Raytheon Company awarded $1.43B contract for Small Diameter Bomb Increment II, with 2,660 months duration

Contract Overview

Contract Amount: $143,212,081 ($143.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-12-18

End Date: 2026-03-31

Contract Duration: 2,660 days

Daily Burn Rate: $53.8K/day

Competition Type: NOT COMPETED

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 $143.2 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB INCREMENT II Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. Long contract duration of over 22 years suggests a sustained need for this munition. 3. The firm fixed-price structure aims to transfer risk to the contractor. 4. Ammunition manufacturing is a critical but potentially volatile sector. 5. Contract performance will be key to ensuring timely delivery of essential ordnance. 6. The sole-source nature of this award warrants scrutiny of its justification and potential cost implications.

Value Assessment

Rating: questionable

The contract value of $1.43 billion for Small Diameter Bomb Increment II is substantial. Without specific per-unit cost data or comparable contract benchmarks, it is difficult to definitively assess value for money. However, the 'NOT COMPETED' award type suggests a lack of price discovery through competition, which could lead to higher costs than if the contract had been competed. The long duration also means that any inefficiencies or cost overruns could be amplified over time.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This typically occurs when a specific technology or capability is only available from a single source, or for reasons of urgency or national security. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. It also reduces transparency in the procurement process.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the military requiring advanced munitions. The contract delivers critical components and potentially fully assembled Small Diameter Bomb Increment II munitions. The geographic impact is primarily within Arizona, where the contractor is located, but the end-use is global military operations. This contract supports jobs within Raytheon Company's defense manufacturing operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Long contract duration (over 22 years) increases exposure to potential cost escalations and performance risks over time.
Lack of transparency inherent in sole-source procurements makes independent value assessment challenging.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Award to a major defense contractor suggests access to established manufacturing capabilities and expertise.
Sustained contract indicates a critical and ongoing need for this specific munition capability.

Sector Analysis

The defense sector, specifically munitions manufacturing, is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts like this are typical for advanced weapon systems where specialized capabilities are required. The market is dominated by a few large prime contractors. Spending benchmarks for similar advanced munitions can vary widely based on technological sophistication and quantity, but multi-billion dollar awards over extended periods are not uncommon for major defense programs.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Raytheon Company, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contractors often utilize small businesses in their supply chains.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures. The Air Force is the contracting agency. Inspector General (IG) oversight is standard for defense contracts, providing an independent review of contract performance, waste, fraud, and abuse. Transparency is limited by the sole-source nature of the award, but contract modifications, performance reports, and payment data are usually subject to internal and potentially public reporting requirements.

Related Government Programs

Small Diameter Bomb Increment I
Advanced Medium-Range Air-to-Air Missile (AMRAAM)
Joint Standoff Weapon (JSOW)
Precision-Guided Munitions (PGMs)

Risk Flags

Sole-source award may indicate limited competition, potentially leading to higher costs.
Long contract duration increases long-term financial commitment and exposure to evolving risks.
Lack of detailed performance metrics in summary data hinders comprehensive value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $143.2 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 $143.2 million.

What is the period of performance?

Start: 2018-12-18. End: 2026-03-31.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award of the Small Diameter Bomb Increment II contract to Raytheon Company. Typically, sole-source procurements are justified when only one responsible source can provide the required supplies or services, or when there is a compelling urgency, or for reasons of industrial mobilization or national security. For advanced munitions like the SDB II, it is often the case that the technology is highly specialized and proprietary, or that the initial development was so extensive that only the original developer can efficiently produce it. A formal Justification for Other Than Full and Open Competition (JOFOC) would normally be required and documented by the agency.

How does the total contract value of $1.43 billion compare to historical spending on similar munitions programs?

Comparing the $1.43 billion total contract value for Small Diameter Bomb Increment II requires context on the program's scope, duration, and the specific capabilities offered. The SDB II is a relatively advanced munition designed for precision strikes against moving or stationary targets in adverse weather conditions. Historical spending on similar precision-guided munitions (PGMs) can range significantly. For instance, contracts for older generations of bombs or missiles might have lower unit costs but require larger quantities. Advanced systems like the SDB II, with their sophisticated guidance and warhead technology, command higher prices. Without specific unit costs and quantities for this contract, a direct comparison is difficult, but the overall value reflects the complexity and strategic importance of such munitions in modern warfare.

What are the key performance metrics and delivery schedules associated with this contract?

The provided data indicates a contract start date of December 18, 2018, and an end date of March 31, 2026, with a duration of 2660 months (approximately 22 years). This long duration suggests a phased delivery schedule over an extended period, likely encompassing multiple production lots and potentially sustainment activities. Key performance metrics would typically include on-time delivery, adherence to quality specifications (e.g., defect rates, reliability), and potentially operational performance characteristics of the munitions themselves. Specific delivery schedules for individual lots or units would be detailed in the contract's statement of work and delivery orders, which are not included in the summary data.

What is Raytheon Company's track record with the Small Diameter Bomb program and similar defense contracts?

Raytheon Company, now part of RTX, has a long and established history in defense manufacturing, including extensive experience with various missile and bomb programs. They were the prime contractor for the development and production of the Small Diameter Bomb Increment II. Their track record with this specific program would involve assessing past performance evaluations, delivery history, and any significant issues encountered during earlier phases or related contracts. Generally, Raytheon is considered a major defense industrial base supplier with a broad portfolio of successful programs, though like any large contractor, they may have faced challenges or criticisms on specific contracts over their extensive operational history.

Are there any identified risks associated with the production or deployment of the Small Diameter Bomb Increment II?

Risks associated with the production and deployment of advanced munitions like the Small Diameter Bomb Increment II can be multifaceted. Production risks might include supply chain disruptions for critical components, manufacturing defects, cost overruns (despite the fixed-price nature, unforeseen issues can arise), and schedule delays. Deployment risks could involve the munition's effectiveness against evolving threats, potential for unintended collateral damage (though precision munitions aim to minimize this), cybersecurity vulnerabilities in their guidance systems, and the geopolitical implications of their use. The long duration of this contract also introduces risks related to technological obsolescence or changes in military requirements over the 22-year period.

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

Solicitation ID: FA867219R0010

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: $143,212,081

Exercised Options: $143,212,081

Current Obligation: $143,212,081

Actual Outlays: $14,690,619

Subaward Activity

Number of Subawards: 30

Total Subaward Amount: $27,143,747

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline