place of Performance
Location: TUCSON, PIMA County, ARIZONA, 85756
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $88.7 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB INCREMENT II Key points: 1. Contract awarded to Raytheon Company for $88.7M for Small Diameter Bomb II. 2. Full and open competition was utilized, but the impact on price discovery is unclear. 3. The contract duration is 2530 days, ending in 2025. 4. Ammunition manufacturing sector, specifically for the Air Force. 5. No small business participation noted.
Value Assessment
Rating: fair
The contract's value of $88.7M for ammunition is significant. Benchmarking against similar advanced munitions contracts is necessary to assess if the firm fixed price adequately reflects market value and avoids potential overpayment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which theoretically promotes competitive pricing. However, the specific details of the bidding process and the number of bidders are not provided, making it difficult to assess the effectiveness of price discovery.
Taxpayer Impact: The use of full and open competition aims to ensure taxpayer funds are used efficiently. However, without further analysis of the pricing structure and potential cost savings, the precise taxpayer impact remains to be determined.
Public Impact
This contract supports the Air Force's capabilities in precision-guided munitions. The Small Diameter Bomb II is a critical component for modern air combat. Raytheon's role as a primary contractor highlights its significant position in the defense industrial base. The long contract duration suggests a sustained need for this ordnance.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of small business participation.
- Unclear effectiveness of price discovery despite full and open competition.
- Potential for cost overruns in long-term defense contracts.
Positive Signals
- Awarded under full and open competition.
- Supports critical Air Force munitions needs.
- Firm fixed price contract structure.
Sector Analysis
This contract falls within the defense sector, specifically ammunition manufacturing. Spending in this area is driven by military modernization and operational requirements. Benchmarks for similar advanced munitions contracts would be crucial for a comprehensive value assessment.
Small Business Impact
The contract data indicates no small business participation (ss: false, sb: false). This suggests that the prime contractor, Raytheon, is handling the entire scope of work, potentially missing opportunities for subcontracting to smaller, specialized firms.
Oversight & Accountability
Oversight of this contract would involve monitoring Raytheon's performance against the firm fixed price, ensuring timely delivery, and verifying the quality of the Small Diameter Bomb II. The Department of the Air Force is responsible for this oversight.
Related Government Programs
- Ammunition (except Small Arms) Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Limited visibility into price discovery effectiveness.
- Potential for contractor lock-in due to specialized nature of the munition.
- No small business participation noted.
- Long contract duration may increase risk of cost escalation or scope creep.
Tags
ammunition-except-small-arms-manufacturi, department-of-defense, az, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $88.7 million to RAYTHEON COMPANY. SMALL DIAMETER BOMB INCREMENT II
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 $88.7 million.
What is the period of performance?
Start: 2018-02-27. End: 2025-01-31.
What is the cost-effectiveness of the Small Diameter Bomb II compared to alternative munitions or previous versions, considering its advanced capabilities?
Assessing the cost-effectiveness requires a detailed comparison of the Small Diameter Bomb II's performance metrics, such as range, accuracy, payload, and target set, against alternative munitions. While its advanced capabilities justify a higher price point, a thorough analysis against less sophisticated but potentially sufficient options, or against the lifecycle costs of previous bomb versions, is needed to confirm value for money.
How effectively did the 'full and open competition' process ensure competitive pricing for this specialized defense contract?
While 'full and open competition' is the preferred method for maximizing competition, its effectiveness in ensuring competitive pricing depends on the number of qualified bidders and the structure of the solicitation. For highly specialized systems like the Small Diameter Bomb II, the pool of capable contractors may be limited, potentially reducing the competitive pressure on pricing. Further investigation into the bidding process is needed.
What is the long-term strategic value and potential obsolescence risk associated with the Small Diameter Bomb II, given its 2025 end date?
The Small Diameter Bomb II provides significant tactical advantages, but its long-term strategic value hinges on its continued relevance against evolving threats and technological advancements. The contract's end date in 2025 necessitates planning for future munitions. Assessing obsolescence risk involves evaluating the pace of technological change in air warfare and the development of next-generation munitions.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 1
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: $88,734,458
Exercised Options: $88,734,458
Current Obligation: $88,734,458
Subaward Activity
Number of Subawards: 6
Total Subaward Amount: $2,651,782
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-02-27
Current End Date: 2025-01-31
Potential End Date: 2025-01-31 00:00:00
Last Modified: 2024-08-29
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